GLOBALFOUNDRIES (GFS) 7 Nov 232023 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to GLOBALFOUNDRIES Third Quarter of Fiscal Year 2023 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Sam Franklin, Head of Investor Relations. Please go ahead.

operator. you, Thank and call. everyone, GlobalFoundries' quarter third Good welcome earnings XXXX morning, to

On Dr. Officer. today David me the with call are and Anderskouv, Reeder, Niels Thomas Chief Business CFO; CEO; Caulfield,

third Investor A ago, made replay available our is slide at short website will being Relations available accompanying results, along today's This we GF's be on with while investors.gf.com, web presentation. which page. quarter released recorded, are our financial on call a and

adjusted are non-IFRS will comparable and we this today's you and financial are remind most reconciliations both During that press I'll measures. present directly results financial IFRS unaudited IFRS for call, The adjusted available release and subject measures and slides. change. these non-IFRS accompanying measures in to

today's statements. tense. may be anticipate, by call be identified and to deemed use Such future the such by can of on as expect, forward-looking terms be the may, Certain believe, intend, statements statements or

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

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

our and quarter Tom provide business environment and XXXX Dave We also details will which providing fourth summary current end third guidance. today's the technologies, will a markets begin and quarter call on update results with following on provide

Niels. that open Tom, Dave then please your X follow-up. with We questions with limit will the for to questions We request X you call and

call over his the prepared turn for Tom remarks. to now I'll

we achieved third Sam, I'm dedicated their earnings that economic quarter global Against have you, quarter uncertainties, teams end the backdrop outlined execution and ranges upper our geopolitical in everyone quarter very joining third resilience. of are call. our at welcome our of and of worldwide and to second guidance proud Thank the ongoing results the update.

Let update business brief a current by me on landscape. start providing the

we elevated Similar serve, levels high anticipate end and, mobile multiple such in of smart at semiconductor the will persist industry, through inventories end in to that as across markets many end to communications XXXX. into compounded infrastructure, the increased we segment that others end markets agreements. devices, the XXXX and data center requested Specific cases, with some adjustments inventory, and shipment alterations electronics manage year-over-year have the lower to by consumer inventory home grapple of customers decreased To and demand. long-term continue their

closely short-term duration with the customers inventory of to and avoid are these We the reductions prolonging support correction. inventory collaborating their

but quarter adjustments. charges to related work of the objective collaboratively all challenges. ongoing these discussions led addition address as our will remarks, In is with of long-term to these customers, In to safeguard conversations to we our during on continue this working primary throughout expect the his we these in fourth collaboratively market negotiations cases, value these have underutilization elaborate productive agreements. Dave to these to some

levels on contingent that recovery Expanding be declining remainder believe minimum, the upon through on will uncertain inventories at believe update. at growth Based markets. end remain consumer-centric discussions the in our year. growth marked will, the for required across a a their catalyst XXXX from global with particularly customers, demand. we second return in of least to our year-over-year quarter current significantly a We and concurrent

IoT, and aerospace despite end industry automotive, headwinds, Now we're key defense. witnessing still markets like resilient these demand in and industrial

unveiled these will critical product discuss shortly. vital which developments, an exciting play increasingly role I partnerships semiconductors in sectors, As we've in

later results, was teams Revenue our range. We This manufacturing continued in exceeded Dave of which touch sequentially around guidance the and Let by on efforts in now better-than-expected our to our quarter payments, well to successful of of margin underutilization optimize adjustments in the his more our customers' $X.XXX world reported the third quarter driven gross near-term performance which above which the detail spending his the billion, discuss midpoint briefly will was commentary. associated the as to the will volume guidance in adjusted requirements our me of Dave quarter, range. resolution increased as which commentary. in discuss XX.X%

consecutive our to strategic am delivered guidance delivered our the high capacity report disciplined I per of positive continues range. of approach of also end we free our a objectives. pleased cash to earnings flow, $X.XX, share which expansion deployment, management quarter preserving that We capital while which and adjusted exceeded

update Let activity. our some me growth. partnership provide of a of you recent brief another now automotive, we with solid Starting delivered on customer quarter revenue

vector partnerships market in of XXXX. where semiconductor grade solutions. automotive billion best-in-class an the to applications from vehicle processing grow Our focused we I'm providing of pleased crucial sensing, with auto-grade track to technology deliver across transition revenue for $X combustion us and models connected solutions supporting the customers of serve our we vehicles. the to automotive remain to and to electrified on report development exciting continue one platforms while growth on remain infrastructure, engine safety. We industry This to continue internal remains end our smart that auto customer autonomous

smart have business solutions. our RFSOI At opportunities upon mobile August, we in In continue and build Annual handset resilience towards to our demand the launched seen market, in Technology greater feature-rich future XSW to we and devices, where our most Summit our premium-tier we in performance, front-end technology power operating advantages switching improvements as area solution and and modules mobile XG RF applications. significant today's as XG frequencies for communication well platform, is consumption lower which will remix in wireless advanced offer

across consumption. and introducing announced to for globally and expanding capabilities ultra-low solutions top-tier intelligence platform features continue edge. technologies, secure efficiency devices, power power memory network our IoT for enhanced we focused of advancements on rapidly suite a temperature-resistant recently of we IoT, embedded see the connected differentiated intelligent to as industry-leading With our at in innovation innovative deliver opportunities memory such Meanwhile, XXFDX and power to a performance

