GLOBALFOUNDRIES (GFS) 5 Nov 242024 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the GlobalFoundries Conference Call to review third quarter of fiscal year 2024 financial results. [Operator Instructions]. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. today's being that advised be conference recorded. is Please hand over Franklin, to would Business now first conference to like Relations. Sam I your the speaker and Investor Finance VP, today, go Please ahead.

Call. and Thank operator. GlobalFoundries XXXX Good everyone, you, welcome morning, Third to Quarter Earnings

call released Thomas CEO; today's On available financial which GF's CFO; third with made John short Officer. A on today page. web This Chief call and recorded, available will Relations presentation. at slide are with Anderskouv, on quarter accompanying Niels Business me investors.gf.com our while Hollister, our Investor are the being Caulfield, and ago, along replay website we results, is a be

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

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

Form caption may with in that and the section differ the annual fourth our XXXX design to will risks our Risk April the results update begin and about filings, in and also materially providing statements, actual well John information provide a results filed on we release our in press recent to SEC highlights cause issued on please third will the guidance. our Tom then described Factors provide quarter the report on with today's wins forward-looking more following refer factors details SEC today under markets, XX-F which For quarter uncertainties call business XXXX. We'll including as from and Niels technologies. environment across end summary discuss XX, current the on as

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

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

the of QX consistent Our customers with results with essential our quarter, to cash in range, we our need objectives gross flow our environment delivered using from deliver third in products factory margins an reflect free they continue lower of the feature-rich and the of guidance another revenue meaningful as end towards year quarter we technologies. In strategic year-over-year execution geographies the to at of generation levels. high where consistent the us our the utilization commentary partner start

end which is the near-term that mindful cover fourth year. To the in commentary and will quarter. impacting remain line we quarterly quarter Although and of are X% for growth of John quarter, we we utilization first point the quarter-over-quarter low serve, reinforce our deliver XXXX, demand revenue markets these for results sequential in would we that a dynamics prior guiding our of roughly continuation revenue billion this top the reporting end, later $X.XXX the the sequential we growth the growth. revenue sequential are throughout was that

our the opportunity opportunities funnel business well by our pace differentiating of base, and are customer size source As wins meeting innovation broadening the focus of of points These on of customers the partnership we of new wins design opportunities. the we have relentless built closed in product and and and am as focus on rate diversifying portfolio XQ encouraged I we our with as and also in wins important XX% all the end design are Year-to-date, markets the across that serve. of approximately our needs proof we sole our our customers.

Just up a execution footprint. intelligence XX% to power by what testament XXFDX our recently, AI technologies. applications, platform benefits are comment set to partnership versus platform. our CMOS remarks optimizing resiliency with purpose solutions developed in GF's Niels We applications. edge serving other win customers, deliver energy of NXP built our at XX% for the announced the most performance XXFDX planar including a delivered higher end will performance is and performance we to and broad and and markets a further The key with this global prepared of power a his manufacturing to lower that matters on design range of management

Our source [indiscernible] support Europe wins and multi-facility the and New the desire to ] global design upon to we fab. coming breadth in critical the in These are serve. tilt nanometer diversify consistent Asia York all Malta offer capacity track that years [ across customer U.S., there. customers the XX, here on remain transfers. strategy service to our footprint, and already uniquely RF complement these of markets diversified markets positions manufacturing over XX-nanometer are our our one platforms XX- of FinFET, to customers' transfer U.S. to completion our the with technology GF most end our offerings will solutions the silophotonic into and foundry of across manufactured served SOI footprint from the We end

X Our silicon positions photonics diversification. beyond product Fab line

and positioned continue fabless this leading in [ bandwidth with increase, and companies rapidly next-generation connectivity with to win model center to data hyperscalers, space. GF's is start-ups As ] applications solution requirements well

in John to commentary. his results our and Niels will Before third I design markets discuss over it win end now in me to activity, detail let quarter pass our more discuss which review

objective strong company reported towards year-over-year billion, another free delivered share which of end value long-term the for gross shareholders. of of creating guidance was long-term $X.XX, guidance cash revenue the the $X.XXX guidance diluted foundry quarter pleased our which generation non-IFRS flow our exceeded the sustainable, our range. Cash increased of sequentially third quarter high also earnings model to at flow to As and XX.X% of driving We which the exceeded am mentioned of in range. margin midpoint non-IFRS generation. our in a high end remains We per the earlier, a expansion for range. I report quarter,

We well in goal, free we the and million our are IFRS to $XXX on delivered adjusted year-to-date. cash have of flow this way

executed full our year still reduces, range intend XXXX, Xx strategic our partner customers closely consider third balance capital of grow our am this of objectives. For anticipate design growth on is approximately teams as total wins to XXXX. plan the with to tremendously allocation our our I to And we our continues to important proud the world flow leverage growth we and a for of to quarter critical and cash results our as strategies. In good cash conclusion, Free metric long-term our compared they progress metric goals. towards reflect support around an business.

