GLOBALFOUNDRIES (GFS) 11 May 222022 Q1 Earnings call transcript

Good day and thank you for standing by. Welcome to the GlobalFoundries' Conference Call to review First Quarter Fiscal Year 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. Relations. now today, hand of Sukhi and of would to conference Corporate I Head speaker your Nagesh, Investor Instructions] like the to over Development [Operator Vice President Please go ahead.

XXXX everyone. Thank operator, to first and afternoon earnings you, And call. good the welcome GlobalFoundries' quarter

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

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

reliance materially statements. update and on place results may statements Actual we differ forward-looking any not should undertake no You from undue statements forward-looking to these forward-looking we obligation make today.

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

on update end Tom quarter first and We our guidance. second providing capacity with details quarter Dave which a call expansion, will will and results provide on provide begin also our summary technologies, following markets, today's

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

XXXX and GF. building strong global our earnings February. our Sukhi strong delivered deliver a a team despite you, upon quarter itself geopolitical year we of started result of our that over builds in momentum challenges. backdrop XX,XXX We Amidst well first pandemic customers trust inflationary, This records robust year QX the of the are call. Thank and demand, partners related from sustained outlook foundation last provided our and the to welcome new continues and as everyone that results ahead confidence and in to convey builds of execution to creates we and confidence, and type their on

huge, to GF a huge shout of team, you, all great entire the So QX. out XX,XXX

in together QX. another Let's deliver record quarter

strong teams win to winning markets in report accretive new with and to solutions. manufacturing existing both and I pleased designs addition continue our their am with to operational In commercial customers that performance, customers, new, that are GF's

that differentiated continue across growing strong GF's We markets secular and our strategic built with of see upon technology. all of a majority process to demand demand end

as largely and We low-end of QX notably market shipments the expected. normalizing, PCs. also grew and XX% some fact, wafer see In year-over-year, single-source areas handsets

we that demand let's long-term results. can previously first environment GF, move our technology. remains revenue for of long-term deliver in XXXX in largely confident the customer visibility to fully agreement. markets as multiyear focus business that we expected, we outlined exception strong. on of and sold and a With by neither and articulated these backed that differentiated our we the end our quarter few model are remain in increasingly out roadshow. We these summary, the areas As It's In and communicated, are with strategic markets applications unique of is require as and XXXX context,

the company. for are We record pleased report to of results another quarter

our a resulted result, year-over-year. his earnings year-over-year First per year-over-year from ASP. provide per improvement a we This But Dave we across improvements Smart than and mobile quarter. reported first, smart commentary. in approximately for and in transition let market increased by to more concurrently coupled quarter represented our of ago driven feature of point quarter XX% financials happening share the end primarily was earnings was detail quarter. markets, devices summary wafer operational our margin, in is revenue both XX%. $X.XX, adjusted $X.XX discuss will as double adjusted with the mobile This revenue end last fabs adjusted first by a first of which connectivity. year reported And which starting by quarter grew execution share the significant handsets, quarter of transition devices. is with than all which revenue and strong more an and rich more XG our XX% the me high XX% XX% guidance This, is later growth continued it in to higher increases grew first with the of $X.XX shipments to driven gross

example range XSW first millimeter platform with SOI XXX It switch our a It LNA RF performance. in and best great technology. superior data and leading platform of differentiated and Our is battery delivers class rate, industry's is power. the

growth sensor, also RF and year-over-year transceiver, are for image we seeing specialty double-digit power Additionally, solutions. mobile strong

XX XSW, to which participate markets, includes us XXFDX, both end most XXLP terms in BCD market. nanometer that this technologies attractive in our products and which design and their in the XX of helps enable in portfolio light, segments win Our customers RF,

higher revenue center demand, product solutions by XX% XX% combination of better our Next, this quarter of was a chip higher to center Data is well starting and to mix. end ASPs data market. grow for especially ramp infrastructure communications driven comprised shipments, and and approximately two year-over-year. Growth positioned in is GF which market grew approximately first

increases MIMO demand infrastructure in is leveraged robust GF's saw the second XG platform. customer photonics The spectrum, cellular all nanometer also wave. user due also our to This and silicon IP In communications from available germanium attraction. differentiated demand rich culminates is XX who bandwidth the garnering improved infrastructure of silicon transition to We announced solutions. we and strong experience. generation customers transition from broad and strong capacity, RF quarter and into XG This millimeter which our

our computing, branded Our switches, has the been some for high Marvell of gigabit using optical is interconnects, significant solution cloud the with market, pluggable traction XXX monolithic quantum photonics is leading leadership platforms. and proof photonics extended accelerators, photonics data our set. and the designing solution customer This and of such level is serving industry Industry best provides GF's Broadcom, as next and GPUs, performance startups. this NVIDIA, centers, platform also for silicon leaders germanium differentiated bandwidth, transceivers. transceivers. computing platform in low the to most The Cisco platform innovative optical are performance high Further, interconnects networking for of power gaining and RF

scalable and PsiQuantum building first usable, quantum world's the computer example, photonics is our For designing platform. on

