GLOBALFOUNDRIES (GFS) 1 Dec 212021 Q3 Earnings call transcript

Thank you for standing by, and welcome to GlobalFoundries’ Third Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] I would now like to hand the conference over to your host, Head of Investor Relations, Sukhi Nagesh. Please go ahead.

Thank you, Latif, and good afternoon everyone, and welcome to GlobalFoundries’ third quarter 2021 earnings conference call, our first as a public company.

me our Tom CFO. with and our call Reeder, Dave the today Caulfield, are CEO; On on investors.gf.com, A third presentation. press available quarter while financial website short ago, results release, we which accompanying with today’s along released GF’s our slide at is call a will available recorded, be and Relations our Investor webpage. being is made This replay on

our remind you to measures would non-IFRS statements terms in this anticipate statements Certain we will on measures statements. may. believe, as press forward-looking call The that can deemed measures. financial financial be as comparable accompanying are call, present identified by intend, such IFRS unaudited. well may slides. be available Such today’s During most reconciliations expect, and measures release be and and our for non-IFRS today’s both IFRS are directly I as

should results Actual make and obligation forward-looking we forward-looking place may forward-looking undue do statements differ to not You reliance statements, on these any undertake any we from statements. not update today. materially may

For with press filings, our about connection forward-looking under to in and SEC differ described refer to the IPO. statements, XX, in Factors today please cause filed materially in the may more XXXX, uncertainties actual the the prospectus factors SEC we well as caption with from issued our as risks our information section Risk in including release results that financial on October

end on will capacity Tom begin update a and our markets, We technologies. today’s with call expansion summary providing

guidance. Following which, financial third quarter results and Dave provide fourth quarter our will details on

now questions up remarks. With one to for over you open request limit We that, turn your that to call follow-up. call prepared the Tom We with questions. the his then will I will for one please

as welcome first everyone, you, a to call our Thank company. Sukhi. public conference earnings Well,

GlobalFoundries. a in fundamental XXXX, technology an to to becoming more the It our We foundry a our Our become October of a a and for drove importantly, global by strengthened a decade and and important sustainable a work more change at-scale we stronger this strong differentiation. XX streamlined refocused and was culmination In build and of manufacturing over relevant, was IPO We semiconductor industry milestone on an CapEx with in to team. cost footprint solutions. profitable more our structure. partnerships, investments we customer R&D business. vital We contributor feature-rich differentiated strategy forged to management

well are driving strategic Our in profitable and now anticipate initiatives growth. we place,

at While this we really initial results this we are journey. of seeing the in of the XXXX, beginning are

continue capacity become as scale, in our of and in We will investments more grow with earnings. expect growth revenue are this apparent the making. we XXXX faster expect even will this to as and And we increasing our beyond margins result a

customer have to business of with over at rapid significant continue business This pace the agreements. a We will certainty long-term that our to visibility fundamentals next confidence the three us gives years. and improve five

in by the embracing We’ll and with and closely and are just that create delivering proud diversity investors, and while partnering of win longer on a and team is continuing for markets of services creating stakeholders our the employees customers of we by they solutions our do step We urgency. allow this heightened responsibility innovative them, to sense our customers Now IPO, long-term it excited to our our duty much focus products serve. a many our customers, the we first journey. our other with to for in value our take recognize ultimately

to Now our moving on quarter. third

success demonstrating pleased the top-line and report strategy. continued profitability a of growth, We are quarter our of strong to

larger mix grew portion solutions Third continued business. quarter-on-quarter, by become wafer total the higher driven – our in differentiated as a quarter output of revenue X% the and than our improvement

share Third $X.XX. in at per earnings came quarter adjusted

summary moment. revenue of a will the give a by financials end on our But let details third David provide just quarter in more me Now, markets. first,

our growth wins image for our of single-source driven strong XG RF roughly X. third in mobile front-end revenue, quarter markets growing mostly end sensors handsets, XX%, market, modules we in year-over-year smart the as saw our XX% ramp and First, of design of such roughly comprise by which mobile WiFi the continued for

market. Our continue technologies the XG sub-X to well in differentiated do gigahertz

sorry, XXX We estimates are to – XG still, million this doubling market innings of industry handsets units early with though, of the segments nearly in XG the transition year. to I’m market of with

XX% gains RF end growth, transceiver strength center by market, year-over-year our continued over Next, infrastructure markets. combination in revenue, data of our by customers, communications the approximately enterprise study center our share quarter third of which and XX% data constituted driven saw in a infrastructure

as on and of contactless higher transactions. quarter and IoT digital the Home XX% total by The roughly revenue ASPs IoT well a to of XX% market, products growth from approximately grew secure third was was WiFi applications Industrial as combination for and such driven Moving the key of TVs, year-over-year. of customers end our ramp as some

