Abu Dhabi owned GlobalFoundries to file U.S. IPO as chip demand surges

Key Points

• GlobalFoundries filed a registration statement to SEC for its IPO

• The chipmaker is entirely owned by Abu Dhabi’s fund Mubadala

• It can seek a valuation of $25 billion

World’s third-largest chipmaker GlobalFoundries Inc on Monday said it has filed for an IPO in the Nasdaq stock exchange as the company bolsters investments in its U.S. manufacturing sites.

The chipmaker said it is currently owned by Abu Dhabi’s sovereign wealth fund Mubadala Investment Co and “continue to have substantial control after this offering.”

Although the company has not set terms for its listing yet, it could seek a valuation of about $25 billion, Reuters reported in August.

GlobalFoundries, which comes behind Taiwan Semiconductor Manufacturing (TSMC) and Samsung in the semiconductor fabrication market, and has three U.S. plants — two in New York State and one in Burlington, Vermont — as well as a plant in Germany and another in Singapore.

IPO timing

Major industries, including automobiles and electronics manufacturing, have been crimped during the pandemic by a global shortage of chips.

GlobalFoundries revealed its revenue had a significant jump of nearly 13% to $3.04 billion in the first six months of 2021 compared to the first half of the last year, setting the stage for a blockbuster finish to a record year.

Although the revenue had declined since 2018, the earnings rebounded over the past 12 months as global demand for chips sky-rocketed.

“Although the supply-demand imbalance is expected to improve over the medium-term, the semiconductor industry will require a significant increase in investment to keep up with demand,” GlobalFoundries said in the filing.

GlobalFoundries was founded when Mubadala bought Advanced Micro Devices Inc’s manufacturing facilities in 2009, and later merged it with Singapore’s Chartered Semiconductor Manufacturing Ltd.

The company manufactures radio-frequency communications chips for 5G, automotive, and other specialized semiconductors and counts AMD and Broadcom among its customers.

GlobalFoundries plans to list under the symbol “GFS.”

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

Picture Credit: Forbes