GlobalData : GlobalFoundries’ IPO will not soothe semiconductor shortage, says GlobalData

13 Oct 2021
GlobalFoundries' IPO will not soothe semiconductor shortage, says GlobalData Posted in Thematic Research

GlobalFoundries' proposed initial public offering (IPO) will have little effect on solving the semiconductor shortage, says GlobalData, a leading data and analytics company.

Dr Lil Read, Analyst in the Thematic team at GlobalData, comments: "This IPO is essentially GlobalFoundries crying to Wall Street for help. The semiconductor manufacturer has been put in a precarious financial state, despite the rampant chip shortage, which shows no sign of abating until at least 2023. Wall Street will now need to reflect on the tough question of whether GlobalFoundries will ever see profits again."

GlobalFoundries' F-1 filings to the SEC show that the company is haemorrhaging money, having lost nearly half a billion dollars during the first half 2021. Despite early rumours, Intel has shown no interest in trying to acquire GlobalFoundries.

Read continues: "GlobalFoundries doesn't have the technological or financial muscle to go toe-to-toe with TSMC, Samsung and Intel. Great profits can be gained from edge chip production, but only after substantial investment in new foundries, reaching into the tens of billions."

Consultant analyst, Mike Orme comments "The issue is that nobody really wants to be at the bleeding edge - making chips that do such essential jobs such as turn on displays or manage battery power, yet only sell for cents. Plus, it involves costly plants, highly complex processes and skilled engineering staff. This has been a major factor behind the overall chip shortage, with the headline case of the auto industry partially and spasmodically shuttered over the past year as a result.

"GlobalFoundries intends to invest nearly $4.5bn over the next two years to expand capacity, but this is chicken feed compared to what is needed to make any difference to global chip supplies."