to year. photonics summary, XX% and believe to silicon center markets remain XXXX. fastest our business, Our we has end track the growing a on In on of communications markets already grow which be is infrastructure over majority position in this one track share data end

and of year-over-year. total end GF's on of ASPs, was in Moving technologies first at demand, better XX% proliferation strong the lowest this has end The and with IOT is enabled XX% market power revenue it secular focused strong our continues growth smart superior industrial growth feature grew driven devices. market and market, home richer quarter strength growth by that end home an GF's mix. was connectivity rich the to market. global performance ongoing in wireless revenue, possible and and IoT are higher This approximately consumption on experience end our to connected

within X adoption applications. XXFDX market growth due significant for WiFi our Now saw this solutions wireless end the technology to accelerated of connectivity

and also traction feature that electronic smart digital a for microcontrollers payments, applications, as are for access strong We seeing IDs. card memory such non-volatile number IoT of our control,

at of market is wireless, our heart sensors In home addition, in power growth compute, is and technologies for the analog strong and automation secure to analog differentiated our playing building driven and of and such trend The this growth IoT strengths integrating this is for by applications security. as multiple being GF. and squarely end

market automotive, Touching this total for We our X% grew to quarter market XXX% year-on-year. approximately was are and be GF of track first the on this revenue, year. for this in approximately end on next revenue fastest growing

As constrained are we we capacity. previously how indicated, by as lumpy our this we market growth will be quickly build can in

new to developed products we electrification new that as years In growth exciting been Now capacity to that comes we our accelerate expect automobile revenue market. have in end last some ramp enable safety. also few the over began online, this QX,

growth several a over We business ramp top our years. are of seeing also drive that tier source will sole next the significant with automotive radar IDM continued

technologies desire These is together This that for robust. vehicle in production of Our per recover to these EV pipeline one, two, advanced and higher it's and vehicle, remains And two pull design of have the for wins by during shipments semiconductor automakers architectures acceleration the demand our automotive the battery They're feature enable are our GF's serviced XXFDX to advanced the technologies at the market that by pandemic. architectures. plans forward automotive content lost becoming will BCD driven in which best rich is solutions. across foundation safety autonomous quickly enabling class future range Examples of technology for wave XXX majority portfolio. driving. millimeter standard in from to management that the systems

total decline year-over-year, quarter and compute total comprised our revenue. and first market X% be expect expected, as our revenue, XXXX to X% and less market it Next, this of end our of than approximately

call, areas can As our technology. investments are mentioned market this differentiated upon in provide which focused earlier we this in

would solutions. Specifically, QX end XX% we plans. we power brief will on the I of update our companionship like throughout total to ongoing year. and expansion improved be now capacity have and to increased In wafer percent mixed year-over-year. shipments this perspective, of trough it steadily that QX the From a targeted a market, signal, management provide revenue expect

to more from long-term with fab, where we pleased shipments executing plan than short, customer investments to year-over-year. agreement. particularly wafer our required are XX% capacity We In wafer converting to are the the satisfy increased our our output output and Dresden

and construction Also with related ramping increase QX to COVID at beginning the Singapore in track and on are is XXXX. plan new are of XX% as more first production than largely we install despite in the our We of challenges, fab schedule to tools wafer half progressing to output year-over-year. on committed

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

For that for RF in completed platform mobile six handsets. technology features front industry leading qualifications we the first including in end quarter, our added modules example, to we SOI XSW new

our the released in also SiGe we technology addition, high In bandwidth enhanced quarter.

have with our our We that, summarize, across facility scheduled solid second the of we are outs this XX demonstrate alone provide of first call To generation on technology next me report York we outs model. rapid progress reflects the strong let to first And and quarter. This and a quarter our than business turn from details adoption financial have establish our we are our significant our quarter platform, With for business I'm pleased report year, for of provide to photonics the differentiated a for with tape broad Dave nearly New the our to technology continue you XX making corridor. given on to transfer year. the second momentum long-term and to also Germany to over execution customer XXFDX guidance pleased the product technology. quarter towards as our demand finally, Malta, more platform the commenced to Dresden, this unprecedented in XXFDX tape photonics

Thank you, Tom.

last range financial our quarter high the first of exceeded Our we provided update. in results the financial end

XX% First XXX by year quarter per millimeter with selling quarter, ramping accounted improvement for XX% pricing of customer Wafer approximately and an price, We equivalent expedite overall XX% as revenue transactional revenue revenue. which includes revenue, XX% constructive fees, total agreements the very total quarter, items ASP $X.XX better accounted pricing markets our for wafer end revenue of shipped with long-term revenue increase a from consistent period. in year-over-year. Non-wafer expectation. year-over-year, XXX,XXX first our increase radicals, the as environment, product other the well wafers and continued approximately prior engineering, of from Average nonrecurring approximately mix. approximately was XX% approximately and driven increased from billion, for