their their So team to to for a big thank work our DIF [ to customers for hard trust us. you and over With ] the that, in continued entire Niels. you,

a everyone I'd market key of partnership Thank to on on and provide call. the update brief you, our some performance. Tom, to in like welcome customer and

are As pleased our momentum. design ongoing win with Tom said, we

collaboration to of IoT mobile is using devices. our our with wins. automotive, what for will smart announcement This focus with set key example a achieve next-generation platform on NXP and recent we out design solutions XXFDX Our

overall will portfolio, On continuing best grade we footprint, BG's by end the their over like manufacturing last in the leveraging such enable markets of our provide driver importantly, New performance Malta, expanding standards. per solutions global this of system content despite York and of ]. Partnerships of to including growth ] meet key the a automotive the and are increasing end facility more levels some serve, deliver to More this [ semiconductor support requirements market channel that quarter proximity our the cutting-edge vehicle. NXP as solution solutions, we [ compact to underscore at our power-efficient higher customers, automotive remains stringent capability note, our inventory that across

Our product quarter, across on diversifying market share automotive of portfolio semiconductor automotive safety, market Notwithstanding We, the industry. decline our and in demand market our the continue XXXX dynamics important automotive gaining radar, the the expect this share sequential to end revenue we end continue facing track and range some in single-digit customers as the such automotive market. Longer we high in that applications to critical growth growth relentless management note remain expect believe an therefore, be connectivity. term, applications the to target will and offset automotive on short-term power deliver as our gains revenue engine of content with grow. us in for revenue to to focus

inventory begin to demand growth now Turning our in the growth normalize. returned appears market to in quarter. with returning devices. our end be This to for on year-over-year mobile volume smart mobile customers' devices conversations as third XXXX revenue modest customers, Based to to smart

will these data be full inventory year believe dynamics, we revenue market roughly our flat. in Given that end

the by established We wins, both are our design growing market. content technology encouraged of ongoing in leadership point gains are we and this which our proof

As penetration continues as design SOI the RF in wins the our XSW our are provider and leading a on grow, platforms. reinforcing quarter key to our XSW position we front-end content of our

We wins for as back applications [ as Milliner display wave our micro design also well ] platform on picked smart and planes up glasses key XXFDX applications. AR XG of

X% manage in a this our wearables both interest to its these we platform, the the inventory customers and although on power applications, sequential down across year levels And enhanced continued both thanks and XXFDX expect from of performance inventories. end our ongoing their continuing to quarter, IoT, due full and revenue growth is basis consumer capabilities. In principally We carefully mobile applications. to in reported market industrial using efficiency are

across Longer and third the applications and at to acquire, across for smart market. the XX-nanometer quarter, IoT includes the continue the our to devices by we design our products XX XXFDX IoT XX-nanometer new need sense, next-generation our decade, to edge expand on grow and our WiFi we cards platforms, communicate term, expect connectivity and data. as end smart number driven end process market connected These During next platform. secured Bluetooth over on both wins of

communications segment sequentially data revenue quarter. Finally, infrastructure our third center and the declined for in

has end, management of power as are and of customers silicon applications data ideally digital-centric future market and technology battlegrounds in space. solutions vector terminals power Although phased this and as growth to [ to market new and increasing working to with compute our conversion a GenAI suited high-performance center. GF the largest higher growing as emerging in towards expanding remix optical from used also To node photonics and key to pleased end and for requirements the as in in the storage XX-nanometer that customers bandit antennas is for data silicon and and trend. we migration front-end address I'm transceiver in servers off, germanium satellite that communication large ranging and sub offerings center incision products. photonics of this growth on communication is tapered network this ] the efficient X power service high require our our silicon product. largely ground germanium opportunity node report we satellite Optical this is silicon product opportunities we're focus solutions. Commercial the important storage market Networking this high-speed significant portfolio SLI data content, to switches array for silicon center

markets earnings with our that I'm of we As roughly seeing positive XXXX. what wins report in second half half Overall, end line be end we previous in very of all across that we're first calls, our the support. in reported we have this the we the design progress revenue for XXXX the to market discussed that will believe pleased on

markets. dynamics the we and a tailoring each customers the support continue product need short-term growth in for of features remain key by for focus, requirements pass the long-term call financials. John I'll opportunities to dive trends on demand position performance end over our to secular to third now quarter these deeper Although a

Niels. you, Thank

CapEx and For call, will metrics, compensation interest restructuring including other income I expenses, other which flow, charges. guidance, revenue, the and remainder cash and/or share-based exclude of reference than non-IFRS the net and

a includes for approximately shipments total a X% items, and As our sequentially of of which revenue, quarter. Tom XX% accounted principally update. approximately revenue and mid-XXs total average revenue for nonrecurring we our levels third billion, X% from utilization Wafer quarter decrease XX% We per last our over X% $X.XXX end in quarterly of in or ASP the XXX,XXX flat down the from call. We from prior quarter in reticles, noted, third provided with XXX-millimeter increase revenue expedite ranges quarter, the wafers delivered quarter, which revenue. our X% year midpoint last earnings wafer the on the prior of other lower guidance accounted shipped third for equivalent roughly consistent commentary due engineering, of results Non-wafer period. selling the fees the represented the was to but approximately year-over-year. price up year-over-year markets revenue exceeded and

