GlobalFoundries reveals revenue jump in U.S. IPO filing as chip demand surges

  • 10/4/2021
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Oct 4 (Reuters) - Chipmaker GlobalFoundries revealed a jump in revenue in its filing for a stock market flotation, setting the stage for a blockbuster finish to a record year for initial public offerings in the United States. GlobalFoundries, which is owned by Abu Dhabi"s sovereign wealth fund Mubadala Investment Co, has not set terms for its listing yet, but it could seek a valuation of about $25 billion, Reuters first reported in August. read more The IPO, one of the most hotly anticipated deals of the year, is expected to round out a record year for flotations, after several other big names such as Robinhood Markets Inc (HOOD.O), Coinbase Global Inc (COIN.O) and Roblox Corp (RBLX.N) capitalized on the capital markets boom earlier in 2021. Alongside electric-vehicle maker Rivian"s stock market debut, GlobalFoundries is expected to headline an unusually crowded year-end IPO schedule, as companies look to make the most of sky-high investor appetite for listings of high-growth tech companies. GlobalFoundries filed for an initial public offering on Monday of up to $1 billion, a placeholder figure that will likely change when terms of the share sale are set. (https://bit.ly/2YgEJuh) During the pandemic, the broader industry that includes automakers and electronics producers has been crimped by a global shortage of chips, which has fuelled manufacturing delays. GlobalFoundries" revenue had been in decline since 2018, but over the past 12 months its growth rebounded as worldwide demand for chips sky-rocketed. "Although the supply-demand imbalance is expected to improve over the medium-term, the semiconductor industry will require a significant increase in investment to keep up with demand," GlobalFoundries said in the filing. The chipmaker has been consolidating its product lines and announced plans to expand into new factories in the U.S. and Singapore. GlobalFoundries plans to build a second factory near its Malta, New York, headquarters, and spend $1 billion to boost output. The company"s net revenue for the six months ended June 30 was $3.04 billion, up nearly 13% from a year earlier. Net loss in the same period narrowed to $301 million, from $534 million a year earlier. GlobalFoundries was created when Mubadala bought Advanced Micro Devices Inc"s (AMD.O) manufacturing facilities in 2009, and later merged it with Singapore"s Chartered Semiconductor Manufacturing Ltd. The company, which makes radio-frequency communications chips for 5G, automotive, and other specialized semiconductors, counts Advanced Micro Devices and Broadcom Inc (AVGO.O) among its customers. GlobalFoundries was initially targeting a listing in late 2022 or early 2023, but moved up the timetable to capitalize on the current IPO boom, people familiar with the matter said. TAKEOVER TARGET GlobalFoundries" decision to file for an IPO is a clear sign that it is not eager to accept a potential merger with Intel Corp or other potential buyers during the current chip boom. The Wall Street Journal reported in July that Intel Corp (INTC.O) was weighing a buyout of GlobalFoundries. It stopped short of making a formal offer, Reuters reported in August. GlobalFoundries was concerned such a tie-up would upset some of its key customers that are Intel"s rivals, Reuters previously reported. GlobalFoundries is the world"s third-largest foundry by revenue behind Taiwan Semiconductor Manufacturing Co Ltd (2330.TW) and Samsung Electronics Co Ltd (005930.KS), but ranks second when factoring out Samsung"s foundry business that makes chips for other elements of the South Korean firm. The U.S.-based chipmaker, which has invested about $23 billion to build five manufacturing facilities across three continents since the company was started in 2009, has about 10,000 patents, according to its filing. GlobalFoundries plans to list on the Nasdaq under the symbol "GFS". Morgan Stanley, BofA Securities, J.P. Morgan, Citigroup and Credit Suisse are the lead underwriters for the IPO. Reporting by Niket Nishant and Noor Zainab Hussain in Bengaluru and Krystal Hu in New York; Writing by Anirban Sen; Editing by Shounak Dasgupta Our Standards: The Thomson Reuters Trust Principles.

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