An Insider’s Look at the Current Semiconductor Market – The Six Five Insiders Edition

On this special episode of The Six Five – Insiders Edition, hosts Patrick Moorhead and Daniel Newman are joined by GLOBALFOUNDRIES CEO Tom Caulfield to discuss the success GLOBALFOUNDRIES has had, and how chipmakers are responding to the current global crisis and where the semiconductor market is poised for growth.

In our conversation, Tom, Patrick and I explored the bold pivot GLOBALFOUNDRIES made in the last 18 months. GF decided to stop making the 7nm node after realizing they were not keeping up with market competition. Tom shared that the company refocused on specialty, feature-rich offerings, enabling customers to specialist in their marketplace.

What it means to be a specialty fab. Tom explained that it has become increasingly expensive to develop single digit nanometers and it’s almost cost prohibitive in some market segments. Customers needed a way to create value and innovation by staying on existing nodes. This requires the feature-rich technology. You need to have best-in-class RF, best-in-class low power, best-in-class digital performance, all balanced in one technology node, supporting IPs and interfaces. This is what GF has been focused on delivering for the last 18 months.

GF’s current position in the semiconductor market. Tom shared that when GF began, no one cared about their goal to be a global company. It wasn’t a feature. In 2019, governments started to understand the importance of semiconductors. The idea of making semiconductors indigenous to the countries or regions they are in, took off — giving GF an excellent position in the market. Now, in the COVID era, GF’s global footprint which used to be just nice to have, is now a key feature.

Utilizing public-private partnerships. We also discussed the real wins that come from private-public partnerships. State governments, like New York, invest in manufacturing plants to help the US be more competitive with the world.Tom shared that the Fab 8 facility in Saratoga County, New York, had roughly a billion dollar investment from the state. GF invested over $13 billion. Now this plant employs over 3000 people and has an enormous economic impact on the region. When done right, these private-public partnerships give the US the trifecta — supply chain mitigation, national security, and economic return.

Where we are going next. Finally, we explored what the future holds for the semiconductor market. COVID-19 has accelerated many technologies and digital transformations. Tom believes — as do we — that it’s here to stay. The US government is looking to make more investments in semiconductors to create the same level of economic activity that other countries have.

If you’d like to read more about GLOBALFOUNDRIES and the semiconductor industry, be sure to check out their website or check out the full episode below. While you’re at it, be sure to subscribe so you never miss an episode of The Six Five Podcast.

Disclaimer: The Six Five Insiders Podcast is for information and entertainment purposes only. Over the course of this podcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.

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Patrick Moorhead: Welcome to a special edition of the Six Five Insider podcast. I’m Patrick Moorhead with Moor Insights & Strategy, and I am joined by my very famous cohost Daniel Newman with Futurum Research. This is a special Insider Edition, and before I introduce our guest, I want to ask Daniel, how the heck are you, buddy?

Daniel Newman: I’m doing good. When you start off with something like the very famous to someone who hardly considers himself very famous, it’s a great way to start my day. So yeah, it’s beautiful, Pat. We’re in the middle of June, 2020. I always like to timestamp these things for people, because we know that our audience listens to these shows for months and years and I love these Insider additions. We’ve had some of the most prestigious, interesting, innovative, and intelligent executives, and the one we’re going to have on the show today should not let you down. But I also like the fact, because you know he’s listening in the back room right now, that we’re putting a little pressure on him straight away, because some of the people we’ve had recently on the show have been just terrific guests and I expect no different today.

Patrick Moorhead: Well, I love to have semiconductor execs on because it really reiterates what you and I always talk about, which is people love to say software is eating the world, and we contend that, okay, it is, but you know what? Semiconductors are eating the world, and they are sexy right now. If you look at what’s going on, and it doesn’t matter if it’s endpoints all the way up to the biggest supercomputers, semiconductors is making it happen.

So with that, I would love to introduce the chief executive officer of GLOBALFOUNDRIES, Tom Caulfield. Tom, thanks for coming on the show. How are you doing?