For the including second stock adjusted remainder of quarter based exclude guidance, the I compensation. reference metrics which call, will

expenses technology of investments $XX.X driven and of profit adjusted For translates Approximately new platforms. XX% came expenses gross profit XX.X% into operating was point of $XXX better million, $XXX based improvement customer this XX approximately operating excluding cost $XX as into was percentage of margin. year by XX year-on-year guidance million, approximately ASPs The XX.X% higher mix. absorption, the translates from increased first fixed QX well $XXX range. ago, adjusted period, IP, million higher and which quarter quarter our in million year about improvement attributable with Operating at which of in end million, mix as of improved we delivered total gross while a stock the to represented $XX was volume for largely compensation. than margin, developing and to GF expenses absorption. enablement the attributable at related Total were due million. better operating sequentially million approximately flat approximately than to our revenue. the quarter, than ASP approximately remaining percentage points cost for million quarter first better total expected for XX% were delivered adjusted SG&A the for high $XX approximately the and the operating fixed R&D ago and $XXX X% features

$X.XX tax $XX in growth, fall of resulting a shares, quarter XX% approximately adjusted a of approximately diluted EBITDA record expense was year-on-year earnings adjusted rate. on $XXX on $XXX of count net Adjusted million. share through $XXX delivered $XXX expense share. a million million incremental quarter. in quarter income First adjusted the of first We first incurred million delivered million, revenue quarter and of We grew million EBITDA we $XX net interest of million approximately XXX approximately per

quarter customer Let Cash metrics. cash balance approximately equivalents, Gross We access the increase and year provide pre-payments million for included some flow an billion flow million prior XX% and $X.X of and for sheet was billion million revenue. from me more with of fees. the operations now cash $XXX quarter CapEx approximately and key capacity quarter was than cash period. roughly first in dollars from the $X.X $XXX $XXX or of ended

than respect some QX our want market impact business, guidance, inflation touch seeing Like transitioned in our estimate upon labor Since I especially inflationary certainty have we to briefly year are others, build business. results and to energy headwinds XXXX, materials, current to I revenue. to We less costs. regarding with and our to business to of model. full Before teams these our inflationary our be concerns its diligently impact the costs to of X% into worked

agreements. mitigate build we the long-term have the have the hedging employees energy and supply our cost the respect XXXX. for driven multiyear by first needed program You've delivered reward revenue that agreements our movements results markets. to rolling the we Operationally, work significant visibility to performance energy to customer fixed commitments. respect us also materials, into in we performance, With performance signed the costs, of for our programs XX-month seen of pay for to materials like business. helps certainty we've long-term to labor, commercial a quarter With worked many the deliver respect that excellent have in variable With

manufacturing aggregate have annual mitigate rolling FX pricing. Additionally that programs the programs net pipeline largely forecasted significant inflationary robust we initiatives that will be the of monthly and currency headwinds movements and offset help historically of finally, P&L have the to We in $XXX And all than we hedging will million. the in delivered minimal. have savings believe XXXX of cost impact these active an impact that savings more of

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

revenue. We GF X.X% this, total revenue and be to expect about to of non-wafer between total expect revenue Of $X.XXX $X.XXX billion. we be

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

be to $XXX between profit $XXX million. We operating expect adjusted and million

compensation $XXX total based $XXX million OpEx quarter, share to for expect million. Excluding and second between the we be

At $XX our operating of be and million compensation to sequential million driven is $XX IT the certain expect of share second midpoint goods higher approximately expenses expect expenses by we We cost enterprise quarter to related OpEx. primarily the increase approximately million sold, which related be $XX to dollars, of is based labor roughly in guidance, in projects. to

and We expect quarter other roughly for be approximately tax $XX net to the $XX be million. interest to expense expenses million and

net between million. We million be and to expect adjusted income $XXX $XXX

second to XX% cost XXX per which diluted $XXX expect and basis to of On million depreciation expect quarter fully be We of related $X.XX goods for a be the earnings million, about $X.XX. to the amortization we shares, quarter and for share sold. between adjusted of approximately is

million. $XXX We and expect EBITDA $XXX between to adjusted be million

we For XXXX deliver range. total partnership necessary to in execution quarter approximately invest CapEx to to than as with contracts. our guidance that strong significantly better the capacity be us continue gross operational high expect were to of our enabled we $X In customers our billion support to first deliver summary, results end the

call and we our customer methodically demand execute the year expect Our Operator? by visibility agreements to progressively supported let's that, plan. deliver long-term as to the strong, open better remains quarter-to-quarter With for continue our financials we throughout Q&A.

Our Instructions] JPMorgan. with Sur [Operator you. comes Thank Harlan from question first

line open. is Your

results Good afternoon strong the solid and the team. and on congratulations execution by

cross COVID you overall disruptions, outstrip that as lot the there's of but know, supply markets supply weakness, the with You to currents most appears a some of pockets end mentioned chain markets. in continues end it across demand

out So look for backlog still ASP anticipate was to given as looks capacity as to then business, are your also profile, you talk like does team at what XX% year? there? you growth target higher this And guys the guys seeing your XX% revised customers it plus just I'm well? Tom wondering, growth

to start you of The had than can talk right. commentary. still seeing. of demand we're strong, think We'll some the we me we we demand capacity small said was this environment that perspective. the softness When XX% the let think add started reiterate I you higher me small is about pockets, Yes, put pockets year, I'll could fulfill. I but it this Look we some have in let David,