We several into and domain-specific as generation learning and Oculi's such that products support edge. optimized the XX sensors XXFDX low-power workload applications, to complex process at being fusion of platform AI embedded are our edge intelligence manufacturing the utilize into wireless latest our supporting at various already LPX architectures processes sensor that with support SoCs Nordic's machine designed designed

area is the on and another defense global the important security prominent on and Aerospace role international IoT, focus within increasingly national takes stage. an as growth

with U.S. contract for XX-year proud supply of critical Defense Department have use We a our of the extended to award wide with are partnership semiconductors a for the of secure applications. range the of across

end market from acceleration our previous and communications and customers of believe with this Finally, portfolio. migration Consistent inventory a digital-centric a remains levels data infrastructure node single-digit that and downturns, elevated within of challenged due is data the we center combination to to center nanometers.

we both As inventory discussed during will infrastructure due until second least the quarter elevated wireless at customers. expect update, levels channel year of the that our and to earnings end our continue digestion of wired across prolonged inventories the

demand continue some in of automotive. As to remix focus service excess to opportunities to as capacity our a such growing on segments, more we durable and result,

additions. to our Turning capacity briefly

demand. I with develop attend ceremony that requirements. in supply capital-efficient In our continue opening Fab helping September, proud We I'm billion XXX-millimeter our capacity expansion will to is XH for And the chain the which was customer $X in footprint approximately the to global to a report meet wafers and have already that Singapore, produce annually. customer measured capacity pleased manner, to to align our in geographies incremental

considering to conditions committed we the of the comes timing highly disciplined demand. capacity additions, in and will remain it When broader incremental assessing market customer

continue guidance identified Notwithstanding to several the downturn in our targets of our that we report our which execute customers to the set dedicated to on and impacting the teams I'm our summarize, our deeper metrics deliver and stakeholders. update. second performance To the out pleased around for industry, longer-than-expected exceeded financial quarter world

near-term semiconductors are vital deep to future play role of secular Although and developing feature-rich committed longer continue partnerships see the our increasingly the role solutions in we world, we GF the outlook, term, we in industry. the on innovative customer that of investing can remain to in of so a over and acceleration an the cautious

over that, Dave. to you, With

third Tom, call. you, and to quarter earnings Thank welcome our

remainder other cash the guidance, metrics, revenue, reference will compensation I exclude flow, expense, of other and the and than call, adjusted stock-based including interest CapEx For charges. and which net restructuring

quarter were As our provided update. at Tom our results guidance we ranges the in the noted, quarterly last of third end upper

year-over-year. billion, a customers' $X.XXX near-term approximately of million XX% results $XX to decrease related to sequentially of included grew volume requirements. revenue their adjustments approximately These to revenue quarter Third

remain the end during modest will the we year-over-year, quarter. ASP price the quarter, mainly the and or product wafers ASPs stable XXXX. be environment for in the decline quarter, per up mix Despite XXX,XXX to in declined XX% by approximately wafer will roughly through that full during X% pricing approximately that year flat ASPs believe the of the equivalent in we shipped prior slightly changes to year decrease selling compared shift average period. the expect We XXX-millimeter driven from XXXX, a the

excludes Wafer revenue reticles, expedite of the from of revenue, revenue approximately for nonrecurring revenue XX% fees other for approximately engineering, third our end total and XX% quarter. from accounted markets revenue. total items, Non-wafer accounted which for

the revenue. represented provide approximately mobile on total an update devices our revenues end Let me by now markets. of Smart XX% quarter's

from approximately the ongoing revenue correction continuation year quarter the X% mobile Third and inventory prior well-publicized the period, weakness the XX% of principally environment broader decreased smart in market. by roughly demand decreased and a driven sequentially within

improved year-over-year smartphone the premium of volumes, Despite the ASP we end remix and these continue market. to to reduced mix as

associated higher mix to full We for expect as improvements to year benefits the compared XXXX. the pricing with be these

channel the inventory. sequentially, to shipment was third primarily due decreased which quarter, the volumes During excess

However, transceiver we premium solutions our into for healthy RF handsets. during continued demand see the tier to quarter

devices prepared previously of As mobile Tom the remain smart as his we rate pace levels elevated and that growth is into anticipated. noted than year-end slower in will the across demand remarks, inventory believe going

the In the revenue. quarter, XX% the home and total third approximately revenue represented of quarter's IoT industrial markets for

approximately the our portion within IoT X% declines, well year-over-year quarter. the ASP and modest Third contributed The quarter X% and end revenue period. declined sequentially prior as in from the as declines to increased primarily mix consumer-centric market year of

