GFS - Earnings call 4 2023 | GLOBALFOUNDRIES Inc.

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Operator

Good day, and thank you for standing by. Welcome to the GLOBAL FOUNDRIES conference call to review the Fourth Quarter and Fiscal Year 2023 Financial Results. After the speakers' presentation, there will be a question-and-answer session.

[Operator Instructions]

Please be advised today's conference is being recorded. to Franklin. conference like speaker to now Sam today, would hand over the your I ahead. go Please

Sam Franklin

Thank you, Earnings morning, Quarter operator. Good and FOUNDRIES to Full Fourth GLOBAL Year XXXX Call. everyone, and welcome

announced has XX, short which today as Relations GF's available welcome On investors.gf.com, the Neil A December being fourth Chief a John will to quarter and slide on his the Officer; at Business I'm Dr. recorded, released on CFO, for ago, who we Corfield, with is Reeder, earnings replay CEO; accompanying be call Zandescof, David XXXX. while website This are page. today's financial taken are along final call along Investor made Dave and Thomas very web as over me call from with and call, our pleased Hollister, presentation. available results, with our to on

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

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

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

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

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

Thomas Caulfield

economy everyone, you, to Earnings our industry. Quarter of XXXX Sam broader semiconductor set Call. unique welcome, global and presented and Fourth Thank challenges for a the the

monetary with levels demand elevated customers policies. of Our inventory weaker tighter grappled a and backdrop

inflationary anticipated high our deeper are we than many has headwinds the ongoing downturn was to a environment moderate, by interest to starting the see industry. in and Although rate led first indoubtedly cyclical prolonged

report Despite dedication thanks guidance to world. our around these the challenges, results the of quarter teams ongoing to pleased fourth midpoint ranges, I our the exceeded which am of

align first with Following I We to very lower a employees GF proud revenue, showed in the the spectrum. successful managed and in a market expansion highly earnings quarter and deliver of which that utilization we and against margin out and XXXX, prolonged am update. challenging costs XXXX gross commitment levels resilience elevated set XXXX our guidance diligently grit

inventory customers We're electronics. seeking consumer agreements. to our of the smart discussed observed of while value across of end the end and have comms we to preserve levels collaborate our we center last mobile As data customers such inventory these continuing earnings depletion and to our elevated long-term markets during in infrastructure the their lower acceleration as closely call, economic support devices, with

his when mutually customers long-term have beneficial cases, proactively responded these will In over XXXX, markets of and achieve prepared agreements. their Dave We which years see and have invested end capacity adjustments heavily some and levels payments, to to to grow restructuring we certain these beginning or the making partnerships, outcomes across rate discussions our customers part are underutilization support 'XX. inventory several pace manufacturing of in remarks. improving and on Entering of as in positively versus resulted have our comment to further

but macroeconomic half a the from remain first discuss serve and as first by we broad will with most dynamics further. has the that quarter of demand customers, sell However, to range comment XXXX, across macroeconomic Dave of once More driven results, XXXX inventory persist. that the landscape a the elevated fourth uncertainties on highlights return end on our levels come, improved geopolitical of with expect these we to markets weakness be discussions channel let on stabilized. our Based which will the during down reductions me

Revenue fourth provided over November We the end results above progress million in resulting resolution associated reduction profile fourth in CapEx volume delivered which through the range. earnings was successful our diluted our of adjusted This third sequentially progress reported our $X.XX, we quarter. positive the our to of quarter with to share the XXXX. I'm at end midpoint recent as guidance XX% of consecutive the overall at also near-term have upper per years we $X.XXX amounts to report increased guidance and associated of of of which made quarter the investing free of flow for range. in cash quarter, margin payments. that pleased guidance requirements the $XXX also and the billion We we high was highlights generating Included gross our was range. of adjusted these capacity are customers' underutilization delivered which in the adjustments a

autonomous, GF platforms X technology plus span vehicles. our million at our the processing our the industry and XXXX. These connected and XXX-nanometer continue XXX of in models successfully supporting Grade to ramping products offerings, of transition activity revenue earnings long-term surpassing out prior all on partnerships design central and our applications development product customer automotive growing for end to Let multiple $X in technologies. critical a year Through key market provide from as capabilities internal set automotive through billion combustion wins of our at we me platform FinFET GF LP XXXX. delivered the expectations was now electrified most handling the and role the portfolio our safety to expand and XXXX XX Auto some our over the from offerings customers and the we believe competitive brief call from is $XXX milestone, and this these we sensing, partnership industry play on our update we our across of breadth features milestone automotive way Building are key in them. expanded that a we our customer voltage will for a in and of engine automotive delivered standards. are