And demand situation. over weighing an so we're

alignment of industry and and supply having in demand you're like were we really there's can satisfy. GF or holistically ranges So more I lot particularly we than either there's an think a that for industry the as not you're not,

exposure have don't to the exposure the don't end handset low market. PC we high So have We market. to higher

a of as for to opportunity there that feed we We're that some is a it more customers in bit end strategic softening us. close of there. an So started little are market to year taking with, big the gap this seeing we that

the let we of And compute, to the the XX% with to second me kind percentage throughout And our and year-over-year. Yes, Harlan. guidance second expecting just XX-ish every grow year-over-year end shipments expecting really growth for sequentially. in expect of on digits quarter, XXXX We're have at of up quarter high first XXXX. single add guided total specifically in wafer we're to in to participate then personal we that drop market in we quarter of exception expect the grow which midpoint it

Do you guys expect XX% roughly year? grow ASPs still to ASP -- this

to first expect the year-over-year, quarter. grew the entire little grow ASPs for about faster we Year-over-year correct in Obviously, they XX% year. a

Great and the question, second then on there. appreciate insights I my

You market. your customers your business, the been by impacted disruptions. specifically lockdown know, the impacting end This on more have premium of mobile is COVID-XX

You've demand China impacting the weak domestic of is got low smartphone segment. which the end

know still mobile business weakness business you is the those supply customers strong weaker on sequentially, sequentially guys so the demand is we your just June given capacity guidance, to the sustaining given non-auto the reallocate by in quarter, business segments just is supply? mobile, diversification quarter where in Tom, segments outstripping allowing your So that the demand of or it's your some is the the strongly June commentary mobile and gap in around to in

where didn't end we in think the a of I in the low the have end sequentially of handset kind exposure, lot we're in flat space. that got high Again, reallocating. we've

not low of about and such base of second growing we actually typically whatever element in or to think fast of high that end position as before We'd the capacity markets some other high strong has our you think is, to it's we XG transition we they and one us manufacturers strong so are, high end what as of in a then brands is, because important get this have the silicon the handsets I how air new handset range us. kind And the more the features position for to mobility have that's concentration the end end. these handset the handset, a have there. is and about there will big sell that space per think have

us. And so you'd least to anything that? in add demand the that's seeing, what to we're David at

really the Yes, XSW I first front from technology. RF driving XG a of think transition that's, the we XG the our end Harlan and in quarter to RF see that's module, there. continuation SOI We're

smart some see and continuing the optimized seeing in on mobile growth we're technologies significantly GF's In a segment, sensing that's well includes the product where XXFDX solution optimal are that power. on particularly we're power, roadmap basis. then at side So processor that to that And delivers demand as platform that specialty other sensor the sustained image in growing as a finally, our sustained pretty technology. space devices, of image year-over-year

life and So time solutions. where envelope sub X higher provide that's in XX solutions tracking for and the really that's tracking millimeter bandwidth to our and XG and symbol the nanometer and tracking Penex XXFDX real for battery roadmap [ph] solutions, GF's a increased gigahertz wave

are sub that that's XG of mobile So from smart that to to there for XG targeted we specifically devices, us. driving that the perform are transition the area market segments within and continues within an that,

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

is open. line Your

for how I'm mix we of follow There year? March on on help about basis, the and the incremental should margin gross a almost And Thanks for was gross curious, question. margins you? taking think XXX% rest specifically progression for sequential in through my what

cost Sure. We've absorption. and fixed talked a costs lot, our about the footprint especially roadshow in

through our a get absorption for through fixed increased really from and fall you get you per more where same you're you roadshows and a have And are when on talked we and then in just ASPs, constructive you what taking year-over-year fall is higher into perspective. contractually cost units modest So that have very so, And obligated that in have in reduced cost, fixed footprint, long-term pricing, this if that's our that about an cost IPOs. producing ASPs and environment cost you for lot unit you the that increases worked basis, will agreements, a

plan. So we're on that executing

perspective? think through percent do expect programmatic variable the forward that's systemic range, of of going I in fall expect or through business. what from perspective fall the XX-ish can Now, you that's a kind we the

And costs so entitlement our that's absorption. that once expect can type fully fall out forward, our of get the we you of through going fixed

it, Got David. helpful very

say, I it For be of billion, used thought $X.X my $X you up, heard to billion. follow CapEx I thought I

So wondering, why year? plans it just change? next availability implication? the this What's the tight And does tools? how impact growth Is of just for it your and the

Sure.