ASPs full within home will For expect industrial roughly prior to be the we year, compared that IoT and flat year. the

helping is IoT which within our weakness of to We continue in consumer-centric the to offset stable of see the industrial the some portfolio. and home segment, portions demand

in as the access The expand such transportation, health, payments and are convenience integrity government, and demand technology card quarter and security beyond our third speed, of areas to transaction enabling applications grew as smart for control. into again confluence the digital

defense grow design to where continue establish his deliver of importance growing remarks, partnerships we noted Tom IoT a traceability. best-in-class wins is security segment to and As in semiconductor aerospace manufacturing and and prepared within new

demand customer and in market. mixed-signal largely the markets our near-term offset increasing expect IoT softness to we portions market the correction of for next-generation current result, these a more end As the consumer-centric technologies inventory into analog and

to continues and stable segment total for approximately us represented a XX% be of growth the revenue. Automotive quarter's

period, XX% ASP volumes, Third in growth infrastructure approximately across quarter safety roughly revenue production and mix to processing, have the sequentially and XXX% applications. driven continued increased sensing, ramp by healthy from automotive we vehicle year and prior as

content, The silicon and architecture to within the year-over-year. pricing environment ACE continue vehicle and across automotive grow as applications ICE constructive remains highly functionality

footprint. customers, for is part investing these future across meet existing supply in and be capacity of our certainty key to chain with manufacturing by to consideration GF positioned designs, discussions As a continues needs globally our uniquely diverse and

to noted, of in at our with Tom approximately revenue we communicated the automotive start what $X on the track year. As consistent is billion business XXXX, deliver of

our quarter's of the revenue. approximately market, Next, represented total infrastructure and which end center to communications moving X% data

of prepared roughly result quarter and XX% year-over-year and drivers as declined by remarks. Third a revenue the declining in XX% his outlined key approximately Tom sequentially volumes

mobile end during and end As capacity allocate the a automotive quarter decline XXXX mentioned by as markets manufacturing of premium as more durable expect this revenues market for Tom, we applications. and, smart will to we noted into update, second see accretive to such in continue through our and

approximately quarter's computing Finally, personal revenue. the end market of total represented our X%

and sequentially declining XX% this year-over-year, Third volume driven quarter by segment. revenue approximately principally XX% declined in

total sequential market end the of PC to expect Although in revenue. we quarter, remain XXXX market increase in a X% fourth at still this anticipate end we revenue approximately

gross to next Moving profit.

alluded margin. manufacturing the profit the includes quarter, and guided delivered to we the exceeded of approximately at third into cost prepared indicated, the $XXX our gross and end million, XX.X% range guidance his of efficiencies was Tom For gross which range resolution revenue customer adjustments. margin translates high Gross in volume with associated and as successful of remarks,

been has of some and Looking expect we guidance. benefits this ahead to to subside, in our quarter, reflected the quarter these fourth fourth

$XXX flat third SG&A the sequentially quarter operating of roughly increased Operating revenue. at million, expenses quarter. to represented for in Total XX% R&D sequentially was quarter to million $XXX for the $XXX approximately the increased and total expenses million.

operating total related the guidance and to we included expect fourth of benefit investment receive We will in is expenses the our credit. in expectation and the tax million to approximately manufacturing advanced quarter that decline $XX

As capitalized receive and to qualifying we benefits on the we these of to U.S. beyond, through continue and spend continue assets to XXXX in the expenses expect program. life

We delivered which period. end operating was quarter, of range bps the XX.X% and approximately operating into $XXX for of prior guided year translates profit our below which margin, high XXX above the million the an

tax and of other $XX [ quarter benefit ] $X interest Third net was the incurred we and a million in expense quarter. million,

decrease approximately approximately sequentially increased million income $XXX $XX Our million, of period. year-ago third but represented a net quarter the from to

a share the third sequential earnings reported a increase we $X.XX for As in diluted result, quarter. per of

cash now balance third XX% me provided flow million. for operating metrics. key cash of net some by cash revenue. flow the for the set Free provide as the of million for and and million. cash out CapEx was $XXX define quarter operations $XX property, sheet of from intangible assets on $XXX which Let or roughly purchases quarter Cash was equipment the less plant, statement was as flows, flow we quarter, activities,

cash At $X.XX of stood of total the securities our third and combined approximately end marketable the quarter, cash, billion. at equivalents

remains revolving credit We which undrawn. have a also $X billion facility,

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

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

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

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

$XX the related for investment guidance, approximately tax to share-based manufacturing million. we total fourth be $XXX between expect the to related Excluding of we and share-based goods million, OpEx. of $XXX quarter, compensation $XX to roughly credit, At $XX million and be the of million sold benefit to related midpoint approximately cost million including our OpEx but is compensation advanced expect which to the is

interest We between million. $X expect expense and quarter $XX million and tax $XX million between net to and $XX to other and for expense the be be million

