Chip Industry Still Getting Much More Demand ‘Than We Can Satisfy’: GF

GlobalFoundries thinks some segments of the consumer tech market are “normalizing” after historically high spikes in demand during the COVID-19 pandemic, especially low-end smartphones and PCs, said CEO Tom Caulfield on a Q1 earnings call Tuesday. “Neither of these markets are areas of strategic focus for GF, with the exception of a few applications in these end markets that require unique and differentiated technology,” he said.

GF’s first-quarter revenue grew 37% year over year to $1.94 billion, about $20 million above the high end of its Feb. 8 guidance, driven by increases in wafer shipments and average selling prices, said Caulfield. “Smart mobile devices” generated about half of GF’s Q1 revenue, and grew 28% from the 2021 quarter, he said.

GF’s smartphone business is up due to“the continued transition of the market for more feature-rich handsets, which is happening concurrently with the transition to 5G connectivity," said Caulfield. GF also experienced double-digit demand growth in the quarter for its RF transceiver, mobile image sensor and specialty power solutions components, he said.

The chipmaker’s communications infrastructure “end market” with about 17% of its first-quarter revenue grew about 80% from Q1 a year earlier, said Caulfield, “driven by a combination of higher shipments, higher ASPs and better mix." He said "the robust demand in cellular infrastructure is due to the transition" from 5G multiple-input and multiple-output to 5G millimeter wave: "This transition increases available spectrum, bandwidth and capacity, all of which culminates into improved user experience.”

GF drew only 4% of its Q1 revenue from automotive, but it was up 170% from a year earlier, said Caulfield. “Our growth in this market will be lumpy as we are constrained by how quickly we can build capacity,” he said. “As new capacity comes online, we expect our revenue growth to accelerate in this end market.” GF announced a collaboration with Ford in November on R&D for future "feature-rich" chips (see 2111180016).

The company’s Q1 wafer shipments increased 14% from a year earlier, said Caulfield. “We are particularly pleased with the output from our Dresden fab, where wafer shipments increased more than 50%.” It’s on track to boost wafer output by more than 10% this year, compared with 2021, he said. “Despite COVID-related challenges, our new fab construction in Singapore is largely progressing to plan and we are on schedule to install tools at the beginning of Q3 with production ramping in the first half of 2023.”

The “demand environment” continues to be strong, despite “the small pockets of softness,” said Caulfield. “When we started this year, we had demand that was 25% higher than the capacity we can fulfill, and so we're weighing an over-demand situation.” The semiconductor industry is still experiencing “a lot more demand than we can satisfy,” he said.