Abu Dhabi-controlled GlobalFoundries files for U.S. IPO amid worldwide chip shortage

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  • GlobalFoundries on Monday said it plans to sell shares in the IPO and trade under the ticker symbol GFS.
  • GlobalFoundries was founded in 2008, when a branch of the Government of Abu Dhabi purchased AMD’s manufacturing operations in Dresden, Germany.
  • “With total industry revenue expected to double over the next eight to ten years, the semiconductor industry will need a significant increase in investment to keep up with demand,” GlobalFoundries said in its prospectus.

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GlobalFoundries, the world’s third-largest semiconductor foundry, is headed for a US IPO, as the Abu-Dhabi-owned company increases investment in its US manufacturing sites.

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in his catalog Filed with the SEC on Monday, GlobalFoundries said that Mubadala, the UAE state investment fund, will list its shares on Nasdaq and “continue to have substantial control following this offering.” Mubadala currently owns 100% of the company.

Global Foundries ranks third in the market for semiconductor fabrication after Taiwan Semiconductor Manufacturing (TSMC) and Samsung. The company has three US plants – two in New York state and one in Burlington, Vermont – as well as one plant in Germany and another in Singapore. One of the New York sites located in East Fishkill was Bought Will be transferred by ON Semiconductor in 2019 and from the books of GlobalFoundries next year.

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In April, GlobalFoundries Have been taken It is headquartered from Santa Clara, California to Malta, New York, where it has the most advanced facilities. The New Yorker CEO Tom Caulfield told Businesshala that month that the company plans to invest $1.4 billion in chip factories in 2021 and is likely to double its investment next year.

Formed in 2008, when a division of Mubadala bought AMD’s manufacturing operations in Dresden, Germany, GlobalFoundries counted chipmakers Qualcomm, Broadcom, Samsung and AMD among its largest customers. As a group, its top 10 customers account for nearly three-quarters of its revenue.

GlobalFoundries manufactures chips designed by its customers for use in contactless payments, battery power management, touch display drivers, and many other purposes. Intel announced in March that it plans to compete in the market and become a foundry for other companies, which is expected to invest $20 billion in US plants.

With the onset of the Covid-19 pandemic last year, demand for electronics such as laptops, monitors and game consoles increased, leading to a shortage in supply and underscoring the need for more capacity. Meanwhile, consumers are moving to electric vehicles with an emphasis on the supply chain.

“While 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,” GlobalFoundries said in its report. Said in the prospectus.

GlobalFoundries’ revenue fell 17% last year to $4.85 billion, but the company highlighted two main reasons for the decline. GlobalFoundries divested a business that brought in $391 million in 2019, and more broadly the company shifted the terms of the contracts with most of its customers, changing how and when it recognizes revenue.

In the first half of 2021, revenue climbed 13% from a year earlier to just over $3 billion.

Operating foundry is an inherently low-margin business, with high costs associated with labor, running the plant, and purchasing equipment and raw materials. For the first half of this year, GlobalFoundries reported gross margin, or revenue saved after accounting for cost of goods sold, of about 11%, a reversal from a negative margin a year earlier. Its net loss narrowed from $534 million to $301 million in the six-month period.

While GlobalFoundries has its corporate headquarters in the US, it is considered a “foreign issuer” because it was incorporated in the Cayman Islands by Mubadala. This means the company is exempt from some Nasdaq regulations that apply to U.S. companies, such as independent directors holding the majority of its board seats and requiring shareholder approval for certain equity compensation agreements.

GlobalFoundries did not say how much money it plans to raise or how much Mubadala will control after the offering. Whatever the level of ownership, investors will have to take the risk of buying into an Abu Dhabi-controlled company.

GlobalFoundries said in Risk Factors, “Mubadala will continue to have substantial control following this offering, which may limit your ability to affect the outcome of major transactions, including a change in control, and otherwise affect the current market price of our common shares.” Can do.” Why brochure?

Watch: GlobalFoundries plans to ramp up production to address chip shortage

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