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

Third XX% we our approximately end XX% customers' quarter year, still begun to for in due revenue to prior year-over-year our a on approximately shipments. the the higher flat seasonal sequentially revenue year to largest principally believe revenue from roughly normalize. have be increased that market And inventory expect and full levels by period, basis. We

of As the In by total rebounds content mobile smart momentum third quarter's represented support and home in with to win revenue positioned design customers we demand Niels, expansion outlined supporting are IoT industrial approximately well revenue. our XX% and devices. the quarter, markets when the for our the feature

X% period continue approximately XX% in industrial IoT consumer channel elevated tackle customers to sequentially decreased the our revenue increased year Third as and from segments inventories. prior the and quarter

growth As with will continue design to in discussed the connected growth end channel similar meaningful represented expect In is to approximately is key until win for across the term, home market inventory our total industrial rate segment Niels, we and our third revenue. customers our of XX% path that revenue by remained drive opportunities. a run there this quarter customers. Automotive momentum for us reduction for on wireless devices quarter's short expected and long-term a a

decreased due timing XX% and quarter management. revenue customer year prior approximately the Third inventory sequentially from period the to of X%

share revenue in high be the has growth a gain across for support we XXXX diverse noted, applications. year-over-year to expect as single digits to automotive our Niels of and we range customers continue As

represented result market, as volumes. our total of the on X% which third Finally, declining revenue quarter moving sequentially year-over-year to XX% a communications XX% quarter's and approximately end and infrastructure center data decreased of approximately revenue,

offset ASPs. partially by a was in improvement this However, year-over-year

optical new and range of power, center the areas and are Niels of applications data we connectivity to in networking end this noted, As continues Tom wins and gaining the in grow. design market infrastructure communications as

profit. gross Moving to next

gross the and from prior XX.X% exceeded the was adjustments translates third Gross range midpoint quarter. by our third also our discussed guided quarter For the into earnings call, quarter, customer in reduced which roughly the profit gross we half revenue delivered indicated we midpoint second and quarter margin. in $XXX of margin of as above million, from approximately the volume had

be similar $XX the million, quarter of advanced quarter We and expect in represented to expenses and tax revenue. SG&A the that million manufacturing third fourth Total these sequentially approximately quarter. Operating adjustments to $XX total sequentially incorporated will for quarter, of in XX% operating expenses for R&D the the credit declined million. $XXX increased and investment million. declined $XXX to

life XX.X%, end the to of expenses earnings operating year our assets, call, which the below we guided on translates as margin prior of we range through to capital and profit of the and points delivered XXXX for program. We in and the As last continue an is U.S. our operating to qualifying beyond, the $XXX expect continue which discussed spend these on benefits basis quarter XXX of period. million into high receive

other interest period. expense decrease $XX net and $XX and expense the the $XXX million was net of quarter million ago quarter. We income and million, reported $XX Third we approximately a third year million, incurred tax income from quarter income of in of income

diluted above the share of our the earnings reported for we As range. result, of quarter guidance which third was a $X.XX end per high

property, to $X.X and as or million. define flow now Cash flows, stood as marketable million. At provide the provided the quarter, government net total assets revenue. plus quarter third was our cash and was third free from capital on related set expenditure, flow the for for which CapEx and less the $XXX flow securities out purchases from by proceeds Adjusted for grants key cash the approximately operating of equivalents cash quarter cash X% equipment me was cash, of sheet of end activities, we some of Let combined cash the million roughly operations at balance the $XXX plant, metrics. intangible quarter, of billion. $XXX statement

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

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

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

between profit and midpoint We XX%. to is million, gross $XXX which be expect million the $XXX at

$XXX compensation, including share-based fourth investment the but million. the advanced we for $XXX Excluding be to manufacturing expect to benefit total between and related million the tax credit, quarter, OpEx

At goods to $XX We $XX million which is $XXX roughly to be midpoint expect and of $XXX million. cost of operating guidance, million related profit to related OpEx. approximately our between of sold approximately to we be share-based is million, million $XX expect the and compensation

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

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

efforts product at the update. differentiated earnings second for Operator? we enabled the year markets approximately offerings to guidance to guidance we provided the growth generation $XXX free our flow open in of an maintain expand as this world cash to the million. GF the expect our results our XXXX, $X full to in that, provide XXXX, summary, opportunity quarter focus key dedication our achieve call us their high and on third indicated, from For delivering billion. In With in we continued across ranges end the Q&A. employees of CapEx let's approaching quarter Tom And adjusted

[Operator Instructions].

question Our of of Ross line comes from Seymore the first Bank. Deutsche

your question -- of weakness this half reconcile then are the year more macro exhibiting then is first Tom, strong? idiosyncratic trying that customers? seem that does importantly, to for benefits solid What you're you the you're And really which are that of kind for the the the XXXX? to the of I so strength I'm puts really a on is set market, of be number how the to my perhaps to takes and in second what you. relative up guess do enjoying Congrats doesn't execution. And

good Ross, really question.

best of So bucking maybe GF which is first little way why start part a say the bit. the to the with trend let's this,

have comes really a of well end smart in it the play The concentration breadth to But think X I pretty factors. high we markets and devices. mobile we down distributed.

