GlobalFoundries Files For IPO In The U.S. Amid Global Chip Shortage

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on pinterest
Pinterest
Share on pocket
Pocket
Share on whatsapp
WhatsApp
GlobalFoundries Files For IPO In The U.S. Amid Global Chip Shortage

Topline

GlobalFoundries, the world’s third-largest semiconductor maker that’s a unit of Abu Dhabi’s state-owned fund, is seeking to go public in the U.S., according to a prospectus filed with the Securities and Exchange Commission on Monday, as it aims to capitalize on increasing investments in the booming semiconductor industry, and expectations the industry would “double” in revenue in the next decade.

Key Facts

The company, which will list its shares on the Nasdaq, set $1 billion as a placeholder amount for its initial public offering in the U.S.

The company may seek a valuation of up to $25 billion in one of the most- awaited listings this year, according to Reuters.

GlobalFoundries makes chips that are used in vehicles for infotainment systems and brakes, to name a few, designed by its customers, such as Qualcomm, Broadcom, Samsung and Advanced Micro Devices.

The company recorded net revenue of $3.04 billion in the first half of this year, up nearly 13% from a year earlier, the filing showed, adding that its net loss dropped to $301 million from $534 million in the same period.

It has two plants in New York state (one of which was purchased by On Semiconductor) and one in Vermont, and a plant each in Germany and Singapore.

The chip maker was formed in 2009 when Mubadala purchased Advanced Micro Devices’ manufacturing operations, and later merged with Singapore’s Chartered Semiconductor Manufacturing Ltd.

Surprising Fact

GlobalFoundries’ headquarters is located in Malta, New York, and is 100% owned by Mubadala. However, it’s an exempted company, according to the filing. Mubadala incorporated GlobalFoundries in the Cayman Islands. As an exempted company, it is not subject to comply with some Nasdaq rules, like making up most of its board seats with independent directors.

What We Don’t Know

How much money the company is eyeing to raise. Also unknown is how much control Mubadala is planning to keep after going public in the U.S. However, in the prospectus, the company said Mubadala “will continue to have substantial control” after the offering.

Key Background

Leading up to the IPO filing, there were multiple reports that Intel Corp may purchase GlobalFoundries, which Chief Executive Officer Tom Caulfield denied. GlobalFoundries was concerned the acquisition could upset some of its biggest customers that are also Intel’s rivals, such as AMD, Reuters reported. Meanwhile, the pandemic has led to a surge in demand for chips, as customers are demanding more electronics, which has ultimately led to a global chip shortage. The shortage has had an impact across multiple industries, such as car makers that have slashed output, and pushed investors to pour investments into the market that is currently dominated by Taiwan Semiconductor Manufacturing Co. and Samsung Electronics. The industry is expected to see more investments, as the global semiconductor production shortage is expected to continue next year, and countries including the U.S. are seeking to reduce their dependence for chips on a small number of companies. GlobalFoundries said in the prospectus that it anticipates a “significant” increase in investment to keep up with demand and the industry revenue to “double” in the next decade.

Big Number

$75 billion. That’s the combined amount of investments Intel, Samsung Electronics and Taiwan Semiconductor Manufacturing Co. plan to inject in semiconductors this year, according to Reuters. In 2019, the three invested around $50 billion.

Further Reading

The Great Car-Chip Shortage Will Have Lasting Consequences (Wall Street Journal)

Why the Chip Shortage Is So Hard to Overcome (Wall Street Journal)

Chip-Threatened Automakers Sell Less, But Profit More (Forbes)

Source link

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on pinterest
Pinterest
Share on pocket
Pocket
Share on whatsapp
WhatsApp

Never miss any important news. Subscribe to our newsletter.

Recent News

Editor's Pick