Business & Investment

GlobalFoundries’ first revenue report is expected to show the strength of low-tech chip design

GlobalFoundries Inc. has released its first revenue report as a public company seeking to leverage cutting-edge chip design services amid the tight global semiconductor supply.

+ 4.83%

We plan to report quarterly results on Tuesday after the market closes. Silicon Wafer Foundry Based in Malta, NY — Known in industry terms as a manufacturing plant or “fab” — Stock debuts on Nasdaq In late October. Wall Street analysts just started covering stocks last week.

Third-party fabs like GlobalFoundries manufacture silicon wafers for the vast majority of chip makers (companies like Apple Inc.) that do not have their own fabs.
+ 2.19%

And Nvidia Corp.
+ 5.95%
for example. GlobalFoundries is proud to be the third largest foundry in the world based on external sales.

The world is still overcoming the global chip shortage and fabs still have long backorders from customers, but one of the distinguishing aspects of GlobalFoundries is not considered cutting edge, but all the same. Is to serve the indispensable chip maker. It is clear from the shortage of cheap chips that are essential for automobile production.

For many: A small $ 1 chip behind the record price increase for computers

“GlobalFoundries has opened up a niche market for the fast-growing foundry market by focusing on old, cutting-edge technologies that have been ignored by. [Taiwan Semiconductor Manufacturing Co.

], The largest foundry company. Citi Research analyst Christopher Dunley has a purchase rating and a $ 75 price target, which he wrote in a note about the company.

“In addition, GlobalFoundries has its own wireless technology, which has significantly increased its market share with major wireless companies such as Qualcomm.
+ 4.55%
+ 3.25%
And carbo
+ 1.84%
” He said.

Citi’s Danley also sees GlobalFoundries as “a major beneficiary of the industry-wide shortage.”

What to expect

Revenue: Of the six analysts surveyed by FactSet, GlobalFoundries is expected to lose an average of one penny per share. One month agoThomas Caulfield, CEO of GlobalFoundries, forecasts profits for the end of September to be approximately $ 290 million to $ 300 million. Of the seven analysts polled by FactSet, Street expects a loss of $ 1990 million.

Revenue: Wall Street expects to generate $ 1.7 billion in revenue from GlobalFoundries, according to nine analysts polled by FactSet. Colefield forecasts revenue of approximately $ 1.7 billion.

Inventory movement: Since the company’s trading debut on October 28, stocks have skyrocketed 50% from an IPO price of $ 47. During that same period, the Renaissance IPO ETF
+ 0.59%

PHLX Semiconductor Index fell 5%
+ 4.08%

S & P 500 index rose 13%
+ 1.32%

Rise 2%, technology-intensive Nasdaq Composite Index
+ 1.88%

It is up 2%.

What the analyst is saying

“Because the foundry situation is still tough,” Morgan Stanley analyst Joseph Moore expects strong predictions from GLOBALFOUNDRIES.

“One area we are looking at to get more colors is our recent direct relationship with Ford Motor Company.
“Moore said. “One of the striking elements of the GF story is that the company is leveraging its current strengths to build long-term visibility rather than high-term results. , Less than 5% of past revenue., Should be very promising. “

Jeffreys analyst Mark Lipasis also noted that GlobalFoundries has a focus on more practical chips, with a purchase rating and a $ 87 price target.

He calls the fab “an analog / mixed signal foundry of the major trailing nodes that will benefit customers from IoT demand drivers that are transformed into unit demand that is 10 times the size of mobile phones and shift customers to fabright models.” I was surprised.

“These dynamics have provided unprecedented levels of visibility and pricing power, and as a result, we expect GFS to maintain multiples of premium valuations,” says Lipacis.

Analysts said the fab’s capacity was “sold out in 2022, 94% sold out in 2023, and about 77% (about $ 10 billion) of sales in 2022 and 2023 are secured by long-term contracts.” I am.

For many: 5 Things You Should Know About GlobalFoundries

Cohen analyst Krish Sanker said the company’s gross margins will double by 2025 with a strong backlog of GlobalFoundries’ single-source design, with a high reputation and a price target of $ 80. , Said that the combined annual growth rate of earnings per share could be 40%.

“As a trusted foundry of the US Department of Defense, our significant presence in the US, EU, and Singapore provides geographic diversity and makes it a unique play on global (formerly Greater China) technology investment themes.” Sankar added.

Of the 16 analysts who recently started reporting, 13 have a purchase rating, two have a pending rating, and one has a sales rating, according to FactSet. Of these, analysts’ average target price is $ 77.41, according to FactSet data.

GlobalFoundries’ first revenue report is expected to show the strength of low-tech chip design GlobalFoundries’ first revenue report is expected to show the strength of low-tech chip design

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