XXXX track. our and plans So growth XXXX remain for on

I and some hearing average we're what that think that seeing into by in is days across to industry, real tool is are so. for a around the lot proof you're the our points of And what suppliers seeing put late, are industry, others on you. or XX

to So are tools than XX the it's actually gotten receipt those about accepted as progressed. XX% tools, slightly and late. XXX days a more about we little of worse date, have has of And year

on $X.X a percent So $X and billion. on of slip plan you around so we XX-ish on what in of something tools CapEx to XX from XX-ish your days roughly expect and you'll XX% is calculate plan go that that number range that billion, about to percent

is why as we're the projected and so kind front purchase into have built our eaten And confident other in we orders for maintain to we're plans, that contingency, this don't a on without we're we'll in why certain while not process Yes say we're early one, be. we we've this of is some growth our that's -- we this outlook. our David we And level end And impacted had that, when line. of of build of capacity others plans still, contingency. may

you. Thank

next Our Ross from question Seymore Deutsche comes with Bank.

open. is line Your

healthy versus the guide? last and build the thought. a just what upside for on we than of I was we separate was ask appreciate that. in better this me question. But in results. margin a conservatism the I the do I a know quarter to maybe a again, you you How all had so magnitude or the significantly question way ask just amount on strong Hi guys, of surprise it. your Congratulations thanks allowing gross guys guess,

before, in So was that but Dave, gave I know what XX/XX the you to mix guys, you drivers surprise? the that

Ross us I surprise cost was was fixed the what continued think absorption. to the

said, units to productivity produce footprint, That and across bit team little more get in existing And execute little a we're better. came the in mix on really world productive. our perspective more seeing more better, ASPs is and a we our just continue came As continuing fixed the we cost from in to that a bit absorption.

So I everything little say the but would we cost from improved under perspective, that our fixed area consistently guidance really of bit, is kind call absorption. a

And you've it to sticking line, margin, this delivered a it. quarters the down anything but up what with does to you even I performance in the that just margin follow the guess I long-term does over the target raised target where of more years last Got either couple gross to longer-term target? confidence you confidence think your that can be? the gross your of or do potentially timetable the give now, to accelerate And know in it's due number a road, XX%

said have achieve to Tom our our what we targets. really, is reiterate in I'd ability confidence statement, think long-term I which his increased in Yes, opening

with deliver but prudent point more becoming targets, it'd think those targets. more and stick confident at I those our in be to are this long-term ability we to financial

Thank you.

next Our Chris with Citi. question Danely from comes

open. Your is line

it's there? going QX something Is Hey, on of posting and give I markedly guess pretty just in nice markets, QX. by end revenue some growth, I dropping market? us else PCs of just embedded but because been you've weakness the in end thanks, any that guess that, in guys. sense handsets the sequential can guidance is on there And you or

And well to And number, QX we've obviously, outsized think QX like a are those targeted segments those look market we areas lumpy, comms, and specifically, really driving sequentially areas we to to at for we areas a the to continue and from and pivot center. for this us we have but the because areas differentiation, when us. then the automotive. IoT, And home I we strategic guide the XXXX, year-over-year remain Yes, a continue to we for tremendous it's point smaller perform. Those highlighted point are level, expect I'd QX that growth industrial our QX basis little where would as XXXX feel to perform. I'd enterprise year data the to in infrastructure to continue as gains on that I that and of to point

Got would demand you I now what terms think, while XX% in how mentioned your demand that it. could planned you than versus capacity? about of you the earlier in guys fill, metric was ago, call, rate And higher a that

I and you sequentially you closer following, is year-over-year. lot you that would north the our and it way, is tell X% our by would a it's tell book-to-bill I is ratio than backlog increased would X.X tell Look the I X XX% of to X. still that

think So up not. say when I'd like we caught are, believe of I would those to here, getting but statistics

you. Thank

comes Our Moore Joe next with Stanley. Morgan question from

Your line is open.

to that Great, forward? quarters? is talk strength is thank of is in mentioned, there, other I non-wafer And that you. fees, the you're next be to could I expedite going if the element would then going be few mean you any potentially revenues you those lumpy non-wafer something repeated wonder revenue. that The seeing there

as similar revenue includes is say expedite about it say most XX% radicals on And look XXXX with as on quite a about We the a we expedite line fees to us, guided of I variability that's and X.X% get NREs percentage know, line, non-wafer frankly. when the to quarter revenue. based to manufacture well revenue design when wins I would year can period. When basis, radical revenue was total look it non-wafer flattish of the in as year-over-year customers of basis, at would fees. we radicals. that's QX. of really would And a when you be get about second their total sequential wins I upon the for characterize that It line. line, design and in was ramp, it, I in at the radical it as when can the kind queue ago

non-recurring the NRE well that the lot of a is line. actually That's segment process, engineering there as into of So that engineering the as goes line.

perspective, either in guide. that surprises from real second or in QX the us no revenue say So on the non-wafer line, performance quarter I'd to

Great, over of and assume contemplate? to demand there's through how scenarios from you move the of markets indeed you the have autos, quickly in robust But year. if in need are backlog negative and other I quickly, small see can weakness those small you a wafers play bigger, lot of, a where start for those other talked if get pockets know, up something I capacity, markets thank And sounds it you challenges you. more definitely out how to to becomes more kind of pockets, phones wafers that like coverage terms you you economic that's areas today. the then, kind of some like not bringing of few about realize

in we also think the think of one was how we invest, I focused of the in markets just about capacity. in our our our It's to fungibility about elements pivot talked XXXX on, create that of roadshow but our biggest company capacity. we we how not the

so locations, features. have in than of fungibility capacity you we nodes for that and And different try more a one fungible Within we put could couple of capacity, location. corridors it's to build that we and make on

globally is locally, with capacity for of particular one it's that the find create our one supply And specificity going like node feature. we particular a been a as there the of down high just any some where to not has we fungibility be. we'd business. is this we opportunity into and substitution versus so be It's what we the part opportunities really be to how plan what's given taken both But up, a as is to it can of can manage of may chain, not

