Home Views Semiconductor

How a global foundry is losing money in a chip boom

Tim Culpan
Tim Culpan10/7/2021 9:46 PM GMT+08  • 4 min read
How a global foundry is losing money in a chip boom
If you want a playbook for how to lose money in a chip boom, just read GlobalFoundries’ prospectus.
Font Resizer
Share to WhatsappShare to FacebookShare to LinkedInMore Share
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

The current state of the global semiconductor market has been alternatively labelled by automakers, politicians and executives as a shortage, a crisis, and even a squeeze. For the companies at the centre of it all, the only word to describe what we are seeing is a chip boom. It is inexplicable, then, that any company which ought to be bathing in profits could still be losing money.

Enter GlobalFoundries — the world’s third-largest contract chipmaker that has just filed for a Nasdaq listing. With shares of leader Taiwan Semiconductor Manufacturing Co (TSMC) up more than double since the darkest days of the Covid-19 pandemic, and nearest rival United Microelectronics Corp rising almost five fold, investors ought to be clamouring over GlobalFoundries’ US$1 billion ($1.36 billion) offering.

Like its rivals, GlobalFoundries manufactures chips based on the designs of clients, most of which do not have their own factories. Rather than land the most-advanced orders for components like smartphone processors and graphics chips, the company in 2018 reoriented its strategy toward chasing down older product types — which it euphemistically calls “feature rich” — that include parts that convert sound and images to digital signals.

For more insights on corporate trends...
Sign In or Create an account to access our premium content.
Subscription Entitlements:
Less than $9 per month
Unlimited access to latest and premium articles
3 Simultaneous logins across all devices
Bonus unlimited access to online articles and virtual newspaper on The Edge Malaysia (single login)
Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
Subscribe to The Edge Singapore
Get credible investing ideas from our in-depth stock analysis, interviews with key executives, corporate movements coverage and their impact on the market.
© 2022 The Edge Publishing Pte Ltd. All rights reserved.