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GlobalFoundries Q1 2024: Delivering Beats and Riding Mobility Recovery

GlobalFoundries Q1 2024: Delivering Beats and Riding Mobility Recovery

The News: GlobalFoundries reported revenue of $1.549 billion for first quarter (Q1) 2024 in announcing its preliminary financial results for the quarter ended March 31, 2024. Read the earnings press release on the GlobalFoundries website.

GlobalFoundries Q1 2024: Delivering Beats and Riding Mobility Recovery

Analyst Take: GlobalFoundries (GF) reported revenue of $1.549 billion for Q1 2024 ended March 31, 2024, delivering financial results that exceeded the high end of the guidance that the company provided in its February earnings release. Key GF Q1 2024 financial highlights include:

  • Gross margin of 25.4% and non-IFRS gross margin of 26.1%
  • Operating margin of 9.5% and non-IFRS operating margin of 12.1%
  • Net income of $134 million and non-IFRS net income of $174 million
  • Non-IFRS EBITDA of $577 million
  • Cash, cash equivalents, and marketable securities of $4.2 billion
GlobalFoundries Q1 2024: Delivering Beats and Riding Mobility Recovery
Image Source: GlobalFoundries

GF president and CEO, Dr. Thomas Caulfield, highlighted that the company delivered financial results that exceeded the high end of the guidance ranges provided in its February earnings release. GF produced these results by driving differentiation and innovation for its customers across their key end-markets as pockets of the semiconductor industry begin to emerge from the inventory correction. Plus, GF earned awards from both the US Department of Commerce and New York State to expand its manufacturing capacity in the US, further burnishing its global capacity credentials.

GF’s top Q1 2024 business highlights included the US Department of Commerce announcing $1.5 billion in planned direct funding for GF’s New York and Vermont facilities. The proposed funding will support expansion and technology diversification, enabling secure capacity for automotive, aerospace, and defense and other key markets. Plus, New York State unveiled more than $600 million in planned funding under the New York State Green CHIPS and other state benefits for GF’s two Malta, New York, projects.

Additionally, GF is furthering its commitment to sustainable operations and fighting climate change with the announcement of two new long-term objectives to achieve net-zero greenhouse gas emissions and 100% carbon neutral power by 2050. The new 2050 goals are aligned with Paris Agreement objectives and build on GF’s Journey to Zero Carbon pledge in 2021.

From our view, the key outcome is GF’s beat on its top and bottom results:

  • Reported Q1 earnings per share (EPS) $0.31 versus $0.23 estimated
  • Revenue of $1.549 billion versus $1.52 billion estimated
  • Guidance for fiscal Q2 2024 is above estimates at mid-point
  • Guidance for EPS Q2 at $0.24-$0.34 versus $0.26 estimated
  • Guidance for revenue in the $1.59 billion-$1.64 billion range versus $1.588 billion estimated

GF’s results and guidance demonstrate that mobility (i.e., smart mobile devices) is making a comeback as further evidenced by the most recent results reported by Qualcomm and TSMC in their respective fiscal quarters. Also, we are encouraged that GF acknowledged the importance of power and identifies that the ongoing GenAI boom will power growth across its power management portfolio providing a boost to its silicon photonics business.

GF’s Q2 2024 guidance is in the $1.59 billion-$1.64 billion range for net revenue, coming in above estimates at mid-point. We see GF fully capable of fulfilling its guidance as it plans to invest more than $12 billion over the next 10 years across its two US sites. We believe that the public-private partnerships with support from the federal and state governments can help ensure that GF strengthens its relationships with key strategic customers as well as ecosystem partners.

Essential nodes will remain important despite broad investor and market focus on leading edge nodes. We find that there is deep value in the process continuum and as such many industries will continue to lean on GF for supply chain reliability and manufacturing prowess. For instance, the new funding from federal and state government sources enables GF to expand its existing Malta, New York, fab by adding critical technologies already in production in GF’s Singapore and Germany facilities geared toward enabling the US auto industry.

The construction of a new state-of-art fab on the Malta campus is aimed at meeting expected customer demand for US-made essential chips across a broad range of markets and applications including automotive, aerospace, defense, and AI. The new fab, which has already been granted some necessary permitting, will use the site’s existing infrastructure and ecosystem, enabling a swift path from construction to production.

The modernization of GF’s longest continuously operated fab and the nation’s largest 200mm facility in Essex Junction, Vermont, includes the upgrade of existing facilities. As a result, GF looks to cultivate the first US facility capable of high-volume manufacturing of next-generation gallium nitride (GaN) semiconductors and other critical technologies.

GlobalFoundries’ Q1 2024 Financials: Key Takeaways

We find that GF delivered solid Q1 2024 results as the company’s ability to attract funding from the US Department of Commerce and New York State is enabling it to expand and create new manufacturing capacity and capabilities to securely produce more essential chips for automotive, IoT, aerospace, defense, and other vital markets. As a result, GF is playing an integral role in making the US semiconductor ecosystem more globally competitive.

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.

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Author Information

Ron is an experienced, customer-focused research expert and analyst, with over 20 years of experience in the digital and IT transformation markets, working with businesses to drive consistent revenue and sales growth.

He is a recognized authority at tracking the evolution of and identifying the key disruptive trends within the service enablement ecosystem, including a wide range of topics across software and services, infrastructure, 5G communications, Internet of Things (IoT), Artificial Intelligence (AI), analytics, security, cloud computing, revenue management, and regulatory issues.

Prior to his work with The Futurum Group, Ron worked with GlobalData Technology creating syndicated and custom research across a wide variety of technical fields. His work with Current Analysis focused on the broadband and service provider infrastructure markets.

Ron holds a Master of Arts in Public Policy from University of Nevada — Las Vegas and a Bachelor of Arts in political science/government from William and Mary.

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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