On between to fourth between a share net diluted expect million XXX approximately and be We earnings for $X.XX. income the expect quarter shares, million. fully to share million count $XXX we and $XXX be $X.XX adjusted of per

that mid-XXs earlier. fourth to elevated commentary for guidance our with Consistent quarter inventory our levels be of XXXX will in in August, year outlined the Tom to the expectation prevailing reflects full low the utilization and due demand that environment

update the As $X we to CapEx be approximately our quarter XXXX, discussed in second full of expect now billion. year for we

prepared our out capacity remain to in and aspirations Tom strategic the As we our meet his set commitments. footprint upon noted in based track on that CapEx we objectives remarks,

year-over-year our generation. anticipate our delivering of significant As will on we on CapEx provide cash free part quarter as fourth we we however, more year-over-year specific XXXX, targets results, a guidance reduction in for material focus CapEx flow

continued in achieve operational to differentiated provided our growth guidance well update. at the results high of long-term across enabled into product focused GF we fourth dedicated segments and our key year-over-year as remain in quarter demand the We second ranges opportunities. third as our consistent from and expand summary, the for acutely outlook world quarter us employees on XXXX heading offerings quarter positioning efforts end to earnings performance growth In the

for With Q&A. open that, Operator? call let's the

you. Thank

We Jefferies. will Mark first Instructions] Our now conduct comes a question-and-answer [Operator question Lipacis session. from from

more associated be collaboration what costs think manifest, period a LTSAs. what try with that your time help that fixed you are talking the they To higher LTSA, get the of for working wondering Tom, strategic to when the extending I'm safeguard covering originally helpful. with I is end? using -- the collaboratively getting the sockets customers are would on how that relief of mentioned, value volume what adjust you understand asking expected versus back it about extent could you or longer those customers that LTSA for you to If to us are very had mechanisms to an like you're or or

you, Thank Mark.

started in question half to yourself the an half. roaring come and the the answered a Look, that step there. as year, were actually second in first we back just we'll You industry, going back, we down this take be

But balanced exactly -- saying, the you -- have right? then sense one unique. Let's build. are So capacity contracts of that resolution is we we provide framework second go new go we that first do was because other is the cycles that in take inventory common let's million, figure How were all thing didn't win to, them, as now can't agreement? to build to meant there demand? how and and not . The customers you over-inventory extend bespoke all long-term ready to together. $XX starting to do better out partners first maybe repurpose for what that long-term you of half, happen. for one-off, which were right? what underutilization let's makes it's quarter, the in prolong the we're that you, through And see it's a sockets would I we the and an design And so with by foremost, clearly, saw some situation, to our tell They're all is is an these get to that just these agreements to corridors a last customers half, had

about and They long-term partnership driven. one-sided were agreement. is balanced be this not supposed Again,

of that would Now end a they're And the lot tell the true-up is thing the means takes I at of last these place calendar-based. you the about year.

these these we But alignment you're takes types of expect rest of of think it as you form to right, through the I quarter. more the of get that resolutions see this So can capacity, and design in payment new that some And repurposing I elements, of contracts. hope extending for is underutilization life helps. different part of the cases, an wins, a resolution. many

Do follow-up, you Mark? have a

when that talk CapEx to translate a do. you free about you is bogey couple that about you're is than Is a envisioned next not be that next going it originally think kind you're had lower in the the guidance last it's giving which over sounds lower I But year. for what I we better flow. years? to a And of be going CapEx a for the Yes, than that lower on thinking what XXXX, should what I appreciate lower cash -- Is like reduction of -- to were thinking? year,

Mark. preface maybe last me is, reiterating It of wafers the what And million are We're just let we're spent of we trying about that to kind look at that years, to trying mark. X statement essentially capacity. When you that just we've funds over total the at achieve with achieve. X

Some still that we target. with of to in come capacity line essentially But online. are that

for CapEx when while something so right guidance, as think guide we're about thinking materially well fourth And XXXX, our in with about February not as quarter that first we're it you lower. now, our guiding update we'll quarter

kind spending we're half, than terms in XXXX. less of in what think So of not half, if of

Our next question comes from Ross Seymore from Deutsche Bank.

want demand. about I Tom, bit of linearity talk a little to the

a the You've taking little talked correction about longer. bit

you despite no holding think anybody. to surprise that. I quite in guys that's well are But

to when is that? of color going And you're you on by that that do of end device the be as basis foundry folks corrections talk Just done? some would Are when see normalization wanted of heard side helpful. to seeing things? those smart market? rolling there of mobile will some green Any to data other kind from points shoots on We've be about, you think a

Yes.

to pass Let colleagues. then I'll maybe me and start, it my

a the are hit you're are and markets end when more semi as markets. it's smart end number. that really inventory take right, the You're that ones shoots for of back, highest the green of devices consumer think things a and see demand were a it's It's centric. step hardest the you bottom, that more the mobile monolithic kind bumping I about that obvious with to And because lot me, about along includes can't

about some base of just may And there growth a not. start And opportunities as off see it that so low we growing. be do be a or for will to it's growing that significant not

will and to to be getting cases nice peaked either a recovery inventories by came It's those that's drive have some and close see further some peak, that, not or have able markets, of in come down where the to of in growth. and beginning large, demand

in about year I'd while That's comments, that revenue hear that up it in really good automotive automotive, you But been that's $X industry, noise this $XXX and for from the soften, maybe some of we're it producing automotive. it's million last remains feeling said prepared billion year. about strong, because as strong say we market. could in a our year such

then consumer-led I So how of market, supercharged Niels, the add inventory to consumers go really that by anything do with all about think be when that? end touches it's spending of that takes And watching the you'd us end place. get again. industry David, many -- we and will it this markets

design win Maybe can on we're little the I seeing the bit on a side. momentum add

well. green course, to on made green, And So area And are we A&D, then, call the and ago, how especially shoots, results, bit little more as space. pleased in talked momentum that what to you X Tom be for a a a pleased momentum those of there. high-end RF focused the in are that talked year, continue sorry, and that bit design the automotive, [ also, have we to continue it phones that little the SMD with building wins. IoT. to of obviously, of like previous X lot said. with about on We . And be we in as we this about front years I'd say pleased more we are tier ] what similar very we enjoying getting calls we with there. comments very opening, design the But the in we See it's in