automotive end, microcontrollers power agreement our through recently we that management on focus long-term To XXXX. a connectivity with solutions Infineon in extended with and XX-nanometer

through ahead as XXXX, and goes Looking the revenue industry market demand share in period we moderation. remain the to to confident even end of automotive opportunities our a grow

in handset Turning towards global these smart To as user of demand now uncertainties business mobile our remained data, improved devices. resilient. handset consumer to and demand tier with and to from we The shows impacted elevated XXXX shipments average industry. the levels devices, reduced increasing smart the drive which remix to saw of more the explosion the connectivity market reliance wafer offset partially premier channel continue and efficiency. before. GF's build dynamics, high-performance macroeconomic in inventory excess mobile combined per and where technologies necessitates an RF XG the prices market have connectivity selling and continue on year

the in connectivity quality, we reductions last standby tier currents efficiency. end the segment. is GF's for NSW battery higher products it quarter generations featured previous longer-range longer than RF module SOI This significant smaller products to more to that front enable customers generation than newest XX% announced specifically platform, designed life, with creating we our XX% call for build power over premium

which will industry-leading applications. our We power ] wave went Edge XXFDX outstanding IoT, low-power and volume that tier innovate are focused we in phones. millimeter capability also technologies -- embedded [ XG providing for premier on AI performance to RF and on memory differentiated GF's into wave efficiency In enable millimeter production continue Android connectivity ultra-low technology,

expect at our all key short-term signal technologies. analog next-generation mixed edge for in with end Although have consistent for reported, inventory requirements this a period the what others long-term drivers and speed, are inference and we of correction market, security

U.S. factor chip a Aerospace our critical key the we XXXX, the In critical with and market. manufacturing of the number end ] States IoT capacity secured Department across Lockheed within United was announced and both a applications. to our [ Defense Additionally, manufacturing in provide Defense segment partnerships of of Martin

and digital-centric as Finally, our communications channel infrastructure customers and as to Partly XXXX. nanometers. wired segment migration single-digit due of the weakness and to show node through continued wireless our inventory well data center across prolonged data center accelerated of the levels digestion to customers infrastructure

of segments, such opportunities We some industry to automotive growing excess our trends capacity in are demand to and actively service these and devices. managing more mobile executing durable remix smart and as

revenue We to that ranges in indicators closely choice increased U.S. are actively and while year, and X/X EPS and the remain our Customer facility the the into in and their core high our our update. across end our out inventory monitoring partnerships are fourth footprint XXXX quarter from on our XXXX results utilization our in fab down customers. pleased XXXX, with earnings in agreements York, transfers more and Multi our XXXX cautious technology also closing, remain our with business, ] to quarter delivered point customers of demand at via In am macroeconomic came first of have source levels. consistent here outlook rounded we successfully the approximately the end our of even we guidance in customers for signs this diversifying [ will multiple accelerated profit with the which markets provided offer manufacturing New manage in opportunities commentary single improved gross I At for report we the our of

potential XXXX. outcomes Given there these are for dynamics, several

the profile at do guidance believe for revenue that sequentially we point, the quarter. we our quarterly have provided will However, this grow first from

and continue the positioned only a of across our the the as secular acceleration customers the Europe world's longer of one term, is Over to to foundries uniquely see support role in with pure-play semiconductors the of we capacity U.S. world, and GF Asia,

deliver are XXXX influence to the in of to certainly Lastly, uncertainties outcome look year in Xx aforementioned we XXXX. that the our the Xx will cash versus into and incremental the range we flow ahead as ability for GF, confident free of

his to him excited focus again turn on the extend job look the I'd over our call Dave, am to to I thank in and warm with as I and our the Before beyond. by new tremendous welcome financial he's opportunities we ahead XXXX and to like objectives as partnering closely John. forward GF John done time at for CFO a in

