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Highlights

  • In Q1FY24, GFS reported USD 1.549 billion in revenue, with a gross margin of 25.4%
  • The company demonstrated good profitability with a Q1FY24 net margin of 8.7%, surpassing industry standards
  • GFS forecasts Q2 2024 revenue to be between USD 1.59-1.64 billion, with expected margins and profitability improvements

GlobalFoundries Inc. (NASDAQ: GFS) is a semiconductor manufacturer. The company offers a range of mainstream wafer fabrication services and technologies. It has a market capitalization of USD 29.50 billion.

In Q1FY24, GFS reported revenue of USD 1.549 billion. The company achieved a gross margin of 25.4% and an operating margin of 9.5%. Net income for the quarter totalled USD 134 million. As of the quarter's end, GFS held USD 4.2 billion in cash& cash equivalents, and marketable securities.

GFS demonstrated strong profitability with a net margin of 8.7% in Q1FY24, surpassing the industry median of 7.1%. Additionally, under the U.S. CHIPS and Science Act, the U.S. Department of Commerce has announced a planned direct funding of USD 1.5 billion for GFS's facilities in New York and Vermont.

Recent business update

Recently, the company disclosed its acquisition of Tagore Technology's proprietary and field-tested Power Gallium Nitride (GaN) IP portfolio. This technology is known for its high-power density capabilities, aiming to enhance efficiency and performance across various applications including automotive, internet of things (IoT), and artificial intelligence (AI) data centers.

Company outlook

For the second quarter of 2024, GFS has forecasted net revenue to range between USD 1,590 million and USD 1,640 million. Gross profit expectations vary depending on reporting standards, with projections of USD 367 million to USD 413 million under IFRS, and USD 382 million to USD 426 million on a Non-IFRS basis. The gross margin at the midpoint of the anticipated range comes to 24.1% under IFRS and 25.0% on a Non-IFRS basis. Operating profit is also segmented by reporting standards, with estimates ranging from USD 94 million to USD 168 million under IFRS, and USD 149 million to USD 213 million on a Non-IFRS basis. This translates to expected operating margins of 8.1% and 11.2% respectively.

Furthermore, GFS projects net income for the quarter to fall between USD 78 million and USD 146 million under IFRS, and USD 133 million to USD 191 million on a Non-IFRS basis. Net income margins are forecasted at 6.9% under IFRS and 10.0% on a Non-IFRS basis. Diluted earnings per share (EPS) are expected to range from USD 0.14 to USD 0.26 under IFRS, and USD 0.24 to USD 0.34 on a Non-IFRS basis.

Top 10 shareholders

The top 10 shareholders of GFS collectively hold approximately 99.38% of the total shares, indicating significant concentration of ownership. Mubadala Investment Company PJSC and Fidelity Management & Research Company LLC are the largest shareholders, owning approximately 85.12% and 7.46% of the total shareholding.

Stock performance

The stock has given a return of 3.23% in the last three months and has corrected by 8.03% in past nine months.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is July 09, 2024. The reference data in this report has been partly sourced from EODHD/Others.