GlobalFoundries Inc. started trading on the Nasdaq stock exchange this morning after an initial public offering that priced at the top end of the target range and raised about $2.6 billion.

GlobalFoundries is currently trading under the ticket symbol GFS at about $45 per share, down slightly from the initial IPO price of $47 a share, representing the high end of the $42 to $47 range the company had set. Abu Dhabi’s sovereign wealth fund Mubadala Investment Co, which owns a majority stake in GlobalFoundries, sold 22 million shares, and investors bought 55 million shares overall at $47.

Nikkei Asia reported that mobile chip giant Qualcomm Inc. was among the investors in the IPO. 

GlobalFoundries is a semiconductor foundry, a company that makes chips for other firms. It’s reportedly the third-largest foundry in the world, with five manufacturing facilities and about 15,000 employees. GlobalFoundries makes chips for many of the semiconductor market’s leading players including Qualcomm, Samsung Electronics Co. Ltd. and Advanced Micro Devices Inc., from which it was spun off in 2009.

The company manufactures a broad range of products for its customers. GlobalFoundries makes radio frequency chips that devices such as smartphones use to connect to carrier networks. According to GlobalFoundries, its silicon can be found in the vast majority of mobile devices sold by the world’s top handset makers. Chips made by the company power a wide range of other systems as well, including smart cars, ‘internet of things’ devices and  certain types of data center equipment.

Strong customer demand boosted GlobalFoundries’ revenues by 12.6% in the first six months of 2021, to more than $3 billion. The company derives a part of its revenue from long-term supply agreements with customers. In the regulatory filing for this week’s IPO, GlobalFoundries reported to have multiple long-term supply deals that are together worth more than $19.5 billion.

While GlobalFoundries’ revenue grew 12.6% in the first six months of the year, its net loss narrowed significantly from $533 million to $301 million. “We have realigned our engineering, sales and marketing organizations toward higher-margin, higher-return products and opportunities to drive our improved bottom line,” the company told investors in its IPO filing.

GlobalFoundries’ plan to continue driving revenue growth going forward places an emphasis on expanding manufacturing capacity. In April, the company stated that it was planning to spend $1.4 billion on enhancing its chip fabrication capabilities this year and twice as much during 2022.

As part of the effort, GlobalFoundries intends to double the capacity of its flagship Fab 8 chip manufacturing facility in Malta, New York, to produce another 150,000 wafers per year. The expansion is reportedly expected to cost about $1 billion. Moreover, GlobalFoundries is planning to build another manufacturing facility near Fab 8 that is expected to create more than 1,000 “new direct high-tech jobs.”

The chip demand that is leading the company to upgrade its chip fabrication infrastructure is driven not only by major customers such as AMD and Qualcomm. GlobalFoundries has a total of about 200 clients, including many smaller firms. One such firm, startup PsiQuantum Inc., has teamed up with GlobalFoundries to manufacture circuits for the quantum computer that it’s currently developing.

Photo: GlobalFoundries