Tom Caulfield: Hey guys, Daniel, Patrick, thanks for having me. I really appreciate you taking an interest in GF and our story. I think we have a pretty interesting story to tell.

Yeah, software maybe eating up the industry, but semiconductors are enabling the industry.

Daniel Newman: That’s really funny you said that, because between the two of you, everyone talking about eating, I wrote a market watch piece early in the year, Five Predictions, and this was right before we had the global pandemic that completely shifted how everything was going to take place for the rest of the year. But I said, my number one prediction is semiconductors will eat the world. It appears that between the three of us, we’re all talking about something about semiconductors, and maybe we need to go out to dinner. It’s been a while.

Patrick Moorhead: Yeah. So as insiders, we know everything about GLOBALFOUNDRIES. Well, not everything, because we’re not inside, but Tom is. But Tom, for those who aren’t necessarily familiar with GLOBALFOUNDRIES, can you give us just a quick rundown on the company?

Tom Caulfield: Sure. It’s always good to put things in context. To talk about the company, we should just talk a little bit about how the industry works. There are hundreds of semiconductor companies. By far more of them are either fabless companies, where they just do design and have other companies like GLOBALFOUNDRIES who have foundries and manufacture with them. Some of them are IBM’s where they do their own products and have their own manufacturing. And some are hybrids. They do some outsourcing of their manufacturing and some insourcing of the manufacturing.

GLOBALFOUNDRIES is a pure play foundry. We make semiconductors, logic semiconductors, for all our customers. Over 200 of them. This interesting space has grown over the last 30 years from essentially zero to about a $65 billion TAM.

Interesting enough, there’s only five players of any scale in this space. TSMC, SMIC, and UMC, Samsung, who’s kind of a hybrid pure play foundry, and then IBM, and then GLOBALFOUNDRIES. Last year, GLOBALFOUNDRIES was number two behind TSMC.

The geographic footprint of that is pretty interesting. Three of those five companies, UMC, SMIC and TSMC are from greater China. Clearly Samsung, more of a global footprint. Based in Korea, but has footprint in the US. Then there’s GF with a big footprint in the US, a great presence in the European Union, and of course, a big facility in Singapore. So we operate on three continents.

So our job is to enable the world with these important chips that make all that software and all the other products run on them.

A little bit more about the size of this market. The way I think about it is we sit in an 85 trillion world economy, at least pre-COVID, enabled by a $2 trillion electronics industry. Electronics are at the core of almost everything in every industry. About a half a trillion of a semiconductor industry feeds that, and a $65 billion foundry industry is the core of that.

In that 65 billion, we are focused on 75% of that, about $47 billion. We’ve conceded 25% of that market that some call leading edge. I’d rather call it single digit nanometer with a small transistor size and speed. It really fits in this high digital speed application space. But more and more the broader envelope of semiconductors enabling system on chip, and certainly 5G, next generation 6G wifi, is in that 75% sand we play in, which is about a $47 billion market.

So that’s a little context on GF, where we play, and our role in the industry.

Daniel Newman: Tom, you alluded to this a little bit, and by the way, congratulations on the success. The focus sounds like it’s going to really pay off. These days so many companies want to put their hands in everything, want to play in every space, and it sounds to me like GF, GLOBALFOUNDRIES, has made the call to say, hey, we’re going to be really focused. We’re going to dial in on those areas, 5G, IOT, automotive, RF, and it’s probably going to pay off. In fact, I was tracking, it looks like it’s been an incredible run for about the last year and a half. So much has happened. So many positive things have happened.

Like I said, you started alluding to this, but share a little bit more. Because again, the world really needs to get to know GLOBALFOUNDRIES. It’d be great to hear a little bit about that success that you’ve been able to achieve in the last 18 months.

Tom Caulfield: Well, I appreciate the kind words. Success is you’re only as good as your last day, but I think it’s more about the journey we’re on and the trajectory we have our business on with this incredible team we have here.

