The News: GlobalFoundries (NASDAQ: GFS) reported revenue of $1.845 billion for Q2 2023 ended June 30, 2023 in announcing its preliminary Q2 2023 financial results. Read the earnings Press Release on the GlobalFoundries website.
GlobalFoundries Q2: Robust Performance in the Face of Macro Concerns
Analyst Take: GlobalFoundries (GF) reported revenue of $1.845 billion for Q2 2023 ended June 30, 2023, delivering financial results at the upper end of the guidance ranges that the company provided in its May earnings release. Key GF Q2 2023 financial highlights include:
- Gross margin of 28.8% and adjusted gross margin of 29.6%
- Operating margin of 14.9% and adjusted operating margin of 18.3%
- Net income of $237 million and adjusted net income of $297 million
- Adjusted EBITDA of $668 million
- Cash, cash equivalents, and marketable securities of $3.232 billion
GF CEO, President, and Director Thomas Caulfield shared that despite the cyclical headwinds impacting the semiconductor industry and ongoing macroeconomic uncertainty, the company delivered consistent financial performance and generated $146 million of free cash flow (FCF) in the quarter. Accordingly, GF’s global teams are focused on managing costs, while developing differentiated solutions that address its customer needs, across several key growth markets.
GF’s top Q2 2023 business highlights included collaborating with Lockheed Martin to boost US semiconductor manufacturing and to bolster the security and reliability of US supply chains for national security systems.
From our view, the alliance with Lockheed Martin highlights key innovations and manufacturing capabilities such as 3D heterogenous integration for optimized chip packaging that improves performance, silicon photonics for low-power and high-speed data transport, and gallium nitride (GaN) on silicon to help chips work at higher temperatures. 3D heterogenous integration is being fueled by an expanding demand to integrate multiple devices of various functions, such as ASICs, CPUs, GPUs, FPGAs, microsensors, photonics, and RF components, into a single package.
The collaboration between GF and Lockheed Martin also directly supports the CHIPS and Science Act’s goals of increasing traceability, provenance, and onshore production of critical semiconductor technologies that bolster national and economic security and domestic supply chains. We find the timing of the collaboration to be momentous since disruptions in the semiconductor supply chain can have devastating effects throughout the national security fabric as well as the domestic and global economy.
Also, the US Department of Defense accredited GF’s advanced manufacturing facility in Malta, New York as a Category 1A Trusted Supplier with the ability to manufacture secure semiconductors for a range of critical aerospace and defense applications.
GlobalFoundries’ Q2 2023 Financials: Key Takeaways
We find that GF has the market vison and national security credentials key to maintaining the company’s continued disciplined prioritization of ensuring its global teams are focused on managing costs, while developing differentiated solutions that directly fulfill customer needs. Overall, GF delivered a robust performance given that China and other global recessionary concerns are looming, interjecting a bit of caution in the company’s guidance. As a result, longer term, we believe GF is well positioned for growth with both broad geographic manufacturing capabilities and process specialization across important legacy nodes.
Daniel Newman and his co-host of The Six Five Webcast, Patrick Moorhead of Moor Insights and Strategy discussed GlobalFoundries earnings in their latest episode. Check it out here and be sure to subscribe to The Six Five Webcast so you never miss an episode.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
GlobalFoundries and Lockheed Martin Put the National Security Into the US Chipset Supply Chain
GlobalFoundries Q1 2023 Financials: Meeting Macro Challenges to Assure Profitable Path