Chipmaker GlobalFoundries Valued at $26 Billion in Lackluster Nasdaq Debut

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Shares of GlobalFoundries Inc, which is owned by Abu Dhabi’s sovereign wealthiness money Mubadala Investment Co, opened level connected the Nasdaq connected Thursday, giving the chipmaker a marketplace capitalization of astir $26 billion.

GlobalFoundries finished its archetypal time of trading astatine $46.40, somewhat little than the $47 per stock it priced successful the archetypal nationalist offering (IPO). The chipmaker raised $2.6 cardinal successful the third-largest IPO successful the United States truthful acold this year, trailing South Korean e-commerce elephantine Coupang Inc and ride-hailing institution Didi Global Inc.

GlobalFoundries, which disclosed gross maturation of 13 percent for the six months ended June 30, has benefited from surging request for chips, owed to a planetary shortage that has forced automakers and different electronics firms to chopped production.

But the company’s gross margins stay markedly little than different chipmakers astatine 10.8 percent successful the six months ended June 30, good beneath the margins of 40 percent oregon much enjoyed by Taiwan Semiconductor Manufacturing Co oregon Intel Corp.

In an interrogation with Reuters, Chief Executive Thomas Caulfield said margins person already risen to 17 percent successful the 3rd 4th and are apt to emergence much arsenic the institution invests $6.5 billion—some of which comes from Thursday’s IPO—in its factories.

He said those investments volition assistance GlobalFoundries instrumentality vantage of brisk request and that margins volition support improving “in the aboriginal quarters arsenic we proceed to physique our capableness with these investments.”

Caulfield said request is apt to stay precocious for years, with acute shortages lasting into adjacent year. “I deliberation it starts to get amended successful 2023,” helium said.

Caulfield declined to remark connected reported takeover involvement from Intel earlier this year, saying the institution is focusing connected being “a standalone business” with a absorption connected processing radio-frequency (RF) and low-power technologies.

Despite the lukewarm banal marketplace reception for GlobalFoundries connected Thursday, the IPO marketplace successful the United States has ne'er been stronger. Numerous different large names specified arsenic Coinbase Global Inc, Robinhood Markets Inc, and gaming level Roblox person already gone nationalist this year.

Electric-vehicle shaper Rivian is besides expected to database its shares successful the coming weeks.

U.S. IPOs, including those of special-purpose acquisition companies (SPACs), person raised an all-time grounds of implicit $250 cardinal truthful acold this year, according to information from Dealogic.

Riding connected Chip Demand

GlobalFoundries was created erstwhile Mubadala bought Advanced Micro Devices Inc’s manufacturing facilities successful 2009 and aboriginal merged it with Singapore’s Chartered Semiconductor Manufacturing Ltd.

The company, which makes radio-frequency communications chips for 5G, automotive, and different specialized semiconductors, counts AMD and Broadcom Inc among its customers.

GlobalFoundries is the world’s third-largest foundry by gross down Taiwan Semiconductor Manufacturing Co Ltd and Samsung Electronics Co Ltd, but ranks 2nd erstwhile stripping retired Samsung’s foundry concern that makes chips for different elements of the South Korean firm.

Mubadala, which has a bulk involvement successful GlobalFoundries, volition clasp 89.4 percent of the company’s shares and voting powerfulness aft the offering.

Funds affiliated with Silver Lake person bought astir $75 cardinal worthy of shares arsenic portion of a alleged backstage placement held alongside the IPO.

Morgan Stanley, BofA Securities, J.P. Morgan, Citigroup, and Credit Suisse were the pb underwriters for the IPO.

By Stephen Nellis and Krystal Hu