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Globalfoundries files for IPO

Deal could value chip maker at $25bn

GlobalFoundries has filed for an initial public offering in the United States.

Abu Dhabi-based Mubadala, which owns GlobalFoundries, confirmed on Monday what has been rumored for a while: the contract chip maker is going to be publicly listed – on the Nasdaq – and is looking to raise at least $1bn from the move. The IPO could value the biz at around $25bn, it was reported in August.

GlobalFoundries – which moved its HQ from Silicon Valley to New York in April – has manufacturing facilities in the US, Asia, and Europe, with its most advanced being the 12nm node, which is used for components in PCs and other electronics. It famously gave up in 2018 on going any smaller than that, leading to it breaking promises to make 10 and 7nm chips for IBM. Big Blue sued GlobalFoundries this year as a result.

GlobalFoundries' market capitalization was around $9.1bn on June 1, according to a prospectus submitted this week to America's financial watchdog, the SEC.

The company declined to comment on how it will use the funds collected from the IPO. The prospectus hints at expanding manufacturing operations, which can cost billions, plus investment in new technologies as well as in research and development of compounds that include silicon germanium and gallium-nitride-on-silicon.

Chip manufacturers, investors, and nations from the United States to those in Europe are pouring billions into expanding their semiconductor manufacturing capabilities and capacity. Chip giants are meanwhile making bank from the global shortage of components, and demand isn't predicted to fall away for years.

Intel last week initiated building two factories in Chandler, Arizona, in which it is investing $20bn. TSMC is spending over $100bn over the next three years as it cranks up operations to meet growing demand.

It's believed GlobalFoundries filed for an IPO after buyout talks with Intel for $30bn failed; GlobalFoundries denied this was the case. GlobalFoundries was created in 2009 after AMD spun out its manufacturing arm to go fabless, and the operations moved under Mubadala's control. In 2014, IBM sold its microelectronics business to GlobalFoundries.

GlobalFoundries in the second quarter of this year was the fourth largest foundry by revenue behind TSMC, Samsung, and UMC, with a 6.1 per cent market share, according to TrendForce.

The company's revenues for the first six months of 2021 were $3bn, up 13 per cent from the year-ago period, and reduced its losses from $534m to $301m. GlobalFoundries had $805m in cash on hand, and debt of $2.18bn. ®

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