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GlobalFoundries Offers a Compelling Outlook at Capital Markets Day, but Headwinds Loom in Near Term

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

On Aug. 10, GlobalFoundries held its first capital markets day at which management outlined the firm’s long-term strategy and outlook. While we like the firm’s increasing focus on differentiated technologies, including single-source products (chips that cannot be made elsewhere without significant redesigns), we do not believe the firm has an economic moat. GlobalFoundries gets about half of its revenue from the smartphone space, which we expect to be weaker in the near term, though the firm does boast enviable exposure to higher content 5G devices. Longer-term, we anticipate the bulk of GlobalFoundries’ growth to come from the Internet of Things, automotive, and communications infrastructure and data center end markets. The firm has its capacity booked up for both this year and next, but we are concerned with softness in certain chip demand pockets as well as inflationary, geopolitical, and pandemic-related headwinds.

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Company Profile GFS

Business Description

GlobalFoundries is a major dedicated contract chipmaker that was originally the manufacturing arm of Advanced Micro Devices before it was spun out in 2009. The foundry sells chips into a range of end markets including smartphones, PCs, Internet of Things, data centers, automotive, industrial, and so on, but primarily focuses on more mature process technologies. Until 2021, the firm was privately held by Mubadala Investment, the sovereign wealth fund of the United Arab Emirates. GlobalFoundries merged with Chartered Semiconductor Manufacturing in 2009 and acquired IBM's chipmaking business in 2014.

400 Stonebreak Road Extension
Malta, NY, 12020
T +1 518 305-9013
Industry Semiconductors
Most Recent Earnings Jun 30, 2022
Fiscal Year End Dec 31, 2022
Stock Type
Employees 14,600