Regarding the proposed IPO, GlobalFoundries noted that “Mubadala will continue to have substantial control” after the offering.
Semiconductor manufacturing company GlobalFoundries seeks an initial public offering (IPO) in the US. Already, the Abu-Dhabi-controlled company has submitted a prospectus to the US Securities and Exchange Commission (SEC) regarding the IPO. With the IPO, GlobalFoundries hopes to increase investments across its manufacturing sites in the US.
GlobalFoundries Seeks US IPO
GlobalFoundries is the third-largest semiconductor manufacturing company. Ahead of it is Taiwan Semiconductor Manufacturing (TMC) (NYSE: TSM) and Samsung (KRX: 005930). According to the prospectus, Mubadala investment company which owns 100 percent of GlobalFoundries, will list its shares in the Nasdaq and “continues to have substantial control after this offering.”
The Abu-Dhabi controlled semiconductor manufacturer has three plants in the US – one in Burlington, Vermont, and two in New York State. Also, GlobalFoundries has plans in Singapore and a separate one in Germany. In 2019, ON Semiconductor purchased one of the New York sites in East Fishkill. The purchased plant will be transferred off GlobalFoundries’ books in 2022.
GlobalFoundries moved its headquarters from California to Malta, New York, which is the home to its most advanced facility. When the headquarters moved, the CEO of the semiconductor company, Tom Caulfield, a native New Yorker, said that the company intends to invest $1.4 billion in chip factories in 2021. Additionally, Caulfield revealed that it is possible the company will double its investment in the coming year.
GlobalFoundries services several companies, but certain chipmakers are among its largest customers. The chipmakers include AMD Inc (NASDAQ: AMD), Samsung Electronics Co Ltd (KRX: 005930), Qualcomm (NASDAQ: QCOM), and Broadcom (NASDAQ: AVGO). The company’s top 10 customers account for nearly three-quarters of its revenue.
High Demand Results in Chip Supply Shortage
There was an increase in the demand for electronics such as computers, game consoles, and monitors when COVID-19 started last year. The high demand resulted in a supply shortage and underscoring the need for more capacity. At the same time, consumers began to transit to electric vehicles, which stressed the supply chain even more.
In the prospectus submitted on the 4th of October, the CEO noted:
“Although the supply-demand imbalance is expected to improve over the medium-term, the semiconductor industry will require a significant increase in investment to keep up with demand, with total industry revenue expected to double over the next eight to ten years.”
Last year, the company’s revenue declined by 17% to $4.85 billion as a result of a divested business. Before the company was divested, it pulled in $391 million in 2019. Another reason for the decline is because GlobalFoundries shifted its contract terms with a lot of its customers, which affected how and when it recognizes revenue.
GlobaFoundries’ revenue jumped 13% to over $3 billion, year-over-year in the first half of the year. Also, the company recorded a gross margin of nearly 11% for the first half of the year.
Regarding the proposed IPO, GlobalFoundries noted that “Mubadala will continue to have substantial control” after the offering.