Third business a year our percent in of hear quarter high sluggishness you in where XX lot end automotive that handle single auto was revenue We're digits. even the the in growing in a about market.

And mobile remember, they devices, period so their ago. X smart had down years

we they've the become a auto or opportunity sockets last cars that engine in years. over so the We've And just X for more that not for a has content us. design steady cars. to And for It's And growing. wins lot growth is a been GlobalFoundries. are expect won of growth And continue. Auto is in more growing. X

So the X I our it's the the revenue. in particular, in and end think concentration those mobile markets breadth of really of auto in devices elements, combination smart our of

Now XXXX.

by a would we quarter. let revenue little the first in me point began putting be context So low would XXXX. QX start we said every talking and sequentially and this grow that the We year in by about

be we're we're for did. over that's let's was QX to top sight mid-XXs. going track we QX deliver guided And in and $X of utilizations that, cash In in fact the what another on QX And X%. flow, to so free just that's not with that further also then of growth. On the billion of -- QX growth. was lose X% exactly today Results of QX over we

cash shows the of our pretty that's It generation think I power business. of impressive. the

that of and GF, like a ship talk performs QX the how an could the probably QX So we but the through X as relative face tied for compared Year-over-year, given the in year bit time, the to It's fair thing XXXX. be XXXX think QX at it are line how guide I don't halfway performs we in to of quarter for to for be economy. And XXXX stand today, is really a have and we to in QX. to is wafers for and that WIP than here growth. our some we The going most GlobalFoundries. more XXXX. tell will it's almost one this -- is we we'll that magnitude that XXXX, you little going macro about of to the up to industry QX

of end in cyclicality. the the other the of to will the be QX On sequential that, in end year this XQ decline high

And have on cyclicality, year-on-year, be it a so cyclicality see Ross. while QX growing it of that, any range normal leave high And it be we the I'll to Do the QX. on the will follow-on? end of will you just at

to Yes. wanted pivot to over margin I just the side. gross

when half I LTSA the you one So that. on little the quarter side in about talked coming you for on John third of a guess benefits into got clarification, things. the that

at stays absolute same then And we is, that margin and my that, of about level meant of not takes XXXX? bigger getting the puts think do the gross You in as again. half quarter, we in on how cut fourth picture think the question

for thanks Ross, Yes, question. the

course through you And We're quarter a the me I of number course right, third in point talk same the We've is steady just the First can. did income if broadly this me of EPS through saw and the about let more pleased is understand the XXXX. in the in this with year seen delivery we net results terms our of of quarter. profitability, year. fourth absolute what in roughly

of margin, the a charges had the lack the in which effect On very factories, we gross other the profit we've positive look partially loadings generated, and at that you if utilization points have X.X that can than and quantify the benefit quarter. that less roughly X a in roughly of QX, little in the as X about quarter fourth in third QX, in about points offset

into year, coming we've seen the gross up utilization net in look Ross, on a see And quarter it's margin that expect ongoing in utilization, is, in continued and we we sequentially we just has would as an industry every as point stabilized that, on as the margins. profit recovery as improvement actually similar XXXX, So effect with of leverage the gross recovery improvement our positive Tom had revenue the profit of back indicated. our really operating

Our comes line of the from of Sankar CD Cowen. next question Krish

Tom, X them. Congrats on had results. I of the strong

on is the overall ASP one environment. First a question

one spoken some Your in your have pricing about March pricing peers But been year. adjustment quarter. has of surprisingly resilient this

Another peer seems be to okay.

So out I'm there's confused mixed kind of like of on messages a there. pricing lot

So Tom, in color you think how with pricing calendar about trends I us can help just some out And on then to 'XX? it follow-up. and had a quick

Yes.

start are industry. with very of how They've the that the energy anywhere of world. expanding foundry capacity. costs. on big time highest went let's So the XX% in represent They're They kind in of prices a player the clear see recent all Most been they articles the about in TSMC. lot wafers pressure that

capital that. Deploying So the to cost to on in they're be return regions need capital structures deploying where a get challenged. going are

And pricing. so repeatedly for about this talked environment constructive they've

industry shared, that our be the part understands recognize the tone player and is sets of inflation rational needs And that, pricing. that so big when that to for