Yeah, let’s start around 18 months ago or so. It’s interesting when I take the helm of the company with a different perspective I was given on what customers thought broadly about GF. I was focused in the more or less the older strategy of the company, which was to make all our investments at this single digit nanometer type technology, and then both in R&D and in manufacturing.

When I started to spend a lot of times with our customers, I realized two very important things. The few customers that would even consider using us at these seven nanometer type of nodes, they came in two flavors. One flavor was while we use this type of technology heavily in our products, you tell me you’re always going to be behind, you just don’t have the scale. Two, because of your scale, the kind of capacity you could put on, we, the customer, would never be able to buy enough waivers from you to return on the investments we would need to make the design into your platform. So while the node is interesting to us and important to us, your version of it, or you doing it, is not at all.

In fact, a very important executive in very big company in this industry said point blank to me, “Tom, if you’re doing a seven nanometer for us, please don’t. In fact, you’re scaring me because there’s other things you can be a lot better supplier to us if you’d focus more on that.” That, for me, was the beginning of, okay, we need a new strategy here.

Then when I visited a lot of our longer term customers who really came to GF from our Singapore team that was former charter, how we became so important to them, this idea of specialty, by taking nodes and creating features and making them feature rich, enabling devices and capability, high voltage, low voltage, special IPs, that allowed them to specialize in winning their marketplace. What I loved about those customers is how much they bet through sole sourcing with us their franchise on us, but we’re coming increasingly nervous. You know, you’re not spending the R&D in your roadmap focused on where our products are. Will you lose your ability to be differentiating for me as a customer?

And two, Tom, you can’t just keep having a net cashflow business, net negative. We need you for five years, ten years, twelve years. We’ve got to know you’re going to be around for a while.

It was the confluence of those two things that we’re spending 90, 95%, of our CapEx and 90% of our R&D was becoming less and less relevant even to the customers we were doing that for and making us a lot less relevant to the customers who we were going to build our business on.

So I get a lot of commentary that was kind of a bold call for GF to make that pivot. I have to tell you quite honestly, it was a very easy call. It was just too obvious. I think what’s bold is trying to figure out what you’re going to do to be successful. Anybody could wake up in the morning at the crack of noon and make sure no one’s doing single digit nanometer R&D. It’s what you are going to do.

So once we began this journey to say we don’t have to look too far, we’ve been doing it. Two thirds of our revenue was specialty foundry. We just had a double down in that space and continue to do it. So we launched this whole campaign, this strategy, roughly September of 2018.

For me, there were a lot of things we had to get done in 2019. The overarching message to the industry, our customers, our suppliers, and probably to our team, was we’re going to have to go reestablish our relevance in this industry. We had to go show that this strategy was in everybody’s best interest, not just GF, mostly for the whole entire industry, and in particular to our customers.

So the point for us was to go out and demonstrate the financial viability and sustainability of our business model while still being able to invest. I’m happy to tell you that in 2019, we produce well over 1.2 billion of EBITDA after we invested $600 million in R&D and $700 million in CapEx. This is a company that’s about five and a half billion dollars in revenue.

So you have real proof of life. In fact, we generated free cash flow that we began to start paying proceeds to our shareholders as part of their return on the investments they made. All of that is really about demonstrating viability of an operating model, that you can grow your business through the capital investments and have a sustainable model where you could fund yourself to do that and be profitable.

The second thing on that is as we went through the year, we were getting very big clients, and then some of our midsize clients, asking us to do more and more business with us that were sole sourced. In fact, one client was asking us maybe the only way we can consider using GF was if you were willing to license something I could only buy from you, sole source from you, to another one of your competitors. The answer for me was, no, you’re just going to have to get comfortable with GF that we can do this for you.

Over the course of 2019, I’d like to say a funny thing happened on the way to the forum. Not only did we become relevant to this industry, I can argue we became vital to this industry by the amount of sole source business. Sole source means it’s not, well, I take my design, I’ll tweak it a little bit, and I’ll go to another fad. I’m talking about I have to rip up my design, start from scratch, and find a completely different technology offering. So this is a two year kind of venture, and companies can’t wait two years.