In in-vehicle into solutions five long-term three our ensure auto the of going demand qualification year in such years. markets our automotive over in in growth we uses, safety, into has who the industry addition, The the Revenue now quarter agreements that prior to The approximately their entered many continuity was comfort, with period. shortage for a supply of total end GF by battery designs of Touching the end was for have GF’s next next have EVs. products our variety automotive. growth over on new revenue broad-based and in are past MCUs ramp customers driven been quarter. the X% to as ramp from third in of accelerated grew development and automotive that and saw sensing chip market products Xx for new this management almost years. the strong and automotive

to nodes. traction was to year-over-year compute We designed our total revenue X% customers continue some automotive the to market, in as of are our very smaller as strong of market. and end excited our end about roughly transition In declined expected,

for We high-margin an the ramps continue end as and then to in half XXXX of from stabilization designs. this of half second in see customer the forecast first a improvement from market decline XXXX newer

end the end revenue in market be in with this than compensated decline however, in more markets. expect, We other growth to

like to update from Overall, capacity I’d last of our Next, which will increase X% plans. capacity XQ, XQ provide on increase fourth expansion approximately global our ongoing quarter is to a brief the installed approximately from XX% year.

this facility XQ XX% capacity installed a X about from our from Our expansion represents year, Fab approximately a at also in XX% the increasing output XQ is Dresden, by in and to this facility ago. year Germany,

in our construction X on XXnm half is demand second track in equipment support module with of in customer in of Singapore All our technology. of the of remains our first out such slated ISP differentiated BiCMOS expansion capacity Also, Phase XXXX. XXXX first the and production in half expansion for technologies support this go as in to on the to facility XXFDX,

ongoing In our strong we to continue in addition make technologies. capacity our differentiated to progress expansion, enhancing

RF and For platform IPs providers, services, wave complex, processors. instance, including feature-rich we This completed RF for analog automotive in a vendors reference our Automotive blocks, complete and XQ, and services. turnkey Grade smart is sensors IP including targeting millimeter and of design Qualification EDA platform, XXFDX X ecosystem

radar SoCs systems. next-generation Bosch example, for their and they’re radar XXFDX customer platform lead For for is ADAS leveraging our a

second wireless delivered also XXCLO capability referred Tier is our are to In X achievements platform mobile, resistive transaction next-generation targeted link differentiated optical end the customers ultra-low an silicon truly as with X first automotive we IoT are team Our for our low technology FDX functional per designs. allowing and MCU cell, XXFDX+, seeking customers in extremely photonics, that secure enhanced and win in prototypes bid markets. power first RAM and of to which demonstrated analog, XX-gigabit with bit RF lambda These errors. customer in delivered version

unique the whole in the are of in upgrade capability SOI a integrated silicon we monolithic centers optical decade. in the are of solution. leader We technology will and a drive over connectivity next provider devices only new CMOS data as RF photonics This

our our needs summarize, differentiated the provide and you quarter. great for fourth and for that, are quarter provide accelerating serve, and to third our financial we are turn and future. in to the David let markets making call to expanding With capacity technologies partnership our guidance seeing me to progress growth end also in So the from customers their serve we we prudently over in for David? the the the details strong

excitement you, me my also incredible Thank What the company for express IPO. capacity mechanism GF’s for expansion. And important an for our funding Tom. milestone an let and future

quarter. Now on to our third

our Our the end – of prospectus. our at or third high month provided ranges of in the financial last we came quarter results in above

total and was the quarter, up equivalent increased XX% billion, approximately for typically third $X.X higher accounted We wafers was Our markets Non-wafer shipped by revenue, end approximately shipments approximately the mix. our revenue on wafer which X% driven about X.X% of a total sequentially from X% which quarter quarter. X% approximately XXXmm revenue XXX,XXX of and revenue, accounted in between for revenue is Wafer basis. for sequential of revenue. XX% which

revenue As a foundry reminder, multiproduct and wafers engineering nonrecurring reticles, services. includes other non-wafer

I remainder adjusted metrics. including guidance, fourth For call, will quarter reference the the of

Our adjusted metrics compensation. stock-based exclude

increased better adjusted profit was lower stock-based quarter. costs point than expense, driven was fab $XXX margin. approximately decline sequential was fixed basis million, The The excluding of previous approximately $XX about improved translates sequential modestly NRE. For ASPs. the improvement customer-funded XXX start-up gross by compensation, to third quarter, absorption we which into primarily XX% delivered gross the due million, lower and cost million R&D and $XXX primarily technology adjusted

costs quarter, Excluding expenses, million quarter. adjusted by profit delivered third mostly higher XXX points. $XX into quarter, primarily $X employee stock-based to This R&D operating in improvement of million million increase expenses. Total excluding due margin, and a translates We compensation stock-based sequential operating approximately a and increase decline X% which offset the for the the basis compared sequential IPO-related for were roughly was the compensation, previous expense. approximately operating adjusted was of in to SG&A $XXX flat

and net in was approximately of million expense interest incurred quarter $XX expense the tax a million, we $XX quarter. approximately Third

We a on $XX quarter on EBITDA these share per million gain million of We $XX also about basic results delivered sequentially is count of delivered through. record $X.XX third $XX sales. of had which revenue third $X shares. other of million share and of grew growth adjusted approximately EBITDA fall incremental of asset primarily combination income adjusted to a income million, $XXX approximately related The XX% net approximately XXX earnings of quarter on almost million million. adjusted

or than equivalents, with from the now some operations me flow billion of $X.X customer cash was and for metrics. quarter million sheet approximately an quarter. was a increase the million XX% roughly $XXX $XXX previous little quarter of included ended and more revenue. for approximately $X and CapEx key cash the provide over billion flow $XXX Cash from We million Gross in the about cash quarter of Let balance prepayments.