GF lot to what of look certainty seen? customers give do Now give remember, results, has this us what certainty. we've our flat But us been a on we going give XXXX? into They And our could LTAs at You year. see has pricing search. our roughly

pricing. fixed volume, and based they're remember fixed on You duration fixed

that's so under. of rules play And we game the the

going of is we noncommitted it these results. But XXXX. that's a It's we've to to these to technology. our see as come deal kind costs a basis. And see And inflation after we so of opportunity get the pricing in against the offset on years had long-term for you've revenue opportunity to discussions about have outside we of our our come our what going And actually of to XXXX in X agreements. that better seen think more

of capture single for on time I general source, lot source You'll of you us. value both that with special we giving the with just one means pricing leave that. And think Do I hear have confuse anecdotal tactical customers setting don't at GF's we which a business would events the see. sole some business, have I'll engagement remember, creation trend it load. our a is of follow-on? and type people for a

and follow-up especially bit components My XXXX? or [ and as smart What head very you a it's the Tom, process helpful here of Yes, Can about power a knows part stack. feedback. very thanks on important the is segment, on? the your from seasonality quick revenue that demand smartmobile mobile, is we talk for trends ] strength in devices? the RF coming focused also, into And obviously,

this I'm right going to Niels in is take me this. Well, wheelhouse. let

is Niels. Yes. This

and we from But we tier XG, [ I that win So talked premier China, a call the mid-tier can getting year about design low little up we the well yes, in to really expanded into known are mobile add on opened devices, growth, also maybe where for smart when ] basically we both a have phones. back it phones. standpoint, we have very think bit a seen position today, good of in I our growth

we're So starting the the well [indiscernible] X addition to China today. Regards to to see the usual This business coming in of premier [ that for with well some RF SMD]. early traction major as well as have players technologies. as [ in in for known is It's phones our the on on on to starting IFM we're SOI]. XSW, portfolio XSW, [ ]

of Our Wolfe of next question the comes Research. from Chris line Caso

then that, down of I on customer Tom, that, as down about the this case, the kind sort I into you that that. QX of the of if think detail of And And provided the you seems just heard would on first single gets It up but that's getting just digits Is it math, in sort could how guess still that we impact next first following of March levels seasonality. de year? is what higher commentary right end if quarter. implies with it our is some some the on minimis basis right commentary we Year, you you on is like unutilization on say to next. high I year-on-year, which get gave payments into as go. the some question of go more half confirm

Yes, the Chris, I'll John. take this part. first is

of customer been the are that effect course that of with correctly. profit through XXXX. and less of quarter of the mean, I You seeing -- of through seeing just the We've quarter. the now on material LTAs first and a to just fourth overall X number of the those the less roughly our we're quarter in effect outlook, interpreting gross We're fourth point discussions over XXXX including

story let material part and I'll As of a year, next less Todd next see first half take look margin the we year, we of question. to dynamic, into similar here up the next profit that gross overall

Yes, right you're this. Chris, follow-up, you've on the have how Chris? done sizing you Do math

another is want geographically, to to I see do. within in picture, what's from your starting but competing supply their diversify tending there's bigger for a bifurcation for dynamics, is where -- another which question that your within to think in are X customers bit to One And what that's China. segment. want again, benefit a locally customers foundry while, product I that there's is on but geopolitical we're little is reasons, seeing China produce you going

having geographically China? way terms do of balance As because of X business you of in in incentive to as some at those of business kind you're the customers located going things compared opportunity for your where to coming the you your look forward, produce how some

let's for Yes. second, rest come that It's It's because what's about like the China tailwind, what's your headwind. talk I'll of world. a Chris, and it's really the but China good China, for to your question,

and Europe. partners GF-hosted summer, month are had events the in just for we that Shanghai had partners. had that and technology global as these U.S. had we X the Xx a over ecosystem We customers and in ago, event We, many customers summit,

the this, U.S. attended. need, companies business. fabless worldwide give But have a local plus foundry in of geographically Europe idea how you they of their to way, but this by can there's Now them one. They an were for diverse events well few the gives like local, need China very who strategy to and also GF, a the and yes, support

in they fact, [ Taiwan no expression use, an N+X In China, ] us taught MCT, strategy. they no their of

GF content wins. the all in sources. And need logical X players [ the mobile engaged for of with is global And kind GF. devices modules, design or they them supplier or GTS], X so the at around representation alluded they're their a Niels the building of fronted to most supply the content RF recognizing out business being choice smart to in major

big tailwind. the So part that's the of

China. figure Now tailwind, in there. of we do for and there for going the of than some differentiated headwind the technology I I an localization. by need us to that for face opportunity -- to I that. all, from types that get and our of job on that a to a Because hope improve of local time customers headwinds more GF's very right, strongly partnerships And opportunity offsets the first us partner it's we long local, is take of advantage even some out our of take in believe it's for there's think helps. how

Hosseini Our Susquehanna line of Group. next International question comes Mehdi the from of

platform. discussing contribution? Can happening? design the is one for of you we win material back expect the said us of across any sense do to a market, should And earlier, specific First wins a Tom. have what give I segments you follow-up. these when And want design are to what I go

talk funnel. level in about I'll design wins bit our So a little high

this and the win of and industry be on what that a industry funnel able very in have opportunities when we around predicated identifying, clarity leads thing our this on accelerated disciplined GF the all into to turns funnel confident And to into really driving design outgrow in does point we've on and For size engine total process around. those tape-out. our design be actions to our need qualifying, outgrow feel and commercial converting of that tape-outs It's wins to business.