Unknown Executive

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

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

ranges quarter related a midpoint of Fourth million fourth customers' grew approximately update. of of our Our included $X.XXX the their XX% of revenue exceeded year-over-year. results quarterly near-term guidance contracted $XX we last in sequentially These provided the billion, volume to quarter results approximately revenue adjustments decline to requirements.

shipped approximately revenue for consistent commentary from aligns quarter. approximately or other XX% revenue XXX-millimeter during year accounted accounted ASP to nonrecurring quarter, period. our and expedite revenue, Despite price from Wafer the the for equivalent for which flat were X% of decline, non-wafer decreased the quarters. XXXX, from the compared prior quarter, full wafer includes total revenue engineering, in We the decline shipped wafers reticles, markets ASPs total in fees a X% our mix driven items revenue with with by approximately per year average year-over-year, fourth our for XXX,XXX changes mainly from XX% selling approximately expectations. of which this prior product the end

which equivalent For flat the the at remained update. first revenue with wafer outlook our decrease in from approximately per million X.X XXXX we XXX-millimeter and year-over-year, We year, approximately in provided ASP wafers, down full an billion, shipped $X.X quarter consistent earnings year-over-year. X% came is XX%

on now provide end an markets. me revenue update by Let our

mix tier inventory mix approximately the total ASPs, XX% and roughly X% the and WiFi from declined XG year represented channel. revenue. devices in mobile sequentially principally year reduced revenue the the decline by transceiver the XX% growth tier year-over-year for reflected XXXX Fourth of to namely of quarter, represented shipments quarter RF and applications. shipments by revenue. low and fourth smart and and our offset Full For driven partially reduced offset fourth approximately for mobile premium the This higher by devices to total handset prior market, year quarter; Full ASP revenue in was similar approximately declined year's quarter's customer mid- dynamics revenue improvements. continued content XX% Smart elevated partially growth period, the X%

Tom during and fourth have our in to for sequentially remarks, execute recent prepared driven technology handset IoT the of content quarter's Fourth As premium continuing announced declined to to noted we home were the mix aerospace this home the year's the additions several with meet platforms approximately demand prior grow revenue commentary and on to quarter. roughly of his industrial demand industrial across total in lower portion calls. strategy year earnings and are revenue revenue stable in declined ASPs only our Industrial Full year-over-year. objective. our the market on XX% basis, and quarter the ASP volumes, offset and Full market Principally year-over-year quarter, consumer-centric approximately which partially XX% and total the aligns and X% represented XX% revenue represented as Home revenue. IoT XX% by In within applications. year IoT industrial IoT provided year-over-year a the revenue. of approximately flat defense reduced by and was

segment elevated in in ahead of the on industrial IoT second half depletion, we remained our to Looking channel to the expect inventory of XXXX, which focus some customers XXXX.

year-over-year Full Automotive approximately revenue approximately architecture. the which, as represented features XXX% total and ASP Full total to now us the quarter to XXXX. the throughout revenue XXXX. just automotive, sequentially and X% quarter principally year's revenue a from year Moving growth XX% $X increase approximately up increased key vehicle and billion for as revenue. across been higher semiconductor is XXX% roughly which represented year-over-year, outlined, Tom XX% of in for X% Fourth content exceeded Revenue year in revenue mix and XXXX. quarter's the due approximately dynamics of grew has segment

ACE we XXXX in across both As revenue as in growth expect range Tom vehicles. our automotive support ICE we diverse noted, to customers a continue and applications automotive of

declined Next, end our slightly represented center quarter's down a ASP while fourth Revenue of where X% X% on mix and data sequentially primarily year-over-year approximately to quarter reductions, the revenue communications market infrastructure and basis. and year-over-year, due revenue. approximately XX% volume were total

approximately nanometer his in communications accelerated Tom infrastructure XX% revenue. XXXX, total result data XX% declined platforms year full reduced our that the customers For transition as represented of to as year-over-year XXXX and a center revenue single-digit technology of remarks. revenue outlined volumes prepared

capacity focusing XXXX, transfers to to opportunities durable ahead well are Looking on remix markets other as our we accelerating end proactively to as technology qualifications. and customer

computing were represented XX% total revenue fourth ASP the personal mix X% year-over-year, slightly our in Revenue down by end PC quarter approximately sequentially, the market declined principally total X% year approximately the XXX% were as and Full year-over-year. quarter. revenues up. and in was of year's XX% volumes flat increased Finally, to of driven but revenue

market in PC separate revenue, will end and Given of the end starting into a longer revenue report QX associated total PC industrial IoT PC revenues percentage our expected market. we and in decline of XXXX, home will no a as as incorporate

gross to next Moving profit.