Ross? have you a follow-up, Did

side of you, on to gross wanted pivot margin the to just things. I over Yes. David,

XXXX, utilization mix despite as on that more down then, all But sure we challenging more can well gyrations puts appreciate. guys I'm the takes the you're puts and it's in I and we and coming rate we uncertain, as doing, about think and gross cetera. but for about side. talked capacity What quarter to output being the than the appreciate fourth et about some think you You held the takes of sequentially margin have now and going wafer your normalized the into target importantly, is your demand are XXXX? CapEx

Thanks, Ross. pleased cost we've about maybe and roughly let X to me structure And first, XX about such points and I'll the decrease how speak by of that it, utilization. points puts absorb speak of in that specifically some then doesn't happen accident. can demand our generally quite largely associated call takes. Look, with headwinds we X we're And with, rebaselined

So the work XX,XXX able to GF accomplish world there's around roughly lot to employees that from a of result. great at be

to And we've how do, so of the on way. we've but work pleased manufacturing long very a from Still with we're rebaselined side. come a structure things plenty perspective cost

more under takes, With have to in some expectation quarter, quarter, and X when additional incorporate look, benefit we of resolution incorporates point that think about of range, received commentary. we about the we some guidance for it LTA you respect And those successful resolution. underutilization will the from prepared mentioned some does the puts fourth utilizations then that that third of the

your either X on headwinds. is, opportunity or of a extent and direction drives based X points we've we all big have you start upside. can some And nice gross the utilization, you the that margin, the in of improve, back I where when come done that very up offsetting think to So and utilization utilization opposite points I utilization put to is to picture think down just the have of the together, takeaway job then really,

comes next Chris question Wolfe from Caso from Our Research.

expectation previously, The to recognize that talk signed And based is you what first most of your the business agreements of I signed pricing the now ship flat customers going that new on perhaps business. Is but you on for to could LTAs on that environment new is the pricing you question some remain that new environment. was forward?

win Look, about speak start. design all touched our the and it on time, we Niels I'll this Yes. about pipeline.

Our where for allows accretive this all business our ourselves. our value booked that is long-term provides value XX% on we business us our customers to were goal of the quarter design sure to to have new we capture to and is differentiation wins that single-source make that model.

always how pricing to to QX all the bring business that changed And for how is us design solutions about marketplace So long-term that to did we're wins the in happy QX differentiation, hasn't our based from future accretive on to are model. and in bringing our we we report aggregate and and QX.

to versus quarter, Maybe some reiterate think for I constructive, that mix commented 'XX do will year, could we a be as the still we've have you're to particularly the 'XX, on impact believe, that ASPs. up But year. that environment the still going for respect with side. given a is as few year-over-year, We well. time, points any flat long on We've pricing to quite mentioned XXX-millimeter pricing slightly for the

XXX-millimeter. I'd say pricing is You the for taking environment XXX-millimeter, do see little deals a spot constructive. on pricing place quite and action But bit of

have follow-up? you Did a

perhaps the could fourth pretty into by kind And about quarter, I up, this demand talk market has do. expectations segment you what's been of asymmetric. change your that down, what's recognizing

in what's market you're segment could particular of that the about segment? -- also you while is it is you a seeing -- true-ups? concentrated Which payments for what's to, segment these If LTA where or the say speak some that,

fourth have Niels, chime more sequential this think if of to add, on for Tom, to a this of bit little us feel individual end you've year. throughout you free what see strong the all of when the performance quarter, to year. course one, I'll you're markets, of in. I been has think Automotive you going the of same start this Maybe the and think anything about Look, I seen

you're a expectation to see to sequential on Our is that going . continue basis.

Within there. home a the of kind and industrial business, X of there's tale IoT stories

a as and got, little bit And consumer quite remaining industrial got then well being and aerospace you've by large, defense stable. You've challenged. as more everything

home I largely this business, so takes, you've pretty industrial kind is some to seen consistently IoT of think a year. but out puts, of some quarter throughout performing what And and quarter-to-quarter

would mobile kind bumping the depleted that Smart of still out be along There's characterize of devices, inventory bottom. that channel. as I needs some to

could but any large, of by And I you bumping movement there, say, given bottom. of so kind a along on and have little bit would the quarter,

fourth you've guys infrastructure and stable quarter. of third then add as a that characterize would relatively to or basis data center, and I And got quarter that? sequential anything to on would you comms being Tom, kind Niels

devices, -- see Maybe of results, Qualcomm ] only right? did Cerus inventory a . has on see to their smart [ and up, bit the we that reporting little Calum ] mobile sign and signs bottomed [ and

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

This market Sanjang I seeing behalf to great want is go the just Vivek. of end ] you're back question. autos, strength. to [ on Dak In obviously,

this but had You said just this a next quarter-over-quarter How obviously, your is year next compare tougher strength it's into do given likely some think sustainable likely year, you to quarter. and, weaknesses strong a have going portrayed you've of a some be customers year.

be here would So any color helpful.