really hand I'm Niels. some to over about, we're it ones to going the the around specifics excited For of

X me pillars Yes. to accretive growth to strategy Thanks, in that -- the to the Tom. confidence we the think that and maybe growth margins me talk GlobalFoundries let Yes, I delivering revenue do talk base it superior best is way forward. best way Really, on. moving our and about specifically, for strategy about

on customer the for manufacturing battlegrounds, technology, all and So a then and based major high-growth we regions chip market on segments support global balanced pillars the model. is X focus essential local X basically in

mean we're these what So X with or you how we these pillars walk let approaching me X pillars. through

So starting essential out with technology. chip

ASP. really, chip what the companies technology power. technology and to to out TI, essential known, is like maybe are way these major you everybody about is are the and embedded And technologies well is. ensure best think the -- knows that it about Just it processing, companies The in behind talk analog if there that today spaces ADI that

and Within within carbide areas of CMS], SOI, type X really the down on. bulk], source the have is You and [indiscernible]. [ And chip silicon essential second focused Power, GaN. that you to [ commodity IF, again]. you the got It's [ MOSFET], [ ecology, within And Within and you've [indiscernible] above. typical have then it's So a technologies, XX-nanometer silicon technology, SMAs], BCD are [ ultra-low of technologies ] [ power get we which you that's and major germanium the [ got CMOS]. really

technology, the focused what are the that's on market are what that what chip there. technologies So essential is and people

take I about areas. following basically product GF vectors. if the put talk technology We on and strategic Now in X it can it these technology overlay

First, ultra-low and XXLP our power we technologies. is seamers], where have our XXFDX [ this

XX% to announcement lower a Our the across power on exactly were IoT, earlier, and higher the performance The that offer the applications, to performance kind automotive, those is we providing XX% did same latest levels. XXFDX performance for on at focus wins we to NXP XX% mentioned the XX% just between power of here lower higher XXFDX weeks back. was of And few and/or multiple exactly We're and power. the S&D]. [ reasons -- like

that technology that other now like we world. have very areas you and and and also [ of [indiscernible] NVM we #X is have XX-nanometer sensing, XX-nanometer got really is the computing differentiation But display This are good feature imaging above. seamers], rich A in is which space. focused the and the portfolio to prominent MCU automotive display. powering in example here Next technologies the on

offer [ of silicon we in integration lowest on photonics, the XX on have major our announcement, which GaN the the we [ Fine acquisition across side, being higher there lastly, the we announced us XSW, optical ] basically, step, ] X IFCN and the really very one, engaged the single with fourth the the RF, in that. players [indiscernible], transceivers XXX-volt with power. BCD, Next Power gamut -- differentiated X Tagar source SW, then earlier, on and BCD, the there. at where XXX latest with the are technology, bandwidth recent silicon germanium And highest gain focusing devices. And we mentioned

the and customers technology one, single-sourced the really essential need That's that's playing chip first to the detail pillar. So differentiated in high our technology, in what segments they're in.

and automotive, are you IoT of centers. photonics $XX and that addressable it we is smart devices, look markets, edge, also in SMDs, and lastly, silicon defense. And safety, phase, segments superior WiFi, really that they industrial And in automotive the as communication market display strategy And in IoT, communication would battlegrounds here, mentioned of industrial, it's antennas. markets key home and space, imaging quite body earlier, high data and those mentioned growth, MCU, the service growth drive and of mobile AI data high-growth of powertrain, are as XXXX. communication commercial pillar the satellite and infrastructure we the on from We're earlier, about and by course, at electronics front be and into and focus go that and end. the Bluetooth, delivery, ray growing in center we aerospace to to Key that we're expecting course, WiFi an they example audio the second seeing battlegrounds. market haptics, home last infrastructure wins The power the interesting our $XXX are besides in billion. billion design we automotive,

we some forward. win moving growth GlobalFoundries for is meaningful going that major to believe there a have We drive

really the third pillar local manufacturing. global the So is for

are X key and U.S. all We Germany the in Singapore regions:

We manufacturing, at X factories with scale we have are in all our XXX-millimeter regions.

support and We standpoint of on almost the our out and can expansion capacity major move few any the across we a have that is qualification factories. needs a And really the an from for model forward. And qualification technology years balanced next dual then very customer have technologies, and dual all we X support automotive model consists the here. CapEx-efficient last pillar there we components give different of security really we automotive so as

we on price, about XX-F. And Infineon the meaningful. had also was past, billion. across LTAs we mentioned, LTAs, in first in world. LTAs, the major around top year more announcement, We about volume, fixed duration. did one, $XX XXX The was Outside our in fixed is that the fixed talked time, we as sales we announced deployed of accounts very was force got Tom the which the announcement That that the early major last a the