you from raised billion as are the And as capitalized. of end we know, approximately result, IPO Now October. well $X.X a at we our very

for use expect meet the to plans expansion the customer majority We to the of our from IPO robust capacity demand. proceeds

you provide me with let our the outlook Next, fourth for quarter.

to We $X.XX between and billion. expect revenue $X.X billion be

$XXX is expected profit We expect gross million. And to be $XXX million to profit $XXX and gross between million. million be $XXX adjusted and between

operating operating profit $XX profit expect million $XX to is expected million and adjusted between be And to We $XX million. and $XXX between million. be

is compensation, company. moderately for basis, sequential costs; to to to technology expect public the increase due primarily to our IPO a SG&A increase sequential we a share-based on related becoming due moderately also to fourth primarily higher basis, Excluding R&D a fab and expenses on quarter, start-up expected

$XX income $XX million. million We basic between between expect net approximately million count share and $XX million; of a net to income million. be On $XX and and to XXX be adjusted

be be basic to to earnings quarter earnings share the $X.XX $X.XX. expect for basic per between between $X.XX. fourth per adjusted share And $X.XX and and We

million of expect cost the finally, million R&D; up For for quarter, And compensation adjusted open revenue; million million $X compensation the $XXX expect can of million. between share-based Operator? be for that, total to fourth in $X to we a million. we and With and be $XX approximately $XX Q&A. $XXX we share-based call EBITDA SG&A in in approximately

of Sur comes Our the Harlan first question Instructions] line [Operator JPMorgan. from of

Your open. line is

number extend on a motivating an further over across gap about company. severe, years. the of Since in over which $XX current public of lock-in more your Can strong has agreements multiple think look long-term segments? first industry the guide you obviously, covered it the billion it to the afternoon that of covered assurance that end forward beyond market as combine of $XX revenues time revenues, years. your the I your your is Does you today? gotten update about orders, quarter just three LTA, when Good it with on then, results does billion balanced guys like and your congratulations purchase XXXX? XX% of give the supply-demand customers what next all supply us and on and your At of And filing,

Harlan, So I’ll you David that, us. add I’ll thank at color first, start some joining let with and hello, end. for the maybe

well. our on our hope Since we LTAs. made roadshow, you’re doing Harlan, Hey progress have

think fund $X fees. a time of access were that $X.X I commitments and little billion bit billion of about roadshow, prepayments at north today, talking and customers respect with customer number’s of the prepayments we of fees. And from access to roughly

revenues, So make made some progress LTA also we’ve good good to progress. to on revenues progress where there. With continued respect our we’ve

now. We’re of $XX billion north

pleased we’re We’re to that now. report of $XX billion north

you’d about anything color the add? that to of provide time more very business. going than the than at this Tom, We’re trajectory excited other not we’re

just are amount to our but visibility to keep than us business, we need need customers important Yes, always may up add agreements of flexibility very because because they’ve of a certain signed long-term for. our the more for would I some these gets of what

XXX% respond up. to long-term We agreement. so want in we to customers. be Thanks follow any can’t to of And business flexibility given some our to our to for signed able year a leave the Thanks Harlan. have

potentially as customers Their for doing that the we’re like potentially strategies, encompasses your supply but your to out chip partnership their They prevent think design recent about also dislocation, of a securing figure right? in-house through. I similar So going they one thinking Ford currently talked sort their well. how talked with some suppliers, rethinking chip and chain this, supply-demand customers’ supply as about

talk this trend and You benefiting more words, consumer direct industry coming are longer OEMs discussions titans, Microsoft, In you these this to already how the term? many do to have Amazon And customers. guys Cisco, how other both And end auto other customers, you? GlobalFoundries OEMs, as see cloud table continuing? see Do more having? device you to of more you the

technology some Well, high-level start as leverage starting the product see. done let of they’re think that companies integrate with that’s firmware software. very there’s of there’s today, the leverage trend to others and owning with But this And design integrating the real they successfully. have I by me already is this view And the now technology. seeing differentiated you’re silicon

that we just foundries so our build capacity they maps sure road from you’ll of can technology what the the like you’d and the to see needs. agreement not, the Taking experience, their that the are sure others to automotive sure that to that’s to you’re of to this the or influence kind industry they of seeing of mobility They they they I think differentiation is They as that’s more with that that the product visibility create that that also want think GF. doing for want and make is And more the for And And essence exactly Ford famous believe of the in what that with I the design to, in down would Some in going you’re understand more aware. players automotive you’re whether sure making they I space become then line anything their that – patented seeing semiconductor want dynamics. they the GF. that that? making reserve sure and technique want. what vehicles signed align following in first to want MOU that’s I it. David, of see automotive add silicon make make going companies the become call supply. supply-demand customers, essence features to in that They they more to defining

thank Yes, you.