We have a huge position in 5G handsets. I will always be very bullish to say 5G is not going to happen because of GF, it just will not happen without GF. Technologies we have in the FEM, the front end module, in the 8SW and 45RFSOI and 22FDX, you can only get them from GF, and companies, large and small, have bet their entire franchise on us delivering those for those. If that’s not vital, I don’t know what is.

There’s handsets, very famous handsets, in the industry where we have as much silicon in all the other specialty applications that we provide our manufacturing services to than the application processor chip that’s on those leading edge, single digit nodes.

So I ask, who’s more vital, right? Just because you’re not the application processor, but if you’re enabling all these other features, I don’t think it’s a debate about who’s more vital. I think that the debate is, well, obviously both of these things need to be there to make that handset vital to end users.

Patrick Moorhead: So, Tom, I’m really glad you pointed out the 75 versus 25, because if I look at the amount of ink that gets generated, it’s pretty much on the top 5% of bleeding edge, which is a shame. But I appreciate you pointing out, particularly on the handset, what’s really inside and where it’s done.

Tom, can you put a little bit finer point on specialty? What does it mean to be a specialty fab? Why is it so special to be a specialty fab and maybe even list a couple of the areas that you specialize in?

Tom Caulfield: First of all, I think it’s more relevant today than it’s ever been before, and I’ll put it in a context of Moore’s law in a second. But when you say there’s a lot of ink being printed, you’re right. There’s a lot of ink being printed in the industry, but it takes a lot of green ink dollars to do some of this leading edge stuff, and that’s probably why that gets a lot of ink. But that same thing is why specialty is becoming so important, because of the cost to do single digit nanometers. Both to develop the technology, put the capacity online, and for customers to design into that technology. It’s very expensive. So it becomes cost prohibitive in certain market segments that independent of the speed of the device and the performance of the device, the market just can’t support that type of cost.

This has been kind of the journey of Moore’s law over the last 15 years. Today, we say the foundry 10 is only 25% in that single digit, what the industry would call leading edge. 10-15 years ago, that was a much higher number. 60-70%. Everybody followed that trend going down and taking a node and making it a platform and going to the next node, and less and less customers and application space have been needing to leverage that path forward. They’ve found ways of creating value and innovation staying on existing nodes, but creating and making more platform.

So what’s specialty? You need high voltage to do power management, you need high voltage to do displays. You want to integrate RF connectivity and do digital processing. You want to do edge computing and AI for an image sensor that you don’t want to have to go to the cloud for every piece of data collect, so it could do a certain amount of the computation at the device before it goes to the cloud for higher level are computing.

So all of this requires feature rich technology. You need to have best-in-class RF, best-in-class low power, best in class digital performance, all balanced in one technology node and supporting IPs and interfaces. So that makes it very special, and for every application, every segment, every device group in those segments and every device, there are things that are required to be special to be successful.

When we think about a $47 billion SAM that GF plays in being a five and a half billion-dollar company, we could be pretty selective where specialty has more value to our customers than where it doesn’t. It’s not we’re hitting our head on a hard ceiling of opportunity for us.

Daniel Newman: Yeah, no. It’s a really exciting opportunity, though, for you, Tom. I mean, as we go into next of technology, you’re absolutely right, putting more system on chip, being able to address the specific needs of those customers, that’s all really, really important differentiation that’s going to help drive your company into the future.

You alluded to something earlier in our discussion that caught my attention. You talked a little bit about COVID and you talked about the size of the markets that proceeded the global disruption that we’ve faced this year. That’s not been it though. We’ve had the pandemic. We’ve had a trade relations. We’re now dealing with a global equality and injustice movement. The chip industry, if we were right early in this conversation in talking about how it’s eating the world and changing the way everyone does everything, then these big global macroeconomic movements are certainly going to impact the chip industry.

I’d love to hear a little bit from you sitting in your seat, how you’re sort of seeing the chip industry being impacted by all of these global events and these unexpected and unprecedented moments that we’ve faced in the year 2020. Which, by the way, I’ve just got to ask, is it over yet?