quarter, the approximately we margin. margin in as the XX% resolution includes delivered customer million, which associated of range was end volume his guidance with revenue remarks, successful of Gross gross adjustments. into high For Tom prepared gross And the fourth indicated. $XXX the at mentioned of profit translates

this to in to has first on volume ahead guidance. expect our quarter discussions been customer and quarter, the adjustments Looking continue, first we reflected

quarter profit and the delivered X% of of represented gross we the total for from basis equating to revenue. For Operating a billion expenses XX.X%, full margin XXXX. approximately uplift gross point year, of XX $X.X fourth

also Included decreased our credit million. in declined were related advanced qualifying million approximately and quarter is to XXXX total to $XX expenses Total of $XX to benefit the million tax million. for expenses SG&A R&D approximately $XXX operating the operating the manufacturing for sequentially $XX expenses. investment

guided delivered the to spend assets for of capitalized the to to quarter, than XX.X% continue life these year margin, and approximately XX we roughly expenses range. the operating basis ago benefits the we higher of program. into above As in translates period our $XXX expect of beyond, through an million midpoint We and points qualifying continue and which on profit receive operating XXXX the

million GF year, to an of points margin, quarter Semi period, We to gain ago East billion quarter. net Fishkill XX.X% fourth of and which net principally delivered income full operating facility from quarter $XXX an delivered the improvement fourth other quarter year-over-year. and ON million $X of the the approximately Fourth profit the incurred operating a $XXX million, due $X.X in ] XXXX. basis [ of of sale of roughly we For decrease into expense approximately XX the on in year of translates the interest million our a expense tax was $XX

result, quarter. basis, $X.X full of diluted year diluted of a income approximately As On for $X.XX. of fourth the earnings share per and reported delivered we net GF a $X.XX per share billion earnings

Let and million. me fourth now key operations provide cash was some flow quarter metrics. Cash from the for sheet $XXX flow balance

million. flow million. provided report that the as assets from With as quarter $XXX For Full cash year, was billion. billion I equipment cash quarter, flow the set XXXX and for the XX% $X.X on $XXX less Free very property, year that, by intangible statement was the was CapEx define $X.X flow full of which activities, operations am out cash free for net year flows roughly cash XXXX for approximately revenue. or of pleased purchases of revenue. plant, we for of was operating XX% cash or full million $XXX to CapEx was the

of growth capacity is and this cash GF, Tom XXXX at look a our of cash, on combined build noted, end will important while stood $X.X billion. and securities fourth healthy quarter, to As objectives. in equivalents we marketable At for our milestone the total an the maintaining this

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

their our him turn To guidance the the GF's for to quarter for that, to I like and dedication summarize over execution operational the year, would quarter in to our the commitment the call us of the and cyclical as team. environment. vision. macroeconomic pleased perform face well provide of enabled I'm With employees strong And to and GF all challenging John to welcome a thank to first to personally I

John Hollister

at echo I to CFO, Thank industry is for gives of pleasure the chips GF's It great and the taking impacting everyone Manufacturing am Dave has today's the excited like morning deliver would good company. the to he heart for for as me inventory the for on you, and and as truly we comments dynamics the notwithstanding to done customers. be dynamic thanking opportunities I Dave, all GF over call. semiconductor and new innovation our global semiconductor essential ongoing about industry, and ahead Tom's

Now with the for outlook quarter XXXX. of provide let you me first our

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

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

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

is we between we guidance, be goods $XX of and approximately sold $XXX million, our Excluding share-based total to to the share-based quarter million At OpEx quarter, midpoint million. OpEx. expect related first million compensation approximately roughly of $XX $XXX of cost the which expect for to to and first is million related $XX be compensation

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

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

CapEx disciplined demand-driven be expect year full to the which our with XXXX, approximately aligns million, $XXX and For philosophy. we

opportunity for both generation commented, flow provide call open in As continued an focus free have we that, Tom this to to on Operator? Dave expect Q&A. cash With XXXX. let's and GF the

