Semiconductor manufacturer GlobalFoundries (GFS.US) is listed on NASDAQ this week, with a valuation of more than 250
Billion US dollars, because we can meet, the global chip shortage may continue until 2023 or later. Now GlobalFoundries
Open market investors need to be persuaded that the company is riding a wave of increasing demand for various microchips. After the pandemic-related supply problems subsided, this demand will not disappear, even if it costs billions of dollars. It can also improve profitability.
“I think for most of the next 5 to 10 years, we will chase supply rather than demand,” GlobalFoundries CEO Tom Caulfield said in an interview with CNBC. GlobalFoundries’ customers include Qualcomm, MediaTek, NXP Semiconductors, and Qorvo.
Automobile companies and home appliance manufacturers have been struggling to obtain enough chips to make products for months, and now the problem is spreading to electronics manufacturers and their suppliers. E.g,AppleThe company said it will miss more than $6 billion in sales this holiday season due to chip shortages.IntelIt also attributed its low CPU sales to the shortage of power supplies and network chips.
But the shortage does not apply to the most advanced chips using the latest manufacturing methods. On the contrary, what is short is what are usually called “traditional nodes”, that is, semiconductors that use old technologies to perform power management, connect to displays, or enable wireless connections.
Caulfield explained that these are the types of chips that the third-party silicon foundry GlobalFoundries manufactures specifically for its customers.
“This is the main part of the shortage because of insufficient investment in this area,” Caulfield said. “For me, we are very happy to allow larger companies to serve that single-digit nano market, and we will do our best in differentiated technologies.”
The profitability of the foundry business is related to the utilization rate of the factory or the speed of the foundry’s all-weather operation. GlobalFoundries has a utilization rate of 84% in 2020, but Caulfield said this is related to the slowdown at the beginning of the pandemic.
“I want to say that since August 2020, our revenue is not enough. Every day, we try to squeeze out as much as possible. I want to say that our current capacity utilization rate has exceeded 100%,” Caulfield said. It also pointed out that the company’s wafer production capacity will be sold out by the end of 2023.
Caulfield stated that GlobalFoundries made a strategic decision in 2018 to stop the development of TSMC andSamsungOther foundries are investing in cutting-edge chip manufacturing technology, but instead focus on providing their customers with less advanced but still essential semiconductors.
The business model of the foundry has a low profit margin and faces high labor, equipment and raw material costs. GlobalFoundries stated in its prospectus that its gross profit margin for the first half of 2021 is close to 11%.
Caulfield said that of the $2.6 billion GlobalFoundries raised on the open market, $1.5 billion will be used for capital expenditures to increase the ability to meet demand. It has factories in the United States, Germany and Singapore.
GlobalFoundries stock price closed down 1.3% on Thursday, lower than its initial price of 47 US dollars, and rose more than 5% on Friday to close at 48.74 US dollars.
The company is still held by Mubadala, the national investment fund of the United Arab Emirates, with more than 85% of the shares. In 2008, whenAMDWhen it spun off its manufacturing division (to become GlobalFoundries) and focused on chip design, Mubadala took over the company.
Caulfield said that Mubadala will reduce its ownership of GlobalFoundries in the next few years, but will continue to support manufacturers.
“Over the next five to six years, in a very orderly and transparent manner, [Mubadala] will take away some of their ownership in order to achieve more balance,” Caulfield said.