Yes.

high last from We XXXX, million [ ] numbers grew were we you rates base. good small $X to $XXX under million, have like year of billion. when start think Remember, that. [indiscernible] looks $XXX I revenue. small to foreshadow you a growth

not growth at rates, of you're because cards continue in growth the automobiles. unit just billion $X those kind to the Now of

auto that nature or a that about the transition of of thing part whole transcends everybody to in electrification industry and one electrification. piece. just connected there's advantage thinks the think the trend But the plays autonomous bit about transformation being the the our the is that I

to vehicle, and need navigation car all an they're signals all electrified car internal in of the for or radar combustion going that nature. semiconductor the these it's devices whether for for other managing So things devices

So years we're X we maybe I because lot broader to we a a think ago. for base, won we've play capture today business because this new of bit building models, in X sockets to can little that

will be takes then. next we'll solid Now far, if it the it part a as take our no semiconductor as what that. our look is industry, from what units in as closer a to QX, so GF. we're as But pause we -- if decide for and of one forward to the deliver to at and us, a capability And shipments get down, for and we go that. year, about can will industry we industry and immune revenue coming see the company, alignment has of big our needs automotive a requirements needs for because be, auto the But the the automotive of

of those or just and only it's vehicles, had growth positioned both, reemphasizing that, this same and it's are we forward. is we've the across whether balanced internal well we across the year goes combustion The areas that going whether well and to the thing both engine electrical point be expect

is Yes, trends a the Long that products we bit a a in think will of hearing the little with secular you're Vivek, we us. provide bifurcation. what I market be like feel term, tailwind the for

from like that units a potentially We're into I looking units term, many happening could interest car market. sold, perspective we're drag rates. create at what total in look, looking the at industry, the just think short on what's with

obviously, watching. on sector something term, we're still So the longer quite long term. But that's bullish we're that

follow-up, have Did a you Vivek?

Yes.

back to color as assumptions to guide approaching X, year the an or see great you the guys for going would know well. now, don't we're any next said smart probably you inflection. next So going I devices, know be 'XX quarter qualitatively mobile but I we're your bottom

Obviously, little that of that for? across maybe X markets. there's But general. respect just a Yes, in catalysts, all what wars we'll guide take one. you with bit There's as That's a end one ongoing. the quarter at in macroeconomic are looking know. are market I'll uncertainty Look, to time, we

business And think kind a one broadly of is caution. little I environment of general just so speaking,

in think like smart devices, positive With I inventory specifically, respect the It looks takeaway is inventory growing any consistently, industry the from coming as from customers, mobile longer. as is not like, look pretty general, that it does to well is down. our

pace decline of that around is kind and But broad there's starting that a think was that of that we inventory I think acknowledgment faster. of do we to sit the I wish table bit rate finally the inventory and fact think decrease. little we the about

And so quite that's positive.

about basis. when a to term, think handsets think on are I about do what think we year-over-year things longer we going like

global years row where couple units. now I'm a talking seen a of have just been You've handsets challenged. in

next in or think reduction, of segment. way will meaningful again? handsets be that so this inventory for we're year all pace handsets will in inform And the down handsets year I are that us and are a which a are up what flat, pretty is rate in which watching, particular,

exposure a the forward in position we handsets. the... Maybe I premium to be believe to are add that that's with as And in we the good is move we would thing only our pleased

come world economy thing, to this China, just devices. China a the other start seeing on, to consumer how Yes. spend is fast the And handsets global be could in where to in and part revival back and have is last pile of will proportional

Our comes from Joe from next Moore Morgan question Stanley.

wonder from impact how edge you about I we of if China address, in business, reshoring at is nodes. capacity on could do your significant you that coming What in spending do U.S. these kind prospects that and China if online? looking any? incremental the you trailing very kind And Great. think think the see of on both of

the is but build the a it standard the device and in, and for Look, and to specific to are going Having need the solutions. table whether cells, that foundry, and you around about innovate be checkbook to put features very think to that. their different lot it's the capacity, be how of capacity, unique IP a the the the even for of to run PDK, customers and we end is supplier. me-too types, a value you I and markets solutions the stakes were We adding libraries, the kind that it unique good provide never innovation knowing

type innovate, GF as we're as built these continues as generic conflict for more continues to And of long what capacity long GF as that's to solutions, with create applications doesn't doing.