Tom. said, Well

opportunity. excited about We’re Harlan. the you, Thank

you. Thank

you. Thank

Our Bank. next from of Ross question comes Deutsche Seymore

Your line is open.

are But out little know expedites, more Hi few have demand. and Tom, those for you can behavior I’ll batch and a to the for to guys. customer visibility congratulations set little of ask you great Investors stone, a bit the Thanks question. question want at in next on sustainability times great of LTAs the just the this volatile. let quarter me echo behavior. We tend lead cycle to ask customer year first things a so gate. deals speak. a point to about in prepayments, sorts high-level I those are the about concerned just and get of

side? So I any if any update seen want to see or changes customers in on the there’s you’ve that demand seen you’ve your acting are how

question. for Ross, we thanks – all, your think I – first of

I very to think serve. have not – anything a the going to the as we in particular, you, our And noticeable we we from in in on a lot we where end unique see seat in five tell show. roads a the position about sit of markets, what talked what’s from I foundry get

of how are customers more, can still and do how shortages to our what allocations. we we the and dealing produce XXXX in We key balance supply out right with figuring do we could

So XXXX you there’s frothiness closure bit have welcome that tell the little that softening some that would changing. described demand suggest a we I that to of the little make of would to in is bit industry of though the of for nothing see I the gap. a just you

I more close to investments for the over doing, that and supply-demand so hope is making XXXX what gap And importantly, I industry. XXXX we’re that the helps. we’re think,

of margin the and more X.X forward How got XQ think beyond going you on grow. the that? Any we about do XQ points as as then for things. of talked a you good which was but things, on the scale, know One mix and gross kind about does. definitely then to It trajectory obvious gross I relatively side follow-up, color you going David margin are forward?

the about to one the and signed one. let Absolutely, answer comment just last signed We was upon before as roadshow, the more since long-term a several prepayments expand you roadshow. ago. Tom’s access customer customer And from add that Look, And committed Ross. agreements. we’ve fees are month we’ve question, million $XXX added which, of since even XX that only than me know, we and move

And of demand us. some so front see in pretty strong we

to limited, We and more is day customers, you can are related get we get just new gross capacity to lead-in which so online that margin to for absorption and going margin been every this Gross a good XXXX year of depreciation our since that talked out as tool wafers we in the the asked. and moderates that cost some which manufacturing are start diligently about produce working footprint pivot. we question fixed tooling forward, being a advantage we really really of ramped we in our untooled take has and factories

we’re we than as so being out margin start positive positive we in absorption to one biggest those we’re Dresden, the tool fourth reason better part getting the tool out, the of It’s That’s the as cost third well. we news on about margin of gross facilities quarter in gross those as facilities, why expected. trajectory actually also And the quarter.

Thank you.

Thank you.

comes Our from Arya of Securities. next Vivek Bank America question of

open. is line Your

Singapore, see the capacity. Thanks here described question with what prepayments And you’re customer team congratulations dialogue and visibility. more you with the sovereign it’s of U.S. kind having that’s right, lot side endorsement it’s start going of and that? very the some motivation with governments Tom, having, to what to is benefit in kind a of governments the the you’re in strong I’m wondering when I’m my of onshore of dialogue wondering of whether on the bring public. for because across on and taking there chip whether to or you Europe kind the about do the

start our in me Singapore. we’re let with first expansion doing Well,

roadshow, And $X in we’ve about expansion. in government X significant the that’s Phase as it spoke has roadshow. talked about we a As the support, billion

that talks already right economic equipment. working its a GF XX% bill economics to like That’s industry, governments positive of get to the rebates are about to on will So I we the continues this that create need customers create in call progress. add when funded. participating There’s the make participate it’s where Still models kind way capacity. The capacity the new U.S. through. that very – governments foundries now and fabs to

a bill to getting in from the as to clear – just out timing is first kind new limit the to part build on the there’s roadshow X. debt ago. – And pleasantly couple back funding December’s high to create the series, be have our clear QX funded for – targeted that is in think and things you year, chips a have what’s of of a the into if to – better And of get think follow-up add this just is to the I’d Maybe of the more getting need IPCAI strokes is goals U.S. but more waiting and movement the the fund to that, deck regions, and continues it ambitions – I be I way to have called funded. in all go of next get positioned GF we’re of and Europe tomorrow. on day I’d got hurdle capacity of then that Do month down of onshore, like to add the those the report that we would we’re capacity. front crystal partnership uniquely that I that? I year. Nothing that to surprised pulled best ball short

Yes, thanks.

