Shares of GlobalFoundries Inc. jumped more than 14% today after the company disclosed that its mobile chip business grew much faster than expected in the third quarter.

The unit’s strong performance partly offset declines across the company’s other revenue segments.

GlobalFoundries, a former Advanced Micro Devices Inc. subsidiary, manufactures chips for other companies based on their custom designs. It produces not only processors but also memory, semiconductor-based sensors and other types of integrated circuits. GlobalFoundries’ fabs leverage manufacturing technologies that are several generations behind the hardware used to make the world’s most advanced processors.

The company’s revenue declined 6% year-over-year in the third quarter, to $1.74 billion. However, GlobalFoundries still managed to top the consensus analyst estimate, which forecast $1.73 billion. Moreover, the chipmaker’s revenue increased slightly on a quarter-over-quarter basis for the second time in a row. 

Much of the credit for GlobalFoundries’ better-than-expected sales goes to its mobile chip unit. While the company’s other major revenue segments all saw declines in the third quarter, the mobile chip unit grew its top line by 11% year-over-year, to $868 million. That’s well above the $796.6 billion forecast by analysts.

Many of the chips that GlobalFoundries makes for mobile industry customers focus on wireless networking use cases. The company supplies 5G and Wi-Fi modules for smartphones, as well as NFC chips that facilitate in-store mobile payments. GlobalFoundries makes its wireless networking products from not only silicon but also other materials such as SiGe, an alloy that lends itself well to Wi-Fi signal amplification. 

GlobalFoundries offers its wireless portfolio alongside several other types of mobile chips. It makes display drivers, tiny processors that help manage a smartphone’s screen, and power management circuits. Additionally, GlobalFoundries has shipped several billion cybersecurity chips that handsets use for tasks such as storing their encryption keys.

The rest of the company’s revenue mainly comes from the auto, smart home, industrial and data center segments. Additionally, GlobalFoundries makes chips that internet providers use in network equipment such as 5G cell towers.

Across all the markets where it competes, the company shipped 549,000 300-millimeter wafers’ worth of chips in the third quarter. That’s down 5% from the same time a year earlier. However, GlobalFoundries still managed to top the consensus analyst estimate of 534,000 wafers.

The company’s profit likewise exceeded expectations. GlobalFoundries closed the quarter with adjusted earnings before interest, taxes, depreciation and amortization of $627 million, which amounts to adjusted earnings of 41 cents per share. Analysts had expected 33 cents.

“We delivered consistent financial results at the upper end of the guidance ranges we provided in our August earnings release, and as we continue to navigate the ongoing uncertainties facing our industry, we remain on-track to deliver approximately a threefold increase in our year-over-year Non-IFRS adjusted free cash flow generation by the end of 2024,” said GlobalFoundries Chief Executive Officer Thomas Caulfield.

In the current quarter, GlobalFoundries expects to generate adjusted earnings of 39 to 51 cents per share on sales of between $1.8 billion and $1.85 billion. Analysts forecast revenue of $1.8 billion.

Image: GlobalFoundries