Tom Caulfield: Well, this is a question well beyond the time limit of this interview. But let me offer you a couple of thoughts. First, on the most recent one of these events, I haven’t thought much about the impact of social unrest caused by intolerance. I’ve been more focused on how do I be a better person in this front and what can I learn from it and how do I make GF a better company? I’m not sure I can comprehend the calculus in what it means to our industry or not. But on the other two, I think I have a lot better sense, about the trade wars, the relationship with China, this idea of decoupling, and then, of course, what COVID-19 did.

So let me start with how I could maybe weave the story of GF into the picture here. When GF was born 10 years ago, Patrick you know this better than anybody else as a former AMD disciple, we were spun out of AMD and we became the world’s independent foundry. The tagline was GF is going to be the world’s first global foundry. It was met in the industry with a resounding who gives a damn? There’s a worse word I could use, but since we’re taping I’ll just say who gives a damn? It was because everybody didn’t value that. They didn’t see that as a feature. In fact, having a global footprint is viewed as, well, you cannot get the concentration and scale locally in one ecosystem and it’ll always be tougher to compete.

Then all of a sudden 2019 rolls around and this idea of countries feeling semiconductors are really, really important, not only for their own security, but for economic wherewithal, and in particular, the US wanting to make sure that it maintained its US-based technology leadership, it created some of this, we need to make sure we have a semiconductor industry indigenous to each country. So the European Union became very focused on this, the United States, of course, Singapore was one of the early adapters, really, realizing they needed that capability in their country and were some of the early movers to create co-investments with the private sector to create that industry there.

So we had coming into 2020, I would say a significant tailwind because of our global footprint. It started to look like, hey, maybe there is some value to this. I told our team that if we didn’t make our pivot and we were not going from relevant to vital to this industry, it doesn’t matter how strong the wind is, if your sailboat is moored and all of the sheets are furled, you’re just buckle down. I think it’s fair for us to say we have a nice sized jib and maybe even a genoa out there right now, and our goal for the next couple of years is make this thing a spinnaker so we can really capture all of this tailwind.

But 2020 rolls around and COVID comes into play. Now it’s not just governments seeing the risk in the supply chain, it’s businesses seeing and saying how did we allow ourselves to become so dependent and create so many single points of failure in our supply chain, to be so concentrated. This idea, I guess, maybe, of 45 consecutive quarters of growth of the economy since the great financial crisis, it became efficiency, efficiency, efficiency.

I’ve got to tell you, the role of the CEO would be so much simpler if all you had to do was to solve for one thing. You always have to have balanced score cards at any business, and I think all of us as an industry, and GF is no exception, have allowed ourselves become too focused on one dimension of efficiency and not thinking about balance in supply chain.

So now, GF’s global footprint that used to be considered at best nice to have, but not interested, is now a key feature for what we do. We have designs with some of our customers that they could take out to GF and we can build it in continents away. We can build our 40 nanometer embedded memory technology in our Fab 7 Singapore facility, we could build it in our Fab 1 Dresden facility. Complete risk mitigation, very low cost of R&D and introduction, because it’s the same company, but the footprint is global to balance some of those suppliers.

So I think the world is never going to be the same. I think sovereignty in technology, this idea of decoupling, is here to stay. It doesn’t mean I’m a proponent of it, it just means I have to deal with it. I think it’s very important, though, for the semiconductor industry to thrive, it needs access to all markets, and the best way for the US to protect its technology is not to limit US companies from selling our technology in the form of products around the world, but to stay ahead so we would be the best ones to sell it.

But that’s here to stay. I don’t think that’s going to change. I think in around the boardrooms in semiconductor companies, around the CEO, the conference rooms, they’re talking what mitigation plans we’re going to put. We cannot take the chance of another world event that’s outside of our control, whether nature causes or a government causes it, that puts our supply chain at risk.

Patrick Moorhead: Yeah, it is ironic. People thought your global footprint was a bit negative, but as you said, really where we’re at right now is we’re changing from a single source supply chain, which is going to be replaced with multiple sources and redundancy, and I think that fits right into your original strategy a decade ago.

