GlobalFoundries’ chipmaking machine unfazed by global disruptions

Records for revenue, gross margin in Q1 as others take a hit


While some chipmakers have reported a hit to their revenue due to COVID-19 lockdowns in China and other effects, New York-based GlobalFoundries said its business stood strong in the face of various global disruptions.

But that may sound like an understatement, given GlobalFoundries on Tuesday reported records for revenue, gross margin, operating margin, and net income in its first quarter financial results.

"Amidst the backdrop of sustained and robust demand, our global team of 15,000 strong continues to over-deliver despite inflationary, geopolitical and pandemic-related challenges," GlobalFoundries CEO Thomas Caulfield said in an earnings call.

GlobalFoundries' first-quarter revenue was $1.94 billion, a 37 percent year-over-year increase, while its gross margin was 24.2 percent, 1,720 basis percentage points higher than the same period last year. The biz is forecasting second-quarter revenue in the range of $1.95 billion to $1.99 billion, and it expects gross margin to slightly increase to 24.7 percent.

The record results were reported as chip manufacturers have grappled with supply challenges exacerbated by the pandemic over the past two years. Most recently, one of the more acute headaches have been lockdowns imposed by governments in China that have disrupted supply and demand for a variety of semiconductor companies.  

GlobalFoundries did see a hit in demand for silicon used for low-end mobile phones and PCs. This falls in line with broader industry trends, with lockdowns in China, inflation, and other factors weighing down the categories. But while this resulted in the company's personal computing business declining by 58 percent in the first quarter, its overall smart mobile devices business grew 28 percent [PDF].

Caufield added that the company was able to reallocate wafer supply for the low-end mobile phone market to other business.

The chipmaker saw fast growth with its communications infrastructure and datacenter business, which increased 80 percent; its home and industrial IoT business, which increased 55 percent; and its automotive business, which increased by a mega 170 percent.

This allowed GlobalFoundries to grow single-source chip wafer shipments by 48 percent in the first quarter from the same period last year. Caufield said a significant factor in this growth were long-term customer agreements.

"We remain fully sold out in 2022 and 2023, and we are increasingly confident that we can deliver the long-term business model we outlined and articulated in our roadshow," he said.

GlobalFoundries is selling out capacity even as it continues to increase its wafer manufacturing output. Caufield said the company grew wafer shipments 14 percent year-over-year in the first quarter, and he expects overall 2022 wafer output to increase by 10 percent. ®


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