GlobalFoundries IPO: Everything you need to know about GlobalFoundries

Silicon wafer manufacturer GlobalFoundries has listed on Nasdaq in the midst of a semiconductor shortage. Here’s the lowdown on the company following the GlobalFoundries IPO.

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GlobalFoundries IPO: What do we know about the GlobalFoundries IPO?

GlobalFoundries filed paperwork for its IPO with the SEC on October 4 2021, and the Nasdaq launch happened on October 27. The company raised around $2.6 billion with 22 million shares priced at $47 each. This made for a valuation of some $26 billion.

Advisers for the transaction were Morgan Stanley, Bank of America Securities, J.P. Morgan, Citigroup and Credit Suisse.

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How much is GlobalFoundries worth?

GlobalFoundries is worth some $26 billion following its IPO. It is unclear how much the company was worth in years prior to the transaction, due to the lack of public data on its valuations before the listing.

What is GlobalFoundries?

GlobalFoundries is a New York-based manufacturer of semiconductors that supplies silicon wafers to markets such as automotive, mobility and wired connectivity. As of 2021, it is one of the largest semiconductor manufacturers in the world.

The company emerged in 2009 when US semiconductor company Advanced Micro Devices (AMD) partnered with the Emerati state-owned Mubadala Investment Company, with a goal to become a global leader in the contract manufacturing of semiconductors. The company subsequently merged with Chartered Semiconductor Manufacturing, based in Singapore, in a $2.5 billion deal.

In 2015, GlobalFoundries took over IBM’s microelectronics business. At that point GlobalFoundries had ten fabrication plants across Germany, the US and Singapore, along with global offices from China and Taiwan to India and Japan.

GlobalFoundries achieved revenues of $4.8 billion for the year ended 2020, down from $5.8 million the year prior, according to its F-1 form. The company employs more than 15,000 people as of October 2021, and now has five manufacturing sites worldwide.

Who are GlobalFoundries’s competitors?

GlobalFoundries’s competitors in the semiconductor space includes industry leader Taiwan Semiconductor Manufacturing Co (TSMC), as well as its Taiwanese rival United Microelectronics, China’s Semiconductor Manufacturing International Corp (SMIC) and US operators Vishay and Microchip. TSMC’s revenue for 2020 was some $45 billion US dollars. This compares to SMIC’s revenues of $3.91 billion US.

In 2019, GlobalFoundries filed patent infringement lawsuits against TSMC, to which TSMC responded by filing its own patent infringement lawsuits against GlobalFoundries. The dispute was settled the same year with the agreement of a cross license for existing semiconductor patents.

How does GlobalFoundries make money?

GlobalFoundries makes money through the sale of its silicon wafers to high-profile customers such as Qualcomm, MediaTek, Samsung Electronics and Broadcom. Some 61% of its wafers shipped in 2020 were ‘single-sourced’ products that can only be made with the company’s own technology.

What is GlobalFoundries's business strategy?

GlobalFoundries’ business strategy looks to take advantage of a perceived ‘golden age for semiconductors’, with the company citing a VLSI Research study that predicts the market will double to almost $1 trillion by the end of the decade. Semiconductors are enjoying a broadening range of applications, from consumer devices to enterprise and industrial usage, and the company intends to meet demand with its ‘data-centric, connected, intelligent and secure technologies’.

In 2018, the company switched to a new strategy in order to better align with customer needs, with a focus on innovation and premium performance over its former preoccupation with transistor density and processing speed.

The company also looked to specialise in process technologies in emerging high-growth markets. It paid more attention to its customer engagement strategy, restructuring its go-to-market organisations to better align with the growing opportunities in smart mobile devices, home and industrial Internet of Things, communications infrastructure and datacentre, automotive and personal computing.

GlobalFoundries has stated its intention to optimise its business and manufacturing footprint to improve the bottom line and return on capital.

Considering the extent of the company’s losses so far (see below), those interested in the company's shares will be keen to see how such measures develop, and the extent to which GlobalFoundries’ revenue commitments of $20 billion, with more than half of that figure accounting for the period 2022 to 2023, will translate into bottom line success in the coming year or so.

Is GlobalFoundries profitable?

GlobalFoundries is not currently profitable, as its F-1 form shows a net loss of $1.35 billion in 2020 on revenues of $4.85 billion. The rate of loss has slowed however, with the company showing a loss of $1.37 billion for 2019 and $2.77 billion for 2018.

Who owns GlobalFoundries?

GlobalFoundries is mostly owned by Mubadala, which will reportedly hold an 89% stake in the company following the IPO. It is unclear as to the ownership of the final 11%.

Key personnel of GlobalFoundries

Tom Caulfield – Chief Executive Officer

David Reeder – Chief Financial Officer

Emily Reilly – Chief Human Resources Officer

Saam Azar – Chief Legal Officer

Brad Clay – Chief Digital Officer

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