Operator

Thank you, ladies gentlemen. and

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

Harlan Sur

are these the weaker does for as X to an lag ] with support levels. X guide customer in past to over though their customers Dave, [ welcome you, few even that inventory and the quarters due saying their that trends years, in foundry revenues also quarter to team. The high utilizations reflect the revenues Thank like over improvement your may next internal John March their ripestarts

So bit the the how single-digit of consideration your on of backfilling nanometer do recovery you and competitors some business maybe lost the some magnitude from in utilizations, GF of this customers of through more potential this recover. customer potential see may And the move FinFET profile to the in maybe an pressure environment, challenging revenue the we're -- mixing important a away XXXX? maybe putting multi of business overall be

help shapes team. of understand profile this the how for Just the us all XXXX

Thomas Caulfield

good. actually got Good this I'll start. in Tom. your first is X Very one. morning I Harlan, questions

happening? let first of shape can't the overarching quarter So me how up? on, asking to is year -- start one XXXX do we I see does looking you're you guess, this What back. have look question You at without

there. XXXX. GF's in what call with technology. year. same performance only comparable compared play in, I year-on-year the to companies playing high I the of We semiconductor in serving would would Let's consider down -- would I it like-for-like, last call performance the end we rank X% and were GF like markets in end

We but seeing in good we is we anywhere we while trend, to about talked fourth the our were it inventory into take of where which XXXX. be, not near what a little call fast beginning earnings a peaking, bit quarter need finally that we forward about

XXXX look part especially customers, of we QX XX%. in now devices, our significant just we started meaningful which back as like talked with of multiple inventory, areas about, what in is in a so our to see decrease David And revenues, happened smart like

you're the first XXXX, what surface of to that down, half inventory finally demand high of with true second inventory, coming absolute to so that to the period we When inventory we're see down we they that half being working universally, correction the down. need at and our talk be so recovery. And the good worked still is, end customers, seeing I is think of starts now

high. pressure interest predicated rates on demand that be better work is strong that's Now on to [indiscernible] look, consumer got driving and

fact year we inventory pretty So down. come the of works another see think cycle this we for to relationships, start GF, that business, set single-source testimony a long-term this is LTAs into our that amplitude. and with managed to it I The for some And our we through this look, -- dampened we -- industry. need agreements play to leveraging deep our long and we as customer that

amplitude you trade the and off so longer an is a time bit come maybe And little in to back. horizon

me be in on the our end the single-digit getting for RAM. So -- is part in believe our is there low the continue continuing first better whole this like earlier top to we revenue memory move second out when reported us -- adding that will FinFET we to line to But is this XX-nanometer in RF develop We then not will this that of And and well. downturns, resistive to technology adding serve grow out. that point platform like down This question to capability, technology, and in FinFET in technology was is we're a QX, done for the building of moving displaced story yes, throughout the [ going embedded more some on customers and others, us these is year. going our ] the all, of quickly by we've year. net

and have success to one them one that our But make learned to different be the different because our assets times down. of in in facilities technologies our in be deployed at end about could range markets react up, we've sure past is at a leveraging

deal. our embedded facility announced to ] that as FDX Fab we of bringing that [ XX-nanometer recall, diversification. get our actively last ramping we're We're year memory to you Save part up XX in GM technology If

FinFET to our So of accelerating we're the technologies and the X can we deployment Fab time, the At we of while read same new single-digit some in be may have. nanometer so business bringing facility execute. accelerating

Harlan Sur

actually on Follow-up. LTAs job in resolutions the getting really customers would $XX has working with Foundries, customers of or million with here agreement good team in I our and their the of to supplier one terminate agreements. your and pay large without these against payments fee one October assume So be a back right? Perfect. fees year, of which other resolution return, Yes, March last the margins the you're But $XX a decided done Global time in fee, quarter in gross where quarter, March the recognizing agreement. million for

all I guess would the an brings differentiation given you of the FOUNDRIES customer to terminate pays important Tom, But more importantly, that agreement $XX why like the GLOBAL supply to technology with just table. million

Thomas Caulfield

Yes.