How about the US? What is the company’s opportunity to leverage its US footprint given everything that’s going on here? I saw you on Bloomberg last night talking about a lot of these things.

Tom Caulfield: Yeah, first of all, I think there is a huge opportunity for us, and for good reason. We’ve put over $15 billion of investment in the US in manufacturing alone, and so we’ve been a proponent of having a US footprint as part of our mix. Now historically, the co-investments that were made in the US to attract manufacturing and keep manufacturing in the US were offered at the state level, and they were always targeted to be competitive with other countries were doing. Not states and countries, but countries were doing. The US central government, or the USG, would stay out of the mix in that.

But present events, seeing how important the economy and national security, or the semiconductor industry, is to that dimension, and the fact that only 12% of the world’s manufacturing capacity exists in the US and the US is where this technology was born, plenty of money we put into R&D as an industry, something like 18% of revenue goes into R&D. But what’s the point of doing the R&D by itself if you’re not enabling what the end game of R&D is. It’s products.

Still for us, we believe these public-private partnerships are real wins. They will level the playing field to make manufacturing in US competitive with the rest of the world. I hate when people call them incentives because they’re not. Incentives makes it feel like it’s some kind of extra help or corporate welfare. They’re not at all. When they’re done right in the private partnership and they’re highly leveraged, they’re really investments. They invest because they create jobs which creates economic activity in a region.

You don’t need to look too far from our Fab 8 facility in Saratoga County, upstate New York. The state put roughly a billion dollars into investment there. Our investors and GF put 13 billion in. We were originally only supposed to produce 1200 jobs and only invest three billion alongside the state’s billion. Today we’re 13 plus, we employ 3000 employees at that site alone, our payroll is $300 million, and the economic imprint of that, or the halo around that, is enormous for the region.

So this is one of these situations done right. The US will not only get the supply chain mitigation, not only get the national security, but they get the trifecta here. They will get the economic return of these investments when they’re done right. GF is in a really good position to be part of that partnership play and to build out our facilities in the US, accelerate our growth, and leveraging this opportunity in partnership with the US government.

Patrick Moorhead: I have to tell you, Tom, I’ve heard that before, but I’ve got to tell you, I’ve forgot it. It’s an investment, not a giveaway. I want to make sure that our listeners pay close attention and rewind the last minute of what Tom said. Essentially, the money that the state put in has now paid back in numerous ways, hence an investment and not a giveaway.

Tom, if I look at where our tax dollars are going as a US taxpayer here, and I apologize because I’m editorializing, I’m not seeing the big payback here. But we just need more of these, and I hope the US does the right thing.

Tom Caulfield: It’s very interesting, because we always had this expansion play at the site of Fab 8. It was from day one. It was always built with the capability to expand and it’s called 8.2. So Fab 8 and then 8.2. I can’t tell you how many times I get asked when are we doing 8.2, and the state’s saying we’ll be right there with you again. Because they don’t get investments like this with these kinds of returns. It was like you going to a broker, we’ve got you a 30% return. You’d say, what are we investing in next?

So when you have success on a model, it’s how do you go replicate that success? I think that’s what we’re looking at right now, where we’re going to a much bigger balance sheet with the USG to go really double down in this space and getting that trifecta I talked about. Mitigation, national security, and great economic returns.

Daniel Newman: I think that’s exactly what we need here. You actually hit on something that… By the way, we talked about macroeconomics last time I chimed in. What a massive topic right now about bringing jobs back to the US, the supply chain disruption that we’ve gone through. I mean, in a lot of ways, it’s a testament to what can be done. It’s an important testament because we’ve been doing this outsourcing experiment for the past couple of decades, but the conversation’s pivoting right now. So you really are sort of a proof of concept. Right now, when we’re talking about payrolls and you’re talking about expanding payrolls and the importance of creating stability here in the states, these kinds of co-investments and partnerships are really, really important.