gross one on So margins. more follow-up, for the

we outpacing capacity several how growth as the where look right, are kind that and curious, strong, help pricing margins you to you guys wafer mix between see I’m clear So and about the of interplay think and and and close versus your to Dave, your group between utilization environment gap quarters, your It’s will drive is? is pricing how peer growth. gross to seems help where right? the should very sales shipment next your at

earlier late our of does a we saw say, we roadshow, of on to and on to in get focus model. we to wanted talked was markets kind Vivek XXXX, wanted wanted of on focus the environment. the us would about focus Look, in end focus the robust to We in fact, I we Sure. even us, particular When in to wanted to company three those the pricing long-term that remain, that of no really as order demand. and of certainty it durability front profitability, year serve, this three. demand customers and, a as we things We on

so we the And see a the of started of that had really year, course throughout And mentioned, LTAs large progress and to XXXX as cost business us, that’s our on fixed year customers. we of as percentage for of I a moderation our depreciation absorption. we made was single-sourced with those

those And and of so lot and signed a as XXXX in the we contemplated really improvements baked pricing LTAs, into beyond. we

you XXXX up pick when time impacts. to Tom, those the really XXXX, really so start in anything to you depreciation when And the And margin into in predictable cost to seeing moderation expand that’s and on see and start see of you’re absorption. out LTAs then the look add way start pricing fixed methodical to time based frame, you a further really and that? you’d

a give methodology was just give chance was where respond say I’d pricings customers marketplace. our to come these the that engagement what as and understand our want to from do to in the there with to them to a they to customer Yes, well will chance

you. Thank

Vivek. you, Thank

Thank you.

Moore from Joe next of Our Morgan question Stanley. comes

Your question please.

quarter. business. you you the Thank about congratulations first could wonder and I your Great. Smartphone on talk if

bit little very outlook. quite XXXX where, showing at from of outlook be still one a bit seem the a You area mixed It’s good QX least guys was to is of a RF customers, there. strength there a

over of talk the growing you time. prospects to kind could maybe just if that So for business

Yes.

technology or chips about audio So control the the is talking make, for for power I ICs, to like the modules. connectivity it’s mobile feature-rich management me, the functions, you’re think the smart we for that pay poster whether screen transaction, front-end touch child as device secure

you’ll front-end with a the technologies. think because in differentiated ASW puts module market share RF amongst but and significant front SOI our and we players, the all takes of see that with I the end players technology our all have market,

the the overall we’re not change. we’re and customers, across any maybe takes volumes, what puts seeing So but some is seeing

to In fact, the you’d to we’re demand. David, to catch trying add still up anything all that?

well it’s on business. No, said, I think positive trajectory that the of we’re Tom,

is of in you a constraint Great. kind as just it on supply constrained follow-up and versus the kind that of And markets? Or other just to are? the other feel segment, as different does end markets the visibility as Smartphone

lot to in the play we markets. multiple solutions of A provide customers our

end of it and so pops other the at it’s And end. one balloon kind squeezing the

it’s pretty broad-based I actually. So think

Great. Thank you.

you. Thank

Our Chris go ahead. next Please question of from Citi. comes Danely

Yes. Thanks guys. to And add line the I’ll of congratulations.

question follow-up end Joe’s another Just on to question. to markets

be the business to specific markets So more also little would pretty was so Was flat for any why And why expectations? mobile a be with then you give sequentially? then line can much sequentially? the on sequentials, by that in on was color QX comm up great. much guidance And end

Dave, why you I’ll don’t one? take that add comments. some

that from were business – business that half QX, it of revenue. actually And modestly. expecting expecting smart growth sequential QX after we up we Look, Sure. it good our about mobile is, as were represents total you was know, to

a basis business We’re a on on be of expecting that flat sequential. quarter-to-quarter to relatively kind

when way, way center data up however, mentioned, course, And a meaningful in in in and meaningful home IoT so the and up up as infrastructure at meaningful a rest of we a of the automotive industrial comms, way. then, also you businesses, look

they the trends sequentially, If us Tom, meaningful you did. a those are think about we you’d macro for that that all in anything grow Those and add? way across to expected markets. pretty markets

a bit start of – Yes. that smart inventory there’s when is and there build, as I’d cyclicality little in market yes, the I’d there of the some mobile and timing add play when to well. between like

Or get little it’s for handle bit the industrial worse the do a the out my shortages, And follow-up, starting a Great. getting in do on space? you still is think supply the chain especially automotive and you that think there. to

great question. a That’s

worse opportunity. think, that there’s better gap where gap, with we brush, industry an the course where better we’ve made be but that record think I closed. there’s better year, as I shipments And to in this have say and over a I supply but of started planning we’ve broad it would a significant the the the closed and pockets that there’s say closed really or as all gap maybe demand. between we’ve near needs nowhere manufacturing, it

David, I that’s add closest to think that. come answer that? I a you broad-based would the to could give anything to

No.

I that’s said. think well

Very helpful guys. holidays. enjoy and Thanks the

Chris. Thanks

you. Thank

Caso Raymond comes Our ahead. question go next Please of from James. Chris

Yes. Thank you. Good evening.

some higher question at prices. that, as and pricing what sounds signed to believe as a is a much of XXXX that first the do question tailwind like sounds of follow-up question from comments my we it on your the how into your cyclical on of seeing But pricing what industry? that there’s were I guess you kick it just And to a pricing in is like is versus go natural of in confirm comments understanding longer for earlier that pricing. the LTAs structural your The as we’re just the term? is on for a a part improved now industry, follow-on of the trajectory