These single last these of next is and across to And is of there the the see within of sales example have NXP have that announcements model. you of seeing and this wins, model in we then more really balance customer we the channel. ecosystem built a the margin source momentum the design with So where and these coverage XXX customers. those will latest Again, we XXXs good accounts, the that. support design thirdly, wins -- get around the X there announcement long-term are one coming XX% future. And our built the accounts. We the is accretive to to XX we months, in accretive

Tom mentioned that, the for into and latest growth have and the well that like We will of basis further the X,XXX the based which with a the we're margin wins design bodes to long-term GTS had channel be believe, from we seeing on earlier set attending than just customers further accretive partners we on, channel. a [indiscernible] We more And our did worldwide customers. that model. our partners

it accretive to a we of and $XXX are same of to portfolio very a deliver at essential why $XX billion markets model. balanced So by to at margins that with that to technologies, and if superior doubling model, fast-growing really [ long-term model differentiated expansion. and our focused I revenue customer design down engagement comes manufacturing The should we segments are are line ] footprint again, local CapEx with global very believe long-term And billion chip XXXX. well the the our wins and summarize strengthening in to margins positioned meaningful the treated growth time and on from efficient with growth expanding

Yes.

of of a Is Any Just in especially these think the be SG&A credits OpEx, baseline? color How quickly receiving. that context to about be million like should John. great. for you're million should the we some would the $XX $XX

Yes, Mehdi.

managing So this carefully year. we've been OpEx

continue has the the of to question, expect We ahead year-to-date XXXX our XXXX form we slightly to we as accordingly. On ongoing as in do next specific credit of revenue And advanced recovery generated far, tax in our thus we been your we'll that our of into views expectations. head kind OpEx adjust year. manufacturing that investment

to at this if would We expect quarter program be of a through continue will. million forward, roughly going would Mehdi. bit $XX life estimate a you a but be year, million of ahead that good $XX quarter been this the It's that rate, a normal a

comes Our question next Mark of Evercore the ISI. from line of Lipacis

dividend. think you under allocation expectations cash a And would flow stock expression which for capital you're I growth the up believe a consider think could I like fabs set or looks than earnings. capital I in what reasonable being pretty cash free broad allocate years programs remarks, Tom, to for flow issued consider because and buying It increasing you off is some or industry next or throw healthy prepared really higher you your R&D new I expression, several used even the with to back

can you'd what a balance if meaning would cash. us maybe, John, on of bit is remind And could the run I'm out structure have that, the -- so like the the company qualify with there cash wondering us figure you give as capital your that? as of sheet you're out excess capital to if help us to we return you color on and could part So conversation? little part more What

to it So over ring. [ going Mark, a Dakota you're looking to for ] John. secret I'm pass

question. Yes. Mark, the thanks for

a quarter balance is were the flow in And entered the from in ended it's results $X cash near It's and goal free billion and to us really cash this happen on have see about $X.X to for net our phase year this total billion we solid roughly lost where GF It's that exciting we where is approaching not we about corporate see history $X company. So generating we've free flow cash formed quite gone so good. a cash. a of now milestone and cash billion with investments that in accumulating. We total debt, billion $X.X company. this for the in now of

potentially as this deployment. would in expect in of well. talk can from continue our amount we you the about capital form to manner, in we more As is overall will progress future dividends it share And repurchases, everything cards and take leverage the reducing

and thoughts So some we'll you all more our lost and look a that We at think progress need things deployment continue need as for to in we're area. to all fully this here to at starting just to some this point. cash that. domain. But not yes, see more -- build about us We'll it's on results history balance in update again, it's we'll consistent and

every accelerate accretive wants look to their going always for in at is Look, business good M&A opportunities. a to that growth be Yes.

we this capital our get of us that's to allocation. And Now And unsustainable growth. that's that cash the and billion There's sorry, another not -- given generation or having balance. also do here cash business becomes already a that's do capacity, cash $XX the in that, deployment Ross, to I said I'm be our and flow but really we'll able a deliver as today, us to we've off not to allowing sit for before, in growth with have look, nothing is it's factories important free door billion we see only growth. in we we invest commented us flow open Mark, between And our foundry trade number in there, for because $X free And revenue. without both.

the flow enough we do flow cash and cash is And into factories allocation to going able in where we'll our getting so be this free idea to of need business. invest growth have both, because free to generate to into exceed grow again scale capital to

Sur JPMorgan. next of of comes from Harlan line the Our question

center The a photonic solution, these manufacturing networking team sort was data next-generation first to market in terms of silicon products. lot of of developing a connectivity

your technology. think I XX-nanometer that's So PLO

and germanium Marvell Team here. the high-speed doing drivers your all on is I like for good some NVIDIA, work are semiconductors think compound and pretty like. silicon customers TIAs Broadcom, also optical

of a quantify? transceivers year. optical next a to architecture So any next become [indiscernible] CID move these Does year, of as customers part many their meaningful to for [indiscernible] way

Maybe I can think, this is Niels. I start.