matters utilized to capacity for our of make capacity and and markets, end continue market device the going and for we start to our make for because we're and is where innovate, value so applications sure these our and understand crisp to we game and types making customers. very sure sure putting goal in with accelerate is end customers markets particular be the to created time we've have we on understanding our And a us, our fully differentiation really

have a you Would Joe? follow-up,

the that. That's of business business industrial in more feel with prospects there's focus and like are of very this sort them were that build price durable of when as helpful. like customers, process smartphone that customers? going How around and seeing the a potentially pricing well? lot the a business I part of smartphone-oriented you of are X, and with models on a developments differentiated won kind to obviously, more are on and But technology. your culture lot strategic kind markets lot you've you able a X leader, those And years ago autos of kind of you forward partnership build of you

the Yes. price I in business we say wouldn't the leaders day. because won we're back

GTS of extension better a which our I have example, think up lining them front-end the this there, solution, could technology and a leverage lower And technology. bag. same wireless module This behind are there earlier to differentiation power, XG to area. in a list of announced for and this our is gives smaller generation fixed performance, that we XX% XSW. the that maybe job on year It give perfect you is solutions. lead front-end modules customers follow-on Joe. switching was next technology better that done the natural a XSW I'll capturing We

a as I solution handsets. think these GF's well see into to start wave into shift you'll millimeter

by of new in our these of example, BCD technology way XX applications smartphones. Just finding some

again, So differentiation I high matters go our important choose would where because they of the have and win very power say us GF. marketplace market, performance. there has we mobile and size to smart that. choosing pick in with device and Differentiation continue to It volumes. that And customers the for the applications,

just of I'll to at audio, really announced, and introduction in And BCD [ also are be getting, the smart add, our strong performance customers said, like really, front. GTS, we the Tom we're haptics we're very the pleased the for that power a ] that on technology, phones, pleased XX process with [indiscernible]. getting, very XSW continues that performance so

[indiscernible] power levels out. XX% performance, lower you pleased see we're more also smaller on and that's XSW, rolling how So as with

Yes.

think the is I last in shift build thing where have us final just piece we add, I to market. seen that you on there, play would the

seen much of that through playing low tier. last, tier you've even on very that and over have shifted focus the tier lower the clearly the XXXX, X you've years, XXXX across the much, it, end of of from seen And us let's really kind We market focus premium us of medium more that call market.

seeing the increase that or in across along across way correspondingly you've -- up those And line go years. or significant ASPs a pretty time

more focus So much a the of premium. towards

comes question Chris next Citigroup. from Danely Our from

renegotiate result it utilization plans And your first out a about LTSAs, of then of this of Just into into another is Has like is And to rates? price? next anything second think your anybody gone half been the year. can inventory question What implications how as XXXX. push next 'XX And a year. out the would coming just for 'XX? Or we up et be into pushing this, has has inventories year? half renegotiation on the from to these Or anyone cetera, the of tried on it more volume? pure

Sure.

inventory, speak GF me to you Let about you're when think referring I say inventory.

So color address I'll one additional LTAs. that maybe come the on back and first, around provide some

Our year, vast X with some substrates. the those not inventory in of materials, increase if substrates. to typically, finished And in the lives their of X longer than majority even in which is the in process, goods. years is increased those this It's years, substrates, up of be is not actually could actually of majority it that nor raw has work and in all

not is not We process. in is to associated So the in into of goods. kind finished increase demand. is the will, manufacturing inventory by and raw It at large customers' if it specifically materials, GlobalFoundries with that feed build [indiscernible] you our

the then their LTAs taking are. about There's work talking demand all aside and we a LTAs, respect and over that needs their volumes of XX Tom that customers with mentioned, daily bespoke. so the LTAs, with basis our on as to are what And

in in very elements those this of of generic, this the too talk earlier some to but at being Tom the call, about LTAs. in was, beginning described well without which so And it half the a the second be would market, then a year. that bit year, the half recovery softer in was would the of little expectation healthy first be this and relatively there

such a their we're and And so not to by I'd half the customers inventory looking longer-lived at satisfy saw doing bit were customers what demand. some be industry, half that looking recovery, products, large, first you year, across unable during second of the were little were build They and accommodate to to semiconductor and well, at say, a let's is, saying, needs. they this of of able demand stranded left

year, pace into As that was were we expecting and and first we second the maybe the think that that expected. we not got it second recognized ramp half through I quarter this and happening second of made at was rate the what the we everyone half

and inventory, our detail more you would we so LTAs. I some start general good want and around you actually industry, pretty in then and customers I well demand saw local those as say, the boundaries "Okay, start And LTAs, don't saw others." would to customers, to those on need say reducing some And GF now customers then say, through build as working you any we on rigor

is giving end visibility which us maps, so results, design And to what you seeing? us for are greater You're the road seeing wins. get opportunity great customers'

you together working the then we how want increasing if modest for maybe to can underutilization inventory don't demand, duration, You're the seeing a work on, fee. with either us customers take maybe

our resolutions those flow the million. in quarter. is quarter fourth of the for those have seeing The was again, we'll additional some guidance for expectation fourth start to the in third quarter some you're range resolution through. So about Included the of that $XX agreements,