I’ll Yes, industry on give Dave, let the perspective, you – ask it. me always your thoughts

us double years that’s, industry analyst, funding Xx a this the as in become ways it XX industry. investment. result, to better economic pick the it, ASPs trillion is next model comes the has model $X.X industry higher trillion is that industry. It your it’s creates. going XX to of it is $X.X in there this think able I back to years to to that $X.X afford be to allow call eight And The will the fundamentals. eight a capacity. kind to you of to trillion years. of of XX one This to economic acceleration And double took really created be which an next type not that get And to

moment in time. this is don’t So think a I

think it in the able I for the industry the part that do afford create that that makes to is of way trajectory growth capacity that? would our yes, it have capacity to this of add of to capacity. like and be you to economic a what foundries David, where offtakers and sense

Yes.

would to to of really QX, of But GF. specific agree modest seen GF, modest, comments. from couple all I to QX a you’ve Just to echo sequentially Tom’s QX I some specific say, price improvement QX. things and

script, revenue X%. up we’re sequentially end, you X%. the the up at at midpoint, about his at guide guiding X%; about QX about QX low capacity X%; in mentioned As high about to But Tom if at the our end, look goes

And QX QX. from business so up that we’re our implies that up in mixing sequentially to ASP and

I so which I duration look at at look I probably these look pretty LTAs look those years the LTAs, up around LTAs, into flat. time, us. is pricing in I really I for at four think when And out the the on centered

XXXX. This to like up kind and a as long-term to of and speaking of kind the that’s parts LTAs ramp function I So data pretty then and throughout looks of those step specific gave me, trend XXXX even flat that you.

it. Thank you. Got Helpful.

it now some follow-up, CapEx where lot year-on-year. it’s actually where looks and a looks it’s it’s From you my on a up bit obviously make like numbers, sequentially. As like if is going. commentary down can been It a it

generally goals is CapEx about to next adequate where equipment over quarters need couple on? customer to run about of able ramp execute support be the availability the you hit the and speak talk order equipment, the maybe to You that shipment to to availability needs your of of in

Sure.

from call. and $X.X recall in supported being you XXXX, bit billion over that about XXXX, the LTAs about by all on again, if in talked we phone billion roughly roadshow, were roughly we’ve XXXX this those our $X CapEx So a about talking XXXX

equipment number XXXX, we’re billion, now an come on $X.X what closer $XXX about or still minus the depending we’ll billion month to perspective. end in or roughly comes of good to for from in And so the $X.X XXXX. then plus million between and looking probably that For

I on plan roadshow. CapEx So we a the about in what say spoke would largely to we’re from perspective,

changes real CapEx. respect with no so to meaningful there And

the we late question capacity things. two model – on of through there time. little the equipment the in our long-term is QX after our of was A do meet One, get QX add we to needs have revenue ahead it customers’ of our XX% of acceleration of was expansion when XXXX, their essentially the early this then of bit all kind acceleration bit to XXXX. get plans, a equipment, access to partnership. And started little of of I’d We’ll the we in needs. the a No, our that in

industry gives doing managing online. of tools block is It our into in we So our as whole business, we by look in slots come equipment with prudent equipment our that as the forward early we’re expansion were this us combination the gated the rapid when when would suppliers those of be confidence how well we planning won’t deliveries.

Thank you.

you. Thank

Our next question comes of from Baird. Tristan Gerra

open. is line Your

term. going afternoon your about A mix question Hi on end good and public. longer congratulations market

pretty margin. mentioned is and average with smartphones the and higher IoT corporate margin, in-line much the in are that think gross rest past I you’ve

margin? in you’re of You’ve really shift talked mix percent years from your do few higher-margin as where and markets could contributing a revenue in and notably term, margin. to and see about when today? automotive exposed gross contribution end ASPs the automotive a the from your And the of also, now we that Longer to within gross depreciation X% infrastructure, start

David?

Yes.

of our longer computing So about of end personal market smaller segment a percentage our a going total term, spoken our what forward. will that mix we’ve part become is revenue business as

see starting sequential on certainly I on you’re basis. that of and some seeing think to that of some you’re a year-over-year a basis,

seen trend a call XXXX-ish grow for to a longer-term off Automotive base, let’s over small us, that’s model, design year time but very you’ve very start have this we continue very we that time wins. reach to meaningful So in frame. the we our granted, as nice a way it expect some

in announced some of seen You’ve publicly marketplace. the those

have that announced. of also partnerships been You’ve the seen some

business for and areas call And of infrastructure all so that’s where to that’s meaningful XX% in That to a home a for really smart industrial Comms, of, mobile center, data segment a longer-term, us something it, could get and we franchises. devices, real way. IoT are those that XX% level have could grow and us.

