GlobalFoundries stock jumps after better-than-expected quarterly results

GlobalFoundries stock jumps after better-than-expected quarterly results

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Shares of chip manufacturer GlobalFoundries Inc. gained more than 6.6% in trading today after the company posted better-than-expected financial results for the fourth quarter.

Malta, New York-based GlobalFoundries generated revenues of $2.1 billion in the quarter ended Dec. 31. That represents a 14% increase from the same time a year ago. Its sales topped the Zacks consensus estimate by just over one percentage point, marking the fourth time in a year the company has surpassed analysts’ expectations.

GlobalFoundries is a contract chip manufacturer that makes semiconductors for other companies. It operates four plants, or fabs, with capacity to produce about 2.4 million wafers’ worth of chips per year. Its silicon can be found in handsets, cars, network switches and a wide variety of other systems.

Many chips don’t have to be produced using the most advanced manufacturing methods on the market to meet customer requirements. GlobalFoundries specializes in making such chips. Whereas the processor that powers Apple Inc.’s iPhone 14 Pro is based on a four-nanometer process, many GlobalFoundries production lines use 130-nanometer or older manufacturing methods.

GlobalFoundries’ fabs produce chips with several different types of transistors. The company makes chips based on the industry-standard FinFET transistor design, which powers most central processing units and graphics cards. It also uses the earlier CMOS and FDX designs, which offer more limited capabilities than FinFET but can provide better cost-efficiency. 

GlobalFoundries topped revenue expectations in the fourth quarter despite decreased customer demand for devices such as personal computers and smartphones. The slowing demand weighed on the earnings of other chipmakers, including Intel Corp. and Advanced Micro Devices Inc., GlobalFoundries’ former parent company. It operated as AMD’s chip manufacturing subsidiary until 2008, when it spun off into an independent company.

Earnings per share also surpassed expectations. The company logged a net income of $668 million in the fourth quarter, which amounted to earnings of $1.44 per share. Analysts surveyed by Zacks had expected $1.34 per share.

“In the fourth quarter, the GF team continued to execute on its commitments to customers and shareholders, despite the well-publicized inventory correction,” said Chief Executive Officer Thomas Caulfield. “As we look to 2023, we will continue to deepen our engagements with our customers in bringing specialty and differentiated solutions to market.”

In the first quarter of 2023, GlobalFoundries expects to generate revenues of between $1.81 billion and $1.85 billion. The company estimates its earnings will range from 45 to 53 cents per share, at a minimum meeting the 45 cents expected by analysts.

GlobalFoundries is investing in new chip technologies to support long-term revenue growth. Last week, it inked a deal with vehicle chip supplier Renesas Electronics Corp. to purchase the latter company’s CBRAM memory technology. CBRAM is a type of cost- and power-efficient memory that is optimized for use in connected devices.

Image: GlobalFoundries

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