Rising Wafer Output Drives GlobalFoundries’ Revenues

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GlobalFoundries posted a 5-percent quarterly jump in revenues to $1.7 billion in its inaugural earnings report along with a 56-percent annual increase in revenues.

Despite global chip shortages, GlobalFoundries reported net income of $5 million in its third quarter ending Sept. 30, putting the chipmaker back in the black after reporting a $293 million net loss a year ago. The company also exceeded analysts’ earnings-per-share estimates of $0.00 with an adjusted EPS of $0.07.

“Our revenue growth was primarily driven by higher wafer output and continued improvement in mix as our differentiated solutions become a larger portion of our total business,” said CEO Thomas Caulfield. About 92 percent of the company’s total revenue derived from its wafer output.

However, GlobalFoundries isn’t impervious to the semiconductor supply chain issues. During its first earnings call since going public in October, Caulfield acknowledged that supply and demand issues persist.

“We are still dealing with shortages of what we can supply to our key customers in 2022,” Caulfield said during the earnings call with analysts.

Even so, GlobalFoundries predicts fourth-quarter revenue at between $1.8 billion to $1.83 billion, and its EPS between $0.02 to $0.06.

GlobalFoundries went public on Oct. 28, initially pricing its stock at $47 with 55 million ordinary shares available. The stock (NASDAQ: GFS) topped out at $73.25 per share before closing Nov. 30 at $69.24.

Capacity expansion

GlobalFoundries said it plans to continue its capacity expansion operations. The company expects its global installed capacity to rise roughly 4 percent this quarter, a 12-percent increase compared to a year ago. The chipmaker’s Fab 1 facility in Dresden, Germany, is expected to increase output by 16 percent this quarter – a 15-percent rise compared to a year ago. Expansion responds to growing customer demand for its 22FDX, 20-nm ISP and its BiCMOS technology.

GlobalFoundries plans to invest $6 billion this year to expand its chip production as it addresses demand spikes and supply bottlenecks. The chipmaker is targeting the hard-hit automotive sector.

On Nov 18. GlobalFoundries and Ford announced collaboration to boost semiconductor manufacturing while advancing automotive electronics. The partnership looks to bolster chip supplies for Ford as well as other U.S. auto makers.

The non-binding agreement would enable GlobalFoundries to launch research on semiconductor production, initially to address the current chip crisis, eventually focusing on enhanced chip manufacturing for Ford’s vehicle lineup in areas such as ADAS and battery management. This could lead to improvements and increased chip supplies for ADAS and battery management systems.

Observers note, however, the partnership and increased focus on building chip inventories could spawn future capacity issues for the chipmaker.

“On the one hand, [collaboration with Ford] seems to create a risk that GlobalFoundries’ solution to today’s chip deficit could end up creating a chip glut two years from now,” analyst Rich Smith noted in an article published in The Motley Fool.

“On the other hand, that’s the risk you take when investing in cyclical industries.”

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