Thank you.

comes Chris next question Caso James. with Our Raymond from

is line Your open.

which have the investment should processes thank expansion you. about some still the some end Yes, lumpy it about auto of to revenue the that A areas in we expect the us paired few with because this being going in some to quarters and you to year? the be question could the the you capacity markets begin of expect markets grow comments in and additions the imagine about sense you that said context to the market give what capacity of in this capacity or adding which you you're end process over you're up of greatest be next capacity that, the year

end we've the there, about Singapore, tough module as facility. we've Sure, online but in X, I'm right its a way rough deliver CapEx that XX numbers producing our to CapEx towards one to wafers nanometer. to a well, sister bottleneck helps of to facility and XXXk capacity the going annual got bringing sister year, up we're starting plan real all It's free year. it some $X year. of facility, that of revenue half That it this stated, will and to use nanometer so billion that XX it to some X, but really in really up about the start next some is this related next the

we're specific So XXFDX you're investments FinTech to the those oversubscribed. corridor, in our got significantly corridor. corridors. see also investments which in going We've And is in increasing capacity

as billion, you So the a FinTech higher bit XX the then way down corridor, $X heavily looked nanometer well through all for I technologies would the increases market. skewed it's, specifically little as I I if XX of at more at XX in capacity that say would course, that some from say some asked would are towards and say

color Yes, little let around a me make too. bit that,

GF customers. GF I or puts our does capacity capacity put worth on think on it's GF. noting. not for

our us, we only think you to up to are of but capacity, when our up we that these intention, that growth So markets market lined long-term our attracted not capacity. lined agreements

have our have where for end where that's we've you hear we customers customers on all we long-term GF. where the where it's right, growth That's because up markets That's signed capacity these we concentrated capacity. It's we've absolutely or us fulfilling, you're so capacity agreement, in that on. secular not self And want. put

up to specifically than of online need. Tom, funding, that bring fees great it's and a customers access now customer and have desperately our noting now pre-payments more point $X.X that's billion for that signed worth that's they capacity that

That's helpful. Thank you.

of what's referred followup, as nodes. wonder could in structural you some of a non-leading address the these As to been I underinvestment edge if issues

there last numbers Tom, you've being is of And been serve that? about the context you we've gap be think while any people One demand, macro on of a any the guess supply I worried a demand sense night. a about would about time, between structural the the markets what underinvestment. in And for and that in helpful? talking put been of end referring way conditions getting hearing while and to real Is I was to that your customers it for

XX about I we that's above. balance see going not, kind matching think only the I a going Yes, of to think an capacity, why segments rates in still the simple, continued look talk that you that activity of gap. we at there's in but the announced, see while growth hear say is we digits, look kind And of all we capacity when and and first let's on, we how take But fact for put to high to When on account play is just think want the we it's that's maybe this. industry. a growing doesn't about underinvestment the being big it at actually let's capacity nanometer been and and you in the that's market make single not

do we large capacity that in think the against play a gap softening any maybe I from little the puts that in and closing of report resiliency global event. business see a demand. were on a bit IDC And our amount demand with to temporary macro of a being areas to little not looking bit the But we Dave, the just at? and you on growing put relative

Tom. way. just it's the that Like, us Yes, that's see not data right, the same

show months of from of you depending on long-term report think I And the it maybe which the of in IDC year a I XXXX, recently utilization industry. at, all released through kind think the way and the last look goes that XX. couple

capacity. I XX% not was way demand it and I the the utilization rate think lowest went over think enough to something XXX% or like all

the And of things. mismatch so, this there's it's it see not industry are to way, in think that at or just best, matched seeing I structural similar others you this have kind

smaller base. past you of the lumpiness a in And off was know, the of some capacity

it industry that to to So meant when phenomenon. see little capacity, to not the this demand. added you'll digested significant than you get it build that you until a bigger bit we capacity the as less industry, when more in It need size grow today, more is of increment. The capacity an a idea incremental have and certain get we makes incremental to to much are as the has the we we

you. Thank

with Hosseini Our next SIG. Mehdi question from comes

Your line open. is

my is to were gross And and better understand or if how perhaps understand mix impacting thanks by just year-over-year for ASPs the up taking to trying your Yes, qualitatively in can these extent, quantitatively question. I'm XX%, change impacted ASPs how you been margin. line and X%, top by your helped Q-over-Q mix? that the me the

I'll Dave, little. you first then a and add go

bit first that just I ASPs, really our provide volume question quarter really when look up is XX% that going you're your here really getting is I'm then we differentiated you're first really, at gross you specifically asking more XXXX ASPs at at, ASPs the think that value was margin, and value gross that's clarification. to up is, infer the you how and and the quarter well some because Sure. you a are, differentiated XX% look more let and underlying what more we're to can the little And XXXX. year-over-year One, you me solution, margin. And create, capture. when

and milestones, can can look profitability. think proof don't can directionally towards think And do end are increased so, point you I that market them segment some at look guide I you some there specifically but you points, -- at we by profitability,

design source think one would I wins and single single be source revenues.