'XX is of you're don't so 'XX. half or I first seeing into think second push some And of the what half out

as you're I to as the think true-up demands we seeing and that I what 'XX into expectations are exit 'XX, right start are that XXXX we it, is, get the now. think loaded call the of with And for extent that those largely elements then realized. we'll XXXX And again will that the not, in and down the in on to all period variables. the LTAs be they're our XXXX, customers sit demands our

a follow-up, Chris? have you Did

Yes.

for So a Tom. question I guess

some seeing think, starting automotive something the to hear ask I of for more end automotive that more, market. that we're source you to second Tom, start This the Taiwan. side, just in is just intimated customers in a not outside you're and

us just a end expand more GlobalFoundries? you another you that? semi benefits where fearful the is across years, Taiwan, X, of potential and this like within manufacturing mean, can Taiwan markets starting on need give of I So Chinese to customers saying, invasion X to are source to potential happening get more and outside hey, of

Yes.

than that. it's think more I macro

concentration, it's becomes much chain, have bit any much in geological of thing, think like part risk. and single seeing semiconductor is and of level about I more balanced. points the of too failure we that's really a supply critical more are high something have put concentration, just a that customers anything, you can a I you're geopolitical, there's what the in industry resiliency. it's a such How bad thing good of mean, resilient little a too looking that, And for world?

to their right ability issues prevent customers shift them manufacturing China and international to now in are leaders I in shipping think if be there about the are want that worldwide that from China. players, things who they worry in from more

seeing we're take customers. China, worldwide and So some but supply yes, for design with alternative for where rest a their to supply interested that for wins be their for us world manufacturing interested they also global customers And footprint the the to in an China of want getting and place customers. of

we and it GF going I the a good, we're mean, chain of and you resilient. geopolitical were are, for gave value people, In the more eliminate more right for first you of It semiconductor bit how be macro to greenfield. in the now, more important XXXX, as footprint, capacity little foundry. head independent create additional us supply make of premise, us because have signal creates of it and we is to global regions which broader was it's global operate on world's is and things but in going And when concentration customers. first a that beginning go Chris, a than failure a semiconductors rather bit managing prudent that have this GF, story the the and of we much event and of for think see didn't I So truly start that points created we great easier value on

geopolitical and so a think the of I for future, in is is the landscape. the And trend what -- temperature this independent

all thing a clear our strategy just to because one to of add technologies not And But sure of maybe GF. if in everybody is manufacture our multiple I'm I part locations. outside have could big it's

get that's provide that and same big the you do customers, So those part moving we in all a them capacity strategy important . we of in In to in Dresden, footprints, manufacturing Singapore, try can forward. vice think the can and way, versa, and we Manta. dual

sourced So can our part business. be member across a single global

Okay. One more question.

Our next question JPMorgan. comes from from Harlan Sur

are weaker customers your still your of excess inventories. any segments. of clear Many for to working a March is quarter consumer-focused seasonally quarter

typically wafer times are full quarter. cycle Your fab a

of of or maybe Can seasonal the already So you're us trajectory just a in your consumption? we already QX, to flattish trends, quarter. kind a with into you more directionally down line how sense expect Should profile step executing you first wafer QX? a starts think shipping more are revenue in as give below utilization sequential and for on guys

Sure.

and then one. specifically first macro come address of take So me just the that more start some maybe with view And and questions. maybe I'll let back a

taking, just in think going inventory some have the on. of in a in wars we cautious that couple we persistently general, still I we high approach inflation. that call got fact a We've the earlier the given mentioned are channel,

aside, all we be expect XXs we've we've that for the for to that a of is that But given of utilization given that from perspective kind low the the specific to mid XXXX. guidance in year

half, of think, the is to of the this with kind For were inventories which mid- starting that XXs. fact to now. into half we second high lower very heading year, Obviously, consistent a we're utilization drain the first I implies much, that see

drained. seeing And as down being that rates utilization come inventory so you're is

industry quarter, with decline has historically I just So think first from seen seasonality a to weighing the fourth perspective quarter sequentially in. I think

have in seasonality, when And say think year, think lower then so utilizations I utilizations first about consistent some the rolling we year, about documented in pretty And higher well in the industry. decrease. this typically next you would is which inventory second half, you that when into the half, with

leave I So guidance anything with there to that, XXXX. think probably respect the we'd with

last would Yes. on No, LTSAs customer relatively Is had the then stable-ish pricing new call, based this the appreciate wafer that And versus that. like-for-like that next be case? overall team and your anticipated engagements still year. year

Sure. like-for-like to flat. pretty With pricing LTAs, respect our is

point. that those perspective, through as elements. stable had year constructive. like-for-like some we've we've Obviously, and LTAs Remember, and some to I So by had the a that duration. is we've and say, be big renegotiate of large, Obviously, price, been fixed pretty had gone pricing volume, out. worked But those really would inventory, fixed consistent on had pretty to somewhat from

for over to Sam Franklin conference turn time, the remarks. session closing Q&A the I this now ended. At will has now

Antoine, everyone, thanks, today. and joining Thanks, for the call

Sorry, to the get everyone speaking Thank the you. and list, we up to we to couldn't over look bilaterally forward months. but you in call catching coming

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