The News: GlobalFoundries (GF) reported revenue of $1.854 billion for fourth quarter (Q4) 2023 and fiscal year (FY) ending December 31, 2023, in announcing its preliminary Q4 2023 financial results. Read the earnings press release on the GlobalFoundries website.
GlobalFoundries Q4 and FY 2023: Automotive Shines Brightly
Analyst Take: GF reported revenue of $1.854 billion for Q4 2023 ending December 31, 2023, delivering financial results that exceeded the mid-point of the guidance that the company provided in its November earnings release. Key GF Q4 2023 financial highlights:
- Gross margin of 28.3% and adjusted gross margin of 29.0%
- Operating margin of 16.3% and adjusted operating margin of 20.7%
- Net income of $278 million and adjusted net income of $356 million
- Adjusted EBITDA of $773 million
- Cash, cash equivalents, and marketable securities of $3.9 billion
Key FY 2023 financial highlights:
- Revenue of $7.4 billion
- Gross margin of 28.4% and adjusted gross margin of 29.1%
- Net income of $1.0 billion and adjusted EBITDA of $2.8 billion
GF president and CEO, Dr. Thomas Caulfield, emphasized that the company delivered financial results that exceeded the mid-point of the guidance ranges provided in its November earnings release. GF produced these results through foundry innovation and differentiation across essential end-markets as shown by the company’s Automotive end market revenue growth, which produced over $1 billion of revenue in 2023. As a result, over the past four quarters, the company has surpassed consensus earnings per share (EPS) estimates four consecutive times.
GF’s top Q4 2023 business highlights include entering into a multi-year agreement with Infineon for the supply of Infineon’s 40 nm automotive safety controller as well as power management and connectivity solutions through 2030. GF was awarded $35 million in federal funding to catalyze the manufacturing of GF’s gallium nitride (GaN) on silicon semiconductors at its facility in Essex Junction, Vermont. The funding brings the company closer to mass-scale production of GaN chips along with their ability to handle high voltages and temperatures.
In January 2024, GF formed a partnership with Amkor to augment the European automotive supply chain and broaden services for global customers. GF is transferring its 300 mm Bump (12-inch bump, CuP, and plated Bump) and Sort lines from its Dresden site to Amkor’s IATF 16949 certified Porto plant to establish new ground for an at-scale backend facility in Europe. For example, the partnership helps support Marvell’s global data infrastructure customers. The move boosts the EU’s drive toward semiconductor manufacturing regionalization.
Additionally, in January 2024, GF announced the signing of a multi-year power purchase agreement (PPA) with Keppel using the organization’s Singapore-based Keppel Sakra Cogen plant for the provision of electricity at GF’s Singapore site, expected to commence on May 1, 2024. Currently, the plant is an energy-efficient and hydrogen-ready combined cycle power plant that enables the expectation that GF will be able to reduce emissions from its Singapore site by more than 10%, or up to 70,000 tons of CO2 emissions per annum, compared with the status quo. The agreement also includes provision for GF to switch a portion of the electricity supplied by Keppel to renewable energy, such as solar and wind, when such sources become more readily available in Singapore.
From our view, the Keppel agreement bolsters GF’s ecosystem-wide sustainability credentials. This becomes increasingly crucial as we anticipate that government funding of semiconductor manufacturing facilities will also include more scrutiny of supporting energy efficiency and sustainability objectives that align with society-wide net-zero goals. Such credentials are reinforced by its inclusion in Newsweek’s America’s Most Responsible Companies list underscoring its commitment to environmentally sustainable manufacturing facilities.
GF’s Q1 2024 guidance is in the $1.5 billion-$1.54 billion range for net revenue, representing a quarter-over-quarter (QoQ) scaling back from Q4 2023’s $1.854 billion revenue. We see GF continuing to show portfolio agility in areas such as expanding the 22FDX platform’s influence across the Home and Industrial IoT end market through temperature-resistant and ultra-low power memory innovations. In combination with Automotive’s performance, this influence can aid GF’s ability to take advantage of what we view as improving prospects during 2024.
GlobalFoundries’ Q4 and FY 2023 Financials: Key Takeaways
We find that GF delivered resilient Q4 and FY 2023 results as the company’s partnership diversification played an integral role in Automotive, further bolstering its Auto-Grade Technology Platform proposition as well as providing fuel for the breakthrough FY 2023 performance in the Automotive end market. Robust performance in the Automotive end market aided GF’s ability to weather the year-over-year (YoY) demand weakness and inventory adjustments we have seen in other key end markets such as Smart Mobile Devices and Personal Computing as well as Communications Infrastructure and Data Center, paving the way for improved performance in 2024 as demand starts to rekindle and the inventory situation improves.
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 Q3: Resilient Performance Amid Macro Uncertainties
Intel Q4 and FY 2023 Results: Transformation Progress Continues
Talking GlobalFoundries, Arm, Open AI, IBM, VMWare, OpenShift, and Synopsys
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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.
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