Mubadala-backed GlobalFoundries' second-quarter profit softens due to market headwinds

The New York-based company’s net income stood at $237 million in the three-month period

GlobalFoundries raised nearly $2.6 billion in its IPO in the US in October 2021 on strong investor demand. Photo: Nasdaq

The US-based semiconductor manufacturer GlobalFoundries’ recorded an annual 10 per cent drop in its second-quarter net profit due to market headwinds that dented the growth of the global chip industry.

The company, which is owned by Abu Dhabi’s Mubadala Investment Company, posted a net profit of $237 million in the three months to the end of June, it said in a statement on Tuesday.

Its revenue in the April-June period stood at more than $1.8 billion compared to $1.9 billion in the same period last year. Earnings per share stood at $0.43 in the previous quarter.

“In the second quarter, GF delivered financial results at the upper end of the guidance ranges we provided in our May earnings release,” said Thomas Caulfield, president and chief executive of GlobalFoundries.

Thomas Caulfield, president and chief executive of GlobalFoundries. Reuters

“Despite the cyclical headwinds impacting our industry and continued macroeconomic uncertainty, we delivered consistent financial performance … GF’s global teams diligently managed costs, while driving solutions to meet our customers' needs, across several critical growth markets,” Mr Caulfield said.

Shares of the company, which went public in October 2021, were trading 1.06 per cent down at $58.52 at 12.20pm New York time (8.20pm in the UAE) on Tuesday. The stock has increased 13.20 per cent since the start of the year and the market capitalisation of the company stood at $32.25 billion.

In its third-quarter guidance, the company expects its revenue in the range of $1.82 billion to $1.87 billion. The net income is expected between $204 million and $262 million.

The global semiconductor market, which was upended by Covid-induced supply problems in the past few years, is projected to drop 3.6 per cent in revenue in 2023 on poor consumer demand and a weakening economy, according to a May report by US research company Gartner.

Semiconductor revenue is forecast to reach $596 billion in 2023, down from the previous prediction of $623 billion, it said.

Semiconductors are important parts in electronic devices and, particularly, in electric and self-driving vehicles. They are used to manage functions such as navigation and parking, and for monitoring engine performance.

GlobalFoundries was established in 2009 after Mubadala acquired the semiconductor manufacturing assets of Advanced Micro Devices. After the acquisition, GlobalFoundries started making chips for other companies in addition to AMD.

In October 2014, GlobalFoundries acquired International Business Machines’ microelectronics division with manufacturing facilities in New York and Vermont.

GlobalFoundries IPO

GlobalFoundries' chief executive Thomas Caulfield at the start of trading of the company's shares on the Nasdaq, on Thursday, in New York. Photo: Screengrab

In October 2021, GlobalFoundries raised nearly $2.6 billion in its initial public offering in the US amid strong demand from investors.

The listing in New York was a landmark transaction for a technology company backed by a sovereign wealth fund from the Middle East.

The company generated $146 million of free cash flow in the last quarter that can help the company expand operations and invest in additional assets, it said.

Its cash, cash equivalents and marketable securities stood at $3.3 billion during the three-month period, while total assets reached more than $17.8 billion as of June 30.

In June, GlobalFoundries and Lockheed Martin, the security and aerospace company, announced collaboration to advance the US semiconductor manufacturing to boost domestic supply chains for national security.

The US Department of Defence has accredited GlobalFoundries’ manufacturing facility in Malta, New York, as a category 1A trusted supplier with the ability to manufacture secure semiconductors for a range of aerospace and defence applications.

Updated: August 09, 2023, 3:12 AM