None of GlobalFoundries’ 2022 Investments Is ‘Dependent’ on Chips Act: CFO

GlobalFoundries estimates the current “shortfall” in semiconductor industry supply is in the mid- to high-single digits, based on industry-wide capacity of about 15 million wafers a year, said CEO Tom Caulfield on a Q4 earnings call Tuesday. GF completed its initial public offering in early November (see 2111020003).

Industry supply capacity is projected to grow about 4% globally in the next five years, based on “announced fab expansions,” including fabs being tooled or those under construction, said Caulfield. Excluding China-based foundries, the five-year growth projection drops to 2.5%, he said.

GF’s own 2022 plans are to increase wafer capacity by high-single digits, mainly through the expansion plans underway at its Dresden, Germany, fab. Construction of GF’s “phase 1 module expansion” in Singapore remains on track to start production there in 2023's first half, he said: “All of our expansion investments are backed with customer long-term capacity reservation agreements and significant prepayments.”

Caulfield applauded Friday’s House passage of the America Competes Act and its $52 billion in funding for the Chips Act (see 2202040054). “One thing I love about it is, it doesn't matter which side of the aisle you're on. Everybody knows that funding the chips bill, creating more security around the semiconductor supply chain in the U.S., is of paramount importance,” he said. Though the Senate cleared S-1260 in June with broad bipartisan support, the House passed HR-4521 Friday 222-210 on a largely party-line vote.

The CEO found it “really encouraging” to learn, as he did Tuesday, that the Commerce Department is planning “a request for information on how this money can be spent,” he said. “It looks like they're really starting to lean in and get ahead of the appropriations of this funding.” Commerce didn’t comment Wednesday.

On GF’s own capacity-expansion plans, “we don't invest just because there's a government incentive or co-investment,” said Caulfield. “We invest first and foremost in partnership with our customers, that there's certainty to the demand.” GF has investments totaling about $700 million “contemplated for 2022" to expand its “Fab 8" campus in Malta, New York, and for facility improvements at its Burlington, Vermont, site, said Chief Financial Officer David Reeder: “None of them are dependent on this funding from government support.”

GF’s Q4 revenue of $1.85 billion was up 9% sequentially from Q3, driven by higher wafer shipments and higher average selling prices, said Reeder. It shipped about 622,300-millimeter-equivalent wafers in the quarter, an increase of about 2% on a sequential basis.

ASPs per wafer were up about 3% sequentially, due to “ramping” long-term supply agreements with “better pricing” terms, said Reeder. Q4 afforded GF an “overall very constructive transactional pricing environment and continued improvement in product mix,” he said. GF anticipates its 2022 ASPs growing by about 10% year over year, he said.

GF sees automotive and IoT for home and industrial applications as its biggest growth drivers for 2022, said Reeder. Automotive is expected to grow “from a smaller base to a more sizable portion of our business,” though the growth will likely be “lumpy quarter to quarter,” he said.

GF and Ford signed a nonbinding agreement in November that “opens the door” for the chipmaker to boost semiconductor supply for Ford's current vehicle lineup (see 2111180016). Automotive generated only about 5% of GF’s total Q4 revenue, said CEO Caulfield, but the segment more than doubled from a year earlier on the ramp of new advanced driver-assistance systems designs, plus “safety applications and infotainment that have been in development and qualification over the past few years.”

The “end market” segment that GF calls “smart mobile devices” comprised about 48% of Q4 revenue, after 24% year-over-year quarterly growth, said Caulfield. Full-year revenue in the segment grew 38% over 2020, he said. The emergence of sub-6 GHz 5G and Wi-Fi 6 and 6E is driving demand for GF’s RF silicon-on-insulator technology solutions, he said.

Industry handset shipments aren't expected to grow by high-single digits in 2022, as GF’s smart mobile device revenue will, said Caulfield. “It means we're winning more sockets” within the fewer smartphones that do ship, he said. “As the industry goes to 5G, that's a real franchise for us in the front-end module.” GF also is growing its share of image sensor processors for smartphones, he said. “More sockets, more content” means that handsets don't need to grow “at the rate our business grows as we win more of the silicon content inside,” he said.