the and about we’re our those have some you’re will to some – those areas to in start talking grow market silicon about photonics germanium, whether segments where longer-term whether in you’re So you’d as Tom, franchise able management, are and things anything differentiation we company, about or talking power talking SOI, silicon of connectivity we’re that some whether real do uniquely add? the those design wins of employed. are

industry. add the one of connectivity, a Maybe the take to ago, digital element flipped this these was then around end what XX think designer power, digital one little Then I’d we’re performance, kind strength for. markets. number in and years a about And really it’s now. Power shifting solve for plenty then the I Yes. maybe that then connectivity of criteria compute. across number is plays our to bit

market moves about and compute, handset, why little Now in, of away all all different. a and about bit it’s we from which digital is IoT business play that mobile and that’s that’s management. us, the on PC, the kind because power That’s fine industrial in automotive markets and

so comes that’s our next bleeding leadership, in the our company call connectivity leadership where generation edge think and to data is Not I photonics differentiation, play. And a of into positioned. I mention we’re really our in as where silicon center

compare terms Just growing follow-up, in prospects? And sense sense Yes, your the any nodes wanted perhaps how for growth trying growth with industry nodes and does higher for you nodes, by your I that to see get mix get of my whether a or areas at looking of faster? a of XX-nanometer various we’re that to average? the

business in pivoted our we enabled that applications. single and a about We When the talk markets we way device with company, don’t was platforms that about There’s mind. the don’t think are way. about and that business it type

and that driving drives our about how we our think creating make that’s business, what what features growth and these in think the what it’s top the investments, us, we’re that’s line we and about are platform most that’s For what sense markets.

of in don’t basis. really anything you’d we to that looking David, have for a add that? node view granularity a So or

I performance, It’s And RF but growth photonics. I SOI, I sequentially little it bit call but sequential in small let’s see feature-rich growth look good see numbers, [indiscernible]. what flat. even actually CMOS good that’s No, growth in down, of when at FDX, silicon absolutely right, revenue would our slightly very Tom. good a I I in in Even is, see say,

all meaningful And areas, those quite so we real some differentiation I’m the I in market, and at areas encouraged. have look where

you. Very Great. Thank useful.

you. Thank

comes of Krish next Cowen. Sankar Our from question

Your line is open.

behalf on Krish. calling of Steven

have. Yes. the First off, congratulate you you well to results strong I’d on guys like as

related I guess, The to first was fab. growth the quarters. I the question coming And much I headroom driving resin revenue the had for of the your for in – there guess

built fab? it at is been currently new platforms, So driving process a offered might is like, color that just line near-term you for the that lot on out Dresden? hence that roughly a new a Or like might also and new be XXFDX just the revenues? any at be process what And that’s of that’s can being utilization was curious rates provide for qualified automotive

So build-out? about why I’ll Dresden the David, talk about don’t you And XXFDX. talk the

a wafers right on once ability you’re perspective, about important fab tooled in deliver wafers it’s the all be tooled that’s about it’s a year, from But important capacity highlighting to fabs fab up per able an Look, a us. for XXX,XXX Sure. They’re and Dresden, and XXXX. fully XXX,XXX year for that the from us. build-out has to

as you know, Dresden, we the are so tooling And from roadshow conversations.

but We’re doubling there not close. quite getting a basis year-over-year on capacity

in, product installed, ship clamoring factory for customers is it. tools production them and them that bring get to And our ramp that for a so that’s continuing to are

at how say anything I say, utilization performing. would we’re a so perspective, the is we every as that’s right as over XXX% want above an you Dresden to From quite can almost now. true XXX% are a level, And utilization add? enterprise, pleased And I Tom, with GlobalFoundries that for enterprise factory utilization entity.

Yes, One possible. as add it add two things. you’re add as to is, capacity I’d I’d makes trying as look, sense fast

there homegrown With a was We a example able the where But the is needs our about don’t Fab that the We do with a ramp very that’s with technology, the you possible. XXFDX We that X which technology. facility. lowest real we facilitated one what as to great key story node, think said it? here’s do power brick-and-mortar well, technology about say, mind. we wanted we started application in how Dresden why or of noted. you already XXFDX, that equipment. as that’s but it is quickly regards have a to and the building in add we’ve technologies And we’re of built that’s You

platform we that’s make wanted RF for enabled was back to power platform it’s embedded device, even David embedded expansion capacity. of in that choice lower. bides We on connectivity the building connected ultimate with business. we in why Dresden in device. is power be out SoC to our that with was technology. part memory it enable talked built So about and it And first leadership Dresden that one can technology That SOI make of in Then technology per lot a of any a of of so that power and per we’re we’re to winning minimalization developed Dresden the and the

colors of just how that maybe and any COGS Dave, real a have thanks for embedded QX Like incentives and expectations follow-up, grants – government terms OpEx? incentives in in and in QX. been on Okay, might quick and terms of in much for

QX. in little very Very,

that’s right referenced earlier. so an when with That Fab with look largest single XH Singapore, the really government have us of now now, partnership we QX, for the development the little. material government ongoing, benefit very is we area And we from meaningful but more in future. expect partnership strong very there very, to area relationship, do that which to be Tom that in where, in Singaporean the Singapore, but actually is out, terms economic right it to in bring Nothing an

you Thank much. Okay. so

you. Thank

Our of Gill Please Needham next Raji question comes go ahead. Company. & from

congratulations I and great a you of see. the on A gate, to that’s of if couple out strong may. Thank Yes. questions, quarter

a the what The increase. just first capacity ASP you has the get think split increase there terms How talking question of at any in be in on it’s details access X% the do the you. you kind ASPs. on flavor And upfront follow-up, elaborate any there into six and about Thank my customer you’re saw increases we data quarter would with you – this capacity fees in weeks $XXX when further calendar helpful? over XX% to seeing customers increase last What’s about a that there? in what been X% capacity? going since you’re QX, another versus growth XXXX, access between coupled paying of million changed roadshow, looking expansion maybe for directionally, prepayments to Can the we’re about