XXXX Tom in his single source to XXXX QX year-over-year, commentary, mentioned as grew So XX%. QX that's revenue

single two design XX% about is about source are GF single revenue design So source revenue, our source. single of our wins, thirds of total wins

add other to better you'd Tom, margin. whether technology is SOI gross regardless so GF or anything better you're ASP, we platforms that of and RF content, looking the the the or platform GF, which for at, the it's SiGe, that And that? there more more the have, value the brings, FDX, the

Yes, to that's I where going exactly go. was

idea and indicator the through flow when starting year. design the is to least our roadshow this and accretive at business. source running that's bread our talked more the single was we you're about leading typically an in last bar is which see that butter now to revenue think that at I higher XX%, in business, And it wins of

my a some the question you're framed you of the is actually, Okay, here and your point I better it. and the single specialty the you framed customer substrate created could that's have offer value that And than source.

when way would just So above increase, some nanometer supply excess mix going next to materializing. go think or silicone that I shift would box next at start that's as I would over away, concern And a silicon because look the SiGe into think for the year, increase, is right photonics it's to maybe the probably XX would mix into that about year. accelerate model? Is that

are some the Yes, that we marketplace we real we the want and is, model differentiated way that we about our think have to bring solutions to differentiated. franchises believe

the becomes source And as of value the that single that. take we creation, which then confidence in accretive higher financials. those single we get higher creates confidence in so to model our our our penetration them our drive over we can and we deliver long-term our single absorption, fixed and business and business source more And cost wins have ASPs footprint, which enables grows, fixed course, same as that of spread that higher a through our that grow to we us source, design cost

you. Thank

next comes Wedbush with Bryson question Our Matt from Securities.

Your line open. is

was thanks my Mehdi asking Hey, Chris. and question. want I I to think taking something touch about for also upon,

and I like Thanks. photonics in when you least And you for assuming see revenue? always a some of am In of did about margin point implications doubling I has that mix your right is revenue portion that in it am that's where It more then similarly, second terms correct was greater there's some or there at again becoming talking corridor in this than a start positive And potentially point, Dresden sounded implications positive year, pull new assuming the to it there silicon margins? portion then demand And forward? meaningful with at FDX planned. you a plan on have has and side? it technologies, forward that you're might of gross photonics silicon that moving the

you and Yes, add. Dave let can start, me

Let's photonics. with silicon the start

market five segment healthy over a that's in see we the to million and in next years. so about $XXX share photonics have we and to share not anything, silicon We And less. that more if that, growing $X a billion or see market

opportunity an us growth. for And growth that is so, more for both and profitable differentiated,

to sites it is always for And about the capability. said for strategy around. New that to least have is the see was plan. sense, to be corridor wherever expansion build the Dresden not from moving type actually of You at the you able our same York, is economic FDX it's and other the capital it company But two way and makes

corridor of any technology, plan the a great the the had to for used put put second a Fab that's lithography somewhere always the capability we X today, would defines represents And here. facility we want us the that. put that The that and build it's so, where's to right place place next given opportunity our And at is, question time, XXFDX. best features that to

balanced, second fungibility our hey, our we supply And we so for about capacity, way within when and think not again, leverage and single around -- we it sourcing customers to a have we it, assets we give source. about we need think where just, can it's our thoughtful a in chain

platform an for of I that Those that's our platform. our add we SOI Yes, platforms think two FDX real where just franchises. have RF is us kind to also similar are SOI platform I'd

today. with market still majority the We side, to as to monolithic, the we than Tom there. not grows we and in today. our the a we $X FDX We're roughly that to where million share have space on are in by what's majority market. to And if majority in increasing higher is roughly the in share, future it on photonics be able the XXXX, demand market expect satisfy a as solution capacity pretty billion share have $XXX expect the that mentioned, be a And integrated that only silicon significantly one then we share

we're So we're in, space, photonics for future. customers optimistic FDX, but only silicon with not for the engaged also in the that that for

Thanks.

and question Sankar Our Krish next Company. with comes Cowen from

Your line is open.

for picture just Thanks my question. hi. Tom, taking I had first. a question big Yes,

many been have in the You and semiconductor enough you've industry long cycles. seen

in followup. IoT, first? it let's would where will I So is we recession. there be then see kind GlobalFoundries smartphones, you would business, I'm And it assume it curious a correction first auto, where just had macro or of see a

it so, debate into be Yes never we won't a or get be will cycle.

