- Stock jumps 7% after Q1 earnings/revenues beat
- GlobalFoundries handed $1.5 billion in US Gov grants
- Analysts predict record revenues and earnings in 2025
Taiwan’s TSMC (TSM:NYSE) may dominate the chip foundry sector but it is far from being the only potential winner as the industry picks up through 2024 and beyond. For example, South Korea’s SK Hynix (000660:KRX) recently revealed that it had nearly sold out its entire manufacturing capacity through to the end of 2025, such is the demand from chip designers, not just for AI chips, but from industries like automotive, defence and medical.
US firm GlobalFoundries (GFS:NASDAQ) is starting to make similarly supportive noises. ‘As pockets of the semiconductor industry begin to emerge from the inventory correction, our teams are driving foundry innovation and differentiation for our customers across their essential end-markets’, said GlobalFoundries chief executive Thomas Caulfield as the company he runs soundly beat first quarter forecasts on both the top and bottom lines, sparking a share price surge to $53.49, based on pre-market data.
DOWN BUT BOUNCING
Sharply down year-on-year they were, yet Q1 EPS (earnings per share) of $0.31 beat the $0.23 analyst consensus by a third on $1.55 billion of revenue, again beating analyst projections pitched at $1.52 billion.
Year-on-year declines were 40% and 16% respectively.
Yet as the market turns to look beyond the current 12 months, there is increasingly hope that GlobalFoundries could be putting up record breaking numbers. Data firm Stockopedia has 2025 (to 31 Dec) consensus at $2.09 EPS on $7.78 billion of revenue, which would both be all time highs.
GlobalFoundires sees Q2 EPS in a range of $0.24 to $0.34 on $1.59 billion to $1.64 billion revenue. That’s versus the $0.28 and $1.59 billion consensus estimate.
$1.5 BILLION IN US GRANTS
Underlining that optimism is significant financial backing from the US Government, among the first dished out under the Biden administration’s Chips Act.
GlobalFoundires bagged $1.5 billion to support the expansion of its production facility in Malta, New York and expand capacity at its Vermont plant.
The company anticipates investing more than $12 billion over the next decade to keep pace with demand for chips from the automotive, aerospace, defence and AI industries. GlobalFoundries generated $488 million in operating cash flow in Q1, with $4.2 billion now sat on the balance sheet.