So Pat, by the way, you’re editorializing, I think that’s important. I think we got to do that here on Six Five Podcast.

So, hey, Tom, as we sort of roll up to the end of this show, and by the way, thanks for all the insights. You’ve been terrific. It’s been a learning experience for me, someone that’s in this space and listens all the time, just to have the chance to hear so much perspective given at one time. I hope everybody that’s been tuning into the show has had the chance to really catch on to all the important details here. But I’d love for you, Tom, just to talk a little bit, and of course, round off on anything I just said, but I’d love to get a take from you now. With all this in mind, all the macroeconomics, all the shifts in semiconductors, what’s next? What does the future hold for us?

Tom Caulfield: It’s not only my opinion. I think if you were to poll the sell-side analysts in this space, industry pundits, the secular trends for semi, post all of this geopolitical and COVID, is more accelerated. That technology will play a much bigger role in society. I’ll get back to what that means, both good and bad, in a moment, but it’s here to stay and it’s here to be accelerated.

I think COVID taught us that we had this thing called the digital transformation, but it was more used as a safety net. We didn’t trust it enough, and so we did our jobs the normal way we’d done it forever, that worked every day and you traveled to meet customers. Then all of a sudden, you get locked down and sheltered in place and you go to your digital transformation that took place that was there all along, and you say, wow, there’s a lot of different ways to work. Never would have done this controlled experiment to go live and work in a different environment.

So given that, the basis of this acceleration is how do we leverage more and more of this digital transformation? We need to make sure we do it in a way where everybody gets to participate in the economy. The one thing about having not just semiconductor R&D and designs, but having the manufacturing, it creates the opportunity for many different types of jobs in our society. College graduate jobs, PhD jobs, technician jobs. Everybody gets to participate in high tech manufacturing.

A lot of our employees, COVID came and they had two things on their mind. When we surveyed our employees, the number one in their mind was job security. Number two was they wanted to make sure they were safe from COVID. We, early on, saw that our business was going to be solid enough through this crisis and we told our team we entered this crisis together and we’re going to exit together. The amount of security and certainty that gave our team was incredible, and I think that’s something about this industry. Let’s make sure that this industry stays robust, let’s continue to invest. Manufacturing plays an important role in many dimensions, including making sure everybody gets to participate in the economy and that technology is moving faster than humans can adjust in how they make a living.

Then the last thing I’d leave you with is when you look at our global footprint, US, Dresden, and Singapore, we’re in those three continents and countries because every one of them was in a public-private partnership with investment. Upstate New York, our big investment was through the state of New York. Local government in Saxony, Germany continue to this day to share in partnership investments with us when we add capacity and capability to create some more jobs, and the EDP in Singapore are the same thing.

What the US government is doing now is creating that same mechanism to create the same level of economic activity and achieving the goals that they want.

Patrick Moorhead: Tom, that’s a great way to end the conversation. I really appreciate your time here. I mean, you’ve talked about where truly the meat of the semiconductor industry is, which I appreciate that. I think that’s going to be an eye opener for our listeners. You talked about the role of specialty foundries and how they play and being able to truly deliver on things like 5G and wireless and really super important areas in IOT is key. I learned a lot about global, truly global, supply chains and what they mean and the changing definition of globalization. Finally, and my editorialization kicked in here, successful public and private partnerships and investments and not giveaways.
So with that, Tom, I really want to thank you for coming on here.

Daniel, my friend, thank you for doing this, and thank you, GLOBALFOUNDRIES.

Daniel Newman: Yeah. Thanks everybody out there. I appreciate it. Tom, thank you. Pat, thank you. Tons of insights here. As Patrick said, hit that subscribe button. We love our fans and our community here on the Six Five Insiders. So many more great interviews to come. A big summit in our near future where you will be hearing more from companies like GLOBALFOUNDRIES, but we can’t tell you any more just yet. But for now for the Six Five Podcast and for the Insider’s Edition, we’ve got to go. We’ll see you later.
Bye-bye, now.

Author Information

Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.

From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.

A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.

An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.


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