GlobalFoundries formally announced that it had filed a registration statement with the U.S. Securities and Exchange Commission regarding its proposed initial public offering (IPO) of its ordinary shares. The company hasn't disclosed all the details of its upcoming IPO, but market observers believe it's looking at a valuation of around $25 billion, reports Reuters.
GlobalFoundries has good timing for its IPO as demand for chips is higher than ever, allowing the company to report a revenue increase for the first half of 2021, along with reduced losses. After the company pulled the plug on developing leading-edge process technologies in 2018 and decided to focus on specialty nodes instead, its revenues have declined. However, chip shortages allowed GlobalFoundries to hike prices and increase its earnings ahead of its IPO.
Back in 2018, the company earned record revenue of $6.196 billion and lost $2.626 billion. The company narrowed its losses to $1.351 billion in 2020, but its revenue dropped to $4.851 billion. In the first half of this year, GlobalFoundries earned $3.038 billion and lost $301 million. That's up from $2.697 billion in 1H 2020 and down from $534 million in 1H 2020.
It should be noted that the company's losses in recent years were mostly a result of massive investments in manufacturing capacities and subsequent depreciation of these fabs.
Earlier this year GlobalFoundries announced rather massive expansion plans. First up, the company said it would install additional equipment to boost the capacity of its Fab 1 in Dresden, Germany. Then, the contract maker of chips initiated the construction of a new fab in Singapore. Finally, the company said it would build a new fab in New York to expand its advanced production capacities.
GlobalFoundries is currently the world's fourth-largest foundry after Taiwan-based TSMC and UMC as well as South Korea-based Samsung Foundry, according to TrendForce. The company serves over 200 customers and has five manufacturing sites on different continents.
Since the company no longer competes against TSMC and Samsung Foundry on the market of leading-edge manufacturing, it no longer has to invest billions in developing new nodes or buying the latest equipment. Since the company refocused on specialty fabrication processes in 2018, it has signed multiple new contracts with various makers and estimates that its total design wins in three years reached around $32 billion. To that end, there's a good chance that GlobalFoundries will become a profitable chipmaker in the future, especially if the strong demand for chips persists.
Mubadala Investment Co., a state-owned investment company from Abu Dhabi that owns GlobalFoundries, hasn't disclosed all the terms of the listing or determined what percentage of GlobalFoundries' shares it actually wants to sell. Meanwhile, the very filing of the registration statement with the SEC indicates that the owner prefers an IPO over selling off GlobalFoundries to a new owner, such as Intel, which may be a sign that Mubadala is optimistic about GF's future market capitalization.
"The number of ordinary shares to be offered and the price range for the proposed offering have not yet been determined," a statement by the company reads.