Abu Dhabi-controlled GlobalFoundries recordsdata for IPO amid chip scarcity

Malta, NY. within the GlobalFoundries campus

Mary Thompson | CNBC

GlobalFoundries, the world’s third-largest semiconductor foundry, is headed for a US IPO, because the Abu-Dhabi-owned firm will increase funding in its US manufacturing websites.

GlobalFoundries stated in its Securities and Change Fee prospectus on Monday that the UAE State Funding Fund, Mubadala, will checklist its shares on Nasdaq and “proceed to have substantial controls following this providing.” Mubadala at present owns 100% of the corporate.

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The corporate ranks third within the semiconductor fabrication market after Taiwan Semiconductor Manufacturing (TSMC) and Samsung. The corporate has three US crops – two in New York state and one in Burlington, Vermont – in addition to one plant in Germany and one other in Singapore. One of many New York websites, situated in East Fishkill, was bought by ON Semiconductor in 2019 and can be moved from the books of GlobalFoundries subsequent yr.

In April, GlobalFoundries moved its headquarters from Santa Clara, California to Malta, New York, the place it has its most superior facility. The New Yorker CEO Tom Caulfield informed CNBC that month that the corporate plans to speculate $1.4 billion in chip factories in 2021 and is prone to double its funding subsequent yr.

Shaped in 2008, when a division of Mubadala purchased AMD’s manufacturing operations in Dresden, Germany, GlobalFoundries counted chipmakers Qualcomm, Broadcom, Samsung and AMD amongst its largest prospects. As a bunch, its high 10 prospects account for practically three-quarters of its income.

GlobalFoundries manufactures chips designed by its prospects to be used in contactless funds, battery energy administration, contact show drivers and plenty of different functions. Intel introduced in March that it plans to compete out there and turn out to be a foundry for different firms, which is predicted to speculate $20 billion in US crops.

With the onset of the Covid-19 pandemic final yr, the demand for electronics comparable to laptops, screens and recreation consoles elevated. This led to a provide crunch and underscored the necessity for extra capability. Shoppers are additionally turning to electrical automobiles, including stress to the provision chain.

“Whereas the supply-demand imbalance is predicted to enhance within the medium time period, the semiconductor trade would require a major improve in funding to maintain up with demand, with whole trade income anticipated to double over the subsequent eight to 10 years,” GlobalFoundries stated in its report. Stated within the prospectus.

GlobalFoundries’ income fell 17% final yr to $4.85 billion, however the firm highlighted two principal causes for the decline. GlobalFoundries divested a enterprise that introduced in $391 million in 2019, and extra broadly the corporate shifted the phrases of the contracts with most of its prospects, altering how and when it acknowledges income.

Within the first half of 2021, income grew 13% from a yr earlier to greater than $3 billion.

Working foundry is an inherently low-margin enterprise, with excessive prices related to labor, operating the plant, and buying gear and uncooked supplies. For the primary half of this yr, GlobalFoundries reported gross margin, or income saved by value of products offered, of roughly 11%, a reversal from a adverse margin a yr earlier. Its web loss narrowed from $534 million to $301 million within the six-month interval.

Whereas GlobalFoundries has its company headquarters within the US, it’s thought-about a “overseas issuer” as a result of it was included within the Cayman Islands by Mubadala. This implies the corporate is exempt from some Nasdaq rules that apply to U.S. firms, comparable to unbiased administrators holding the vast majority of its board seats and requiring shareholder approval for sure fairness compensation agreements.

GlobalFoundries didn’t say how a lot cash it plans to boost or how a lot Mubadala will management after the providing. Regardless of the stage of possession, traders should take the chance of shopping for into an organization managed by Abu Dhabi.

GlobalFoundries stated in Threat Elements, “Mubadala will proceed to have substantial management following this providing, which can restrict your means to have an effect on the end result of main transactions, together with a change in management, and in any other case have an effect on the present market value of our widespread shares.” Can do.” Why brochure?

watch: GlobalFoundries plans to ramp up manufacturing to handle chip scarcity

GlobalFoundries planning to ramp up production, address chip shortage: CEO

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