fruition the platform. are were future silicon X -- of haven't the And and through I years been really you but of X wins. true finally customer XX major say We've of right, personally names, think it we are actually in SiGe. And design both you we come early. we as mentioned So those seeing we have on industry players on the earlier, did working for this photonics our now the I've into announced and analog. high-performance the are I

these So really, require trying boundaries to the in to to that. is advantage of to very time technologies, take positioned get here we're the and types performances future global of going we are well in

it I so yes, in a think when think this be -- do So out that will for meaningful you generator about that context, us in time. revenue

you're these they a be as well rapid Of see course, get levels to got needing speeds But pretty you're to power and you hit going -- going see I as of have of the to to ecosystem ramp think some changes, data you're some minute to those, technologies. limitation. to still

single this and for success chip. of CMOS great monolithic us. RF in photonics realizing ] at Yes. It's integration have [ Look our done to [ ] a

enable to center the [ for neck or way of customers problem help with do one biggest for some is GaN other going the integrate our what Power is help neck invest that the That's where as as particular, power at the other But to the photonics. think we're solve connectivity. this our ingredient us thing. to look, have big we're to here in of opportunities. And a to some data into done core customers continue you've of kind add the in for the one puzzle. more just challenge of the becoming other us play pieces Look call the delivery, focused I'll our with We and and we technology, we to well. future, doing silicon things interstate well. it's ] and And of best

for them for also it much leadership GF automotive of in Infineon of this trying to partnerships, LTA beginning team maybe I MCU and you is in smart of Why some in mobile see also, that. the XXFDX the you your to of with last had the as guys to appreciate And month that you not? partnership mentioned NXP at right guys an signed strategic Great. kind strategic year? at prepared others remarks, of LTA going the with NXP, sign the node. Did them, announced And the that used XX-nanometer associated ] continuation out automotive, given partnership strong to embedded I'm partnership nature agreement be pluses with [ IoT associated with might some great similar long-term difference figure and the you these right? with especially of just an have their

certainty a you -- I In on around volume that. to so is the XX-month with see getting cases, getting and cases, renegotiation the dynamic deal, like typically basis. and and into spaces, pricing, standard right? volume, Yes. we Ts&Cs to see it's basically industrial -- specifics that you NXP aerospace pricing in place call automotive, would some in some defense, LTAs almost duration, commitments, So without other markets -- on we like can dynamic right, and what back have customers it

a of best. and on of going really depending do customer So suits the is mix customer market we the what it, the after the

of all complexity a every it's the them cycle market. last years, If customers really the important less a XX refresh changing time. it's is If It's it's end Right. because design this that year, the to certainty. it's want where product

as We last that $XX plays so we we product And think LTA you billion. sit have customer revenue it revenue year, just an end in another. Look, total today, to of a give And billion peak still could here point, LTA, an was different had who revenue. idea, for we one when want $XX hit under and $XX or LTA ended almost billion. we you LTA above markets not on may

in. our these in And get it's under a LTAs. type that certainty want so And we locked some customers that it's because slow, because amount it's fair still that's of to just businesses get business there's bleeding still long-tail out not of of

some or nuance about I part an it's LTA the to long a the be line of important of product another use. never industry, so that it's And It's our about X thing. think going and one bit for thing certainty underneath. always solved solve What's becoming and little problem

take one last We'll question.

One moment our for last question.

the from line Securities. of of Our America comes Arya of Vivek last Bank question

[indiscernible] is guess, behalf or This on Vivek. for follow-up I One clarification.

guided You've to the up flattish then the with for smartmobile have at single-digit numbers. And be the is QX can high get XX% XX%, auto year. remained to you be the to to midpoint sure question date. trends weak not the pretty I'm how real guidance device those smartphone of

particularly going how device we demand that down? mobile So think smart about given seasonally be should tends your forward, to QX

smart IoT take I'll see guide. I mean, an compared Niels round I'll 'XX mobile infrastructure incomes it's John. on QX to is comments the the for this where declines really, Vivek, you let Yes, trends. first out will And 'XX part. year-on-year the

doing be Mobile, Smart little say trend you a devices. the smart Yes. GlobalFoundries the may here. could well ] [ in We're bit mobile boggling

are from momentum that as win well and space design IF very on standpoint, meaningful doing in And We forward. a moving portfolio. well particularly have we our design

And then quick Got follow-up. it. a

impacts, gross basis the impact margin mentioned On expect, you say, QX. XXX in without point-ish you the prepayment front, that

those, you up, in say, should points So excluding basis XX QX. be

of about So much how should margin forward gross you pretty we those out impacts? that run now going think

the of in cost our that the earlier, various of performance that namely improvement Yes, has various factors the the the ongoing touched recovers along the growth you'll see with manner the with gross factory business, on as mixing a channel, growing to in and in loadings margin along lead initiatives, is recovery that natural accretive. business utilization margin Niels industry our of factors that, increase, progression

closing Franklin the concludes remarks. Sam back now to would for I turn like This question-and-answer session. it to

Thanks, Thanks, this very continue much. for to [ appreciate the afternoon. back and in other later everyone, questions, questions Rick]. of joining Thanks we'll today. some We the us call the

in Thank for This participation you conference. concludes your program. the today's

now may disconnect. You