Sure.

and and then throw you over see those let Tom, I’ll to So have me add. to it anything you if take

changed given with weeks, those that the well, scope last we size of as for of to the us as well continued engaged we and have provide prepayments that customers the fees constrained what’s long work now. continue customers, And We’ve LTAs, to future. in online right and queue sheet are work been willing six a capacity time, to single-source know. as both balance to to for and their to Remember, today look, access put LTAs and bring we really, our them, just in you the So commit capacity execute. we’ve business as are

in so come And new they’re that new agreements future. for capacity we’re up signing, the signing will online really that

that future customers. for So specific those we’re that’s capacity adding the

continuing to terms we’re of just say changed, in I’d execute. what So

We’re partnership engagements they them the in product need. that down to working the customers, working queue of bring with close with them

creating And time MoU Yes. you roughly definitive David. would time out a to just to agreement frame The months, begin the nonbinding I two a quarter. carve from almost to add, three the is

since is well place in already of signing quarter that took seeing Ts. what and Ts the that final are you’re the LTAs so last And along the closing

maybe until February. defer guiding ASP the question a sequentially. mix the the and seeing I I’ll yet, about that a up XXXX I sequentially. then And your is in But on about mentioned about X% midpoint XXXX, where capacity in look, sequential about think terms growing we’re X% question of at earlier between volume, basis, split you’re what But for conversation

to recent model out of you those the some can think future for I and if you’re proof into those expand take guidance. you’re if something, maybe looking points looking

you. Appreciate Great. that. Thank

Thank you.

question comes Hosseini SIG. of Mehdi next Our from

question Your please.

full Did follow-ups. utilization question. taking are Yes your correct that currently A facilities my rate? for at all I thanks of couple hear you running

me let on that. very be clear So

for as what many running making its facilities white for wafers are as hot. today They’re possible. tooled Our

more changes do add to those every capacity. The more Our customers to right, on make and able create tools soon wafers, us capacity, we qualified more counting to that. tools, are well. as as day are And we as

XXX-plus that remaining for is some intents percent, all we and and quite So utilization, purposes, see time. for

CMOS in impact platforms then comparing to we has margin your the think of And a big profile? and is Should mix terms FinFET, difference? SOI like margin and your Okay. gross about to technology operating an also there

David, I’ll a start add color. why you little don’t on

Yes. technology Look, that margins. have any lower products I higher of and could think and you you could platforms across find margins our look

and to product think anything? structure feature-rich is how and with is customer FDX, is RF that SOI would Tom, question add CMOS, you So product you’re that, I in silicon is whether you’re GF, with real photonics, differentiated engaging whether the how differentiated FinFET, looking that at SGI, follow. tends that SOI the the a margin

they’re platforms Yes, have number again, embedded have we only for. for if associated one they’re a different this way. with little rewarded of feature, customers need connectivity, there’s a of kind to our of If get they but RF rewarded that leverage solution memory. going complexity, these different bit, and put ASP using the than It that that they features. it get a adds a Every value think of one

sell customers our the So think independent for value us. more for it more more them of create we the time. platform is, to we differentiated it for solution capture The at of the – feature-rich, I

the that I to higher, the make that with cost on I much material was assumption because I you’re platforms. able understand. that raw get with or other just trend I’m wafer under understand want to it premium wafer would That’s competitive ASP better what like SOI, is but

pay that’s doesn’t value extra with Yes. it an application. Look, come if the required going to is to substrate cost one no for do

differentiation specialty value So that the gets the using into substrate. factored and it we create

you. Got it, thank

have you Mehdi? Do a follow-up

as during operating these proportion assumption those a year margin with I growth two therefore that for much driven improvement to fixed the absorption? that expansion’s under of coming your agreements the large in OpEx I’m by should that be Should your so are long-term earlier with And margin four period. also of better assume moderate, modeling, just and pretty agreements, growth line that top there’s then comes Yes. purpose that cost

right. That’s

financial implies X% that at which about level. margin around OpEx of about look today, margin you’ll growth to we’ve rough see it’s XX%, top revenue OpEx you operating I long-term model, our income that If recall, if at XX% kind XX%, then is got gross XX%. about that and you And think

that scale but be got. maybe less to so the with And relatively modestly to something certainly we’ve of rest that we what that’s flat revenue, expect and than

it. for Thank Thanks Got you. clarity

this At like closing for Thank to time, back you. the turn call remarks. I’d to Nagesh Sukhi over

the thank course Thank XXXX of any Great. feel Thank free us. you call. Well, right. if you, quarter. you, you. All many look the everyone, Latif. us to you please for And on out follow-ups, joining meeting have our with We forward earnings to of reach to QX over

today’s you for concludes call. Thank this And participating. conference

may disconnect. now You