Analyst(s): Dr. Bob Sutor
Publication Date: November 12, 2024
GlobalFoundries (GF) reported its Q3 2024 financial results, showing resilience in a challenging semiconductor market. The company’s revenue reached $1.73 billion, with notable partnerships strengthening its automotive, IoT, and AI applications portfolio. Year-to-year revenue was down, but revenue was up for the second consecutive quarter.
What is Covered in this Article:
- Key financial highlights for Q3 2024
- Recent strategic partnerships and technological advancements
- Year-over-year and sequential performance analysis
- Fourth-quarter 2024 guidance and outlook
- Concluding insights on GF’s resilience and growth trajectory
The News: GlobalFoundries reported Q3 2024 revenue of $1.739 billion, achieving a gross margin of 23.8% and a non-IFRS gross margin of 24.7%. This represents a 6% decrease in revenue year-over-year, although the company experienced sequential growth compared to Q2.
The company entered recent strategic partnerships with NXP Semiconductors and Finwave, focusing on diversifying technology offerings and increasing its presence in growth markets such as automotive and AI. For Q4, GlobalFoundries’ guidance projects revenue between $1.800 billion and $1.850 billion, with a midpoint gross margin expectation of 24.3%.
GlobalFoundries Q3 2024 Earnings: Strategic Moves in a Shifting Semiconductor Landscape
Analyst Take: GlobalFoundries’ Q3 2024 results indicate a strategic shift to enhance resilience and adaptability in a volatile market. The company’s partnerships with NXP and Finwave demonstrate efforts to align with high-demand sectors, positioning GlobalFoundries within the evolving semiconductor landscape.
Despite experiencing short-term revenue declines, GlobalFoundries maintains a strong cash position and implements proactive cost management strategies. Futurum Group CEO Daniel Newman shares his comments about GlobalFoundries’ Q3 2024 earnings on X and says that the company’s revenue decline is expected as the U-shaped recovery for many parts of the semiconductor value chain outside AI servers has been slower than expected. Additionally, the Q4 guidance reflects cautious optimism, and the company’s focus on key growth sectors suggests a potential for long-term value creation and market impact.
GlobalFoundries Q3 2024 Financial Highlights
GlobalFoundries announced a Q3 revenue of $1.74 billion, reflecting a 6% decrease year-over-year from $1.85 billion. The gross margin declined from 28.6% in Q3 2022 to 23.8% in Q3 2023, attributed to changes in cost structures and industry pressures.
Net income for Q3 amounted to $178 million, with an adjusted non-IFRS figure of $229 million. GlobalFoundries reported a non-IFRS adjusted EBITDA of $627 million for Q3, resulting in an adjusted EBITDA margin of 36.1%.
Although these figures are lower than the previous year, this performance was expected. With a 5% dip in wafer shipments to 549,000 units, GlobalFoundries still struggles with balancing supply chain disruptions and fluctuating demand.
Strategic Collaborations and Business Advancements
GlobalFoundries has strategically enhanced its competitive position through various partnerships and collaborations. GlobalFoundries’ collaboration with NXP Semiconductors, which uses GF’s 22FDX® process technology platform and is recognized for its power efficiency and performance optimization, seeks to improve NXP’s capabilities in automotive and IoT applications while also allowing both companies to respond to the increasing demand in these sectors. The production of 22FDX chips is set to occur in GF’s facilities in Dresden, Germany, and Malta, New York, contributing to a geographically diverse supply chain.
Another significant partnership is with Finwave Semiconductor, which specializes in GaN (Gallium Nitride) technology. GF is looking to optimize and scale Finwave’s GaN-on-Si technology for large-scale manufacturing at its 200mm facility in Burlington, Vermont. The companies anticipate GaN-on-Si technology will be vital for various high-power applications, such as renewable energy and electric vehicles.
Fourth Quarter 2024 Guidance and Outlook
GlobalFoundries provided guidance for Q4 that they believe indicates expected stability amid ongoing uncertainty. The company projects net revenue between $1.800 billion and $1.850 billion and anticipates a gross margin midpoint of 24.3% on an IFRS basis, or 25.0% on a non-IFRS basis. Operating profit is forecasted to range from $177 million to $256 million, with net income expectations between $161 million and $236 million.
The financial outlook reflects cautious optimism, with growth anticipated from expanding partnerships and controlled operational expenses. Additionally, the company is mindful of macroeconomic factors such as inflation and supply chain constraints. GlobalFoundries’ strategy to diversify its market presence across automotive, IoT, and AI sectors is smart as it tries to provide a buffer against sector-specific slowdowns.
Looking Forward
While some financial metrics have shown year-over-year declines, the company has exhibited sequential growth and maintains strong liquidity. GlobalFoundries is taking a proactive approach to cost management and focusing on its core technological capabilities. The Q4 guidance suggests a balanced outlook, with efforts directed toward maintaining profitability and implementing strategic initiatives. As the semiconductor market improves, GlobalFoundries’ targeted positioning in essential growth markets could support its future success and shareholder value.
The fourth quarter has been sequentially positive for GF for the last two years, though only slightly in 2023. The next earnings report should indicate if GF’s actions are gaining it the momentum it needs to return to 2022 revenue levels and beyond.
Read the full press release on GlobalFoundries’ Q3 2024 earnings on the GlobalFoundries website.
Disclosures: During the preparation of this work the authors and analysts used ChatGPT to research the company and the market. After using this tool/service, the author reviewed and edited the content as needed and takes full responsibility for the content of the publication.
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 analyst has no equity position in 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 Reports Second Quarter 2024 Financial Results
GlobalFoundries Partners with Silicon Catalyst to Boost Startups
GlobalFoundries and BAE Systems Partnership: Strengthening the Semiconductor Supply Chain
Author Information
Dr. Bob Sutor is a Consulting Analyst for Futurum and an expert in quantum technologies with 40+ years of experience. He is an accomplished author of the quantum computing book Dancing with Qubits, Second Edition. Bob is dedicated to evolving quantum to help solve society's critical computational problems. For Futurum, he helps clients understand sophisticated technologies and how to make the best use of them for success in their organizations and industries.
He’s the author of a book about quantum computing called Dancing with Qubits, which was published in 2019, with the Second Edition released in March 2024. He is also the author of the 2021 book Dancing with Python, an introduction to Python coding for classical and quantum computing. Areas in which he’s worked: quantum computing, AI, blockchain, mathematics and mathematical software, Linux, open source, standards management, product management and marketing, computer algebra, and web standards.
