GF Fits Bill for Wafer Production Outside China or Taiwan, Says IPO

Abu Dhabi investment group Mubadala is sole owner of the 500 million shares in wafer supplier GlobalFoundries, said an F-1 registration statement Monday at the SEC for an initial public offering. GF is an “exempted” company in the Cayman Islands where it's incorporated, and that means it isn't required to hold annual meetings, said the filing. Mubadala CEO Ahmed Yahia Al Idrissi is GF’s chairman. The company applied to list its shares on the Nasdaq under the symbol GFS.

GF, as the world's only “scaled pure-play foundry” with a “global footprint” that's not based in China or Taiwan, can help customers “mitigate geopolitical risk and provide greater supply chain certainty," said the F-1. “We define a scaled pure-play foundry as a company that focuses on producing ICs for other companies, rather than those of its own design, with more than $2 billion of annual foundry revenue.” Taiwan Semiconductor Manufacturing Co. is by far the world's largest foundry, with just under 53% global share in 2021's second quarter, reported Statista Friday.

GF is one of only five foundries of “significant scale,” and about three quarters of worldwide foundry revenue in 2020 was from wafers manufactured in Taiwan or China, said the F-1. “These trends have not only created trade imbalances and disputes, but have also exposed global supply chains to significant risks.” Governments in the U.S. and EU “are increasingly focused on developing a semiconductor supply chain that is less dependent on manufacturing based in Taiwan or China,” it said. GF’s main executive offices are in Malta, New York, where it also runs a fab. It also has plants in Germany, Singapore and Vermont. It’s selling its fab in East Fishkill, New York, to On Semiconductor.

Foundry customers are “increasingly seeking to diversify and secure their semiconductor supply chains,” with manufacturing footprints outside of China and Taiwan, said the F-1. Fabless companies and integrated device manufacturers “increasingly view their foundry relations as highly strategic and are looking to secure long-term capacity contracts by paying to access capacity expansions at their foundry partners,” it said. “This trend has the potential to help balance the geographical distribution of manufacturing and drive increased long-term visibility and profitability of the foundry industry.”

GF revenue of $3.04 billion in 2021's first half was 12.6% higher than a year earlier, said the F-1. GF shipped 1.14 million wafers in the six months ended June 30, up 19.4% from the same 2020 period, it said. Shipments of 2.03 million wafers for full-year 2020 were 15.5% higher than in 2019, it said. It defines wafer volume as the number of finished 300-millimeter-equivalent wafers shipped.

The company amassed more than $32 billion in design wins between 2018 and 2020, as “our customer base has become larger and more diverse,” said the F-1. It grew from Advanced Micro Devices as a single customer in 2009, its first year of operations, to a global base of more than 200 customers at the end of 2020, it said. Its top 10 customers are Qualcomm, MediaTek, NXP, Qorvo, Cirrus Logic, AMD, Skyworks, Murata, Samsung and Broadcom, said the filing.

GF specializes in “single-sourced” products that can’t be manufactured elsewhere “without significant customer redesigns,” said the F-1. About 80% of its more than 350 design wins in 2020 were for single-sourced goods, it said. Its long-term supply agreements give GF “a high degree of revenue visibility and significant operating leverage,” it said. The “aggregate lifetime revenue commitment” in those agreements exceeds $19.5 billion, including more than $10 billion through 2023 and about $2.5 billion in “advanced payments and capacity reservation fees,” it said.

The chipmaker estimates its “serviceable addressable market” opportunity exceeds $54 billion, said the F-1. It counts smart mobile devices, home and industrial I0T, communications infrastructure, data center, automotive and personal computing as its “core” markets.

GF plans to use the IPO’s net proceeds for capital expenditures and other general corporate purposes, said the F-1. It may also use some of the cash raised to buy or invest in “businesses or technologies that complement our business, although we have no present commitments or agreements to do so,” it said. It had total debt of $2.18 billion on June 30, and its cash on hand was just under $805 million. It reduced its net loss to $174 million in the quarter ended June 30 from $237 million a year earlier.