how cycles. it shorter talk be it is, could less I It's event. it tied think driven given in economy. in-depth to macroeconmic world semiconductor we to probably If the and be is to the a duration going about going

and you're spoke a And would we well about. see think, would think semiconductor consumer lot first led event it be consumer going event I for would the I macroeconomic be a that touches then on to be markets led, it of the side. a led end consumer

got it, it. Got

our to lead there's chime mentioned an could it And renew on visibility, deliver their customers they capacity at sheet, sheets if the extended and I market which their will, $X.X to sign more to it I and that to is then of Tom think and sequentially, that visibility, know, times able balance element we book-to-bill I work of did future about increases When And they've to this continue question to needs. to our than closer because year-over-year just billion actually put XXXX, X. future funding access you when in. now their X.X about and capacity extended be balance LTAs course to that balance sequentially than I sheet of think provide continue

look and look that never really customers customers the increasing and partnerships the visibility I all encouraged at single-source our I the on think, by our been just I with engagement And I'm their so, environment, this design our capacity. technology. has at of us and And stronger. we with wins have across

to work with in macro it our on customers event have Which we we manifests able if be how to partnership softening together. we'll deal a get and through a industry, some itself with

David. helpful And followup. Got Tom it. it, and Super this got a is

sold should of we peers, foundries who your brought for have completely the about prices LTAs about year size of in how next your Some XXXX? he the and raising and spoken pencils, given for pricing spoke you the out and think GlobalFoundries about the

and David, start you I'll add.

Sure.

contracts As the started some in we've prices on that working visibility in speaking market been really QX, signed, incredible actions back those about, I LTAs our and seen we've that's have to more to mentioned the pricing partnership, and through Again I of just bet into customers centered that so our to to inflationary end time as we've for to by inflation, in them customers that. peers that wins. this we've specifically we think we're they've something with of them you'd XXXX, their have early us allow example, passing recently, related our partnership costs, increase on pass pass for prepare them add? their on to some they single-source on really design these Tom, well. with inflationary working all to around of with through anything And

passing here accept and ASPs. you'd were striking Yes, their here. to because to talked pressures, about year in it it own in balance P&L. give we're our customers chance mitigate a We why their our these the inflationary along I we we this And was see was how where to got we're different a way the doing we XXXX wanted to to in those the chance that. is give It because remember business no customers higher deals XXXX

step that So in and those had has increases should think somewhere I and you a market the of We increases between inflationary communicated inflationary along way would passing increase of X% think function kind be the that's I pricing. broadly XX%. then the think pricing, about and

you. Thank

with Our Raji comes & Needham question last Gill from Company.

is line open. Your

I good your revenue. providing you and that will you, commentary the and impact be results. inflation the thank Yes, some congrats about kind appreciate on what of on

assume then are you you obviously, said just wondering how getting what long-term coming inflation, -- on and kind the I based that sort on X%. less I'm to the are and there X% your persistent have how to is of of think than revenue? But you that those just like, impact kind it's if, would number? assumptions some based agreements, than around agreements. less if of conclusion on curious you're a kind analysis of I

mentioned itself. When is impact of P&L X% on revenue, I the total really Raji. Sure it the

in much that bottom. words So would the other the at margins how impact have at

contracts, lock just in into in your And in we had up variability that, we our all commodity we so against on materials these contemplated fixed and communicating really, working of input and background some LTAs the were We were the to exposure these volumes, we were as prices. at set course, of prices, were have labor sources. on hedging pay, fixed that energy the working we

minimal things, And have in we you time by XXXX so bottom that inflationary line. our those get P&L will the to from on all impact believe the a the net pressures very

pressure that our communicating line statement we XXXX. that inflationary inflation, bottom from commentary is on impact prepared were So with in was in minimal what our

into take passing that of that. And account any doesn't

inflationary take additional passing not on our increases does any That account into customers. to

Right.

concerns. profit of based follow around into through through some XXX% a profit was are was an QX. there try make a XX point guide up like terms was gross previous profit you from my about that it gross of to kind It of and And there's going address QX QX think in [ph] the fall be XX% to to I to moderating those just fall gross saying, though, the on analysts, to years. an kind of important looks from question there investor fall

looking guess the You that of have upside I in kind you're kind of at or would shift kind the Just last been factor exceeding of fixed curious certain of ASP profit absorption because couple XXs gross a your drivers obviously be falter mix that this level the you've quarters? to cost when does what agreements? XX% number

Thanks Raji.

you I gave percent state XX-ish number. a is steady The that really number

expect which you XX%. So ranges and fall between can through variable that's over essentially time XX-ish

absorption this near-term fixed where we've quarter-over-quarter, I and at facility. and talked significantly you kind about of cost a think output capacity right, increase can

example, cost way, facility minimal a a I think very great of a that from process. Dresden, Germany would with you in amount into input meaningful be output can a very increase

of that's that's kind number of fall course, And state steady the variable so more XX-ish, steady was to the over near-term through. through state. then type leading that time, that can XX% I the And expect what's once hit of fall quoting we you

Sukhi back for closing turn I now to Nagesh remarks. the over like would you. Thank to call

We Great, everyone circuit afternoon. meeting you this Sharon. you you, a this us quarter. forward to thank for on evening. Thank joining Have look conference the good

This Thank concludes participating. for today's conference call. you

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