capacity in we you with I'll we agreement me the of investments dynamic, I'll how like margin. an on this settle [ how that do comment David and the is that to the a answer ] Look, reverse. first Let termination that materialize of do and part gross the John think let have customer then fact did made and put on work to demand customer them. we on

not forward. doing we move doesn't mean is the going us business that think I technicality with forward. how determination is one customer of It of the

last me wafers get I balance work more to with the by a the announced taken of effort to is to that. that we reconciliation offsets creating customers the supply/demand let just Finning. too so of with in capacity. a fourth of part than hand cost to And about customers need. impact that, our they underutilization recently a sure not talk of over an take is With I termination. the it agreement fees wouldn't extension quarter forcing for And read make And some automotive rather, That's that quarter Dave ] which think customer in point, we the we [ this mechanism necessarily into our much or long-term

Unknown Executive

Tom. smart Thanks, from smart was you're the has you target build been in referencing, let point -- a in that the mobile devices, moving at the know, drawdown on inventory Harland And space. Sure. a been The inventory the me And least general. that you really for made. one industry as mobile

mechanism termination of that LTA such the a we that continuously renegotiate don't being characterize would as moving the that around. so And I as to have are really LTA volumes

So I would cleanup a kind that of activity. characterize as really

or give LTAs the a In I benefit for take mentioned, were quarter, fees as fourth total the million, terms $XX termination bit. of little about

quarter. about that's of impact the X to points So

As Tom add? to for utilization to from guidance anything expecting here. fourth the bottom kind quarter balancing mentioned, then our you'd just for And John, first a to are we're we of expecting would revenue perspective, quarter bit, sequentially, grow but QX, reiterate from along a from that I be down little then

John Hollister

Yes, journey, how margin to on back roughly the double XXs and comments that seeing early want horizon we to our the X look is to the 'XX point the on that just made low you as I had the points low David, to out and going just click into you gross in rates and to margin. points through pointed now mid-XXs. correlated we every on utilization utilization gross late in if utilization past, quarter high is to down of strongly Tom's first 'XX, And back the X

XX about of lion's share for So XX see you can to the gross impact accounts split points on margin. there, which

Operator

One on for next our question.

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

Vivek Arya

Best wishes John. to both Dave and

recovering some my do I end start you QX think, a you market that you those end is suggested scenario? For us could you to or first XX% guiding expect by as hoping sequentially. or about how give one, color QX trends? down, think sales And you're QX was segment which start process into possibly in the recovery, of then, that can end QX markets Tom, bottom I

Thomas Caulfield

devices, second smart where GF. prolonged that the that I market in that's think could Let pick revenue to the how year it given seen an end part you've And this again up. is, that starts question for that from and with pole important of business given is in be downturn others me a long much start of

will after even growth We also signals believe seeing, that business. have the meaningful factor of our we year, in we're we in automotive industry some this

has we ability serve growth. a broad and parts in-cabin vehicle, end lot of broad the I line, this a car are or take a sensing see perspective you, being electrified combustion market and part that top as But the content and microcontrollers lighting, as we tell markets to comparable. that to the revenue with to that do low entertainment of point is X our those of would in QX And the internal from to it engine independent

Unknown Executive

second that that don't but know, automotive When give a we're question, the be market, of take by little better guide I'll of first quarter, color to bit I'll than think you we you you expecting average. as part end Vivek. Yes, about

a better to Obviously, more XX% words, grow year-over-year that and certainly average average, those off. than that better than average decline. get have average be referenced referenced will to to from that ultimately will to I that In question average We're segments we you sequentially. decline. down Q bit about implies that down a Vivek? expecting it will basis will QX QX. that follow-up be other the which Automotive sequentially you XX%. other devices be little both Q of than that a decline on better actually that You expect about than us be mobile Q-to-Q down Did to smart

Vivek Arya

more capacity, are my to starting in term? industry it some GF pricing question We just So long immediate the what UMC the pricing of obviously, competitive and years? least at that follow-up would these imagine. announced Intel partnership. imply And the for we over really impact, kind imply GF's does recently few what But longer the for nodes? the of landscape CapEx means in I no power see Tom, have China. at trailing-edge Because is over saw competitive power term, what more dynamics and can terms does is industry that next that And the there over

Thomas Caulfield

lot So of elements a to there's different this.

beginning journey. the first very a capability PDKs, cells start competitive Look, on Let standard Even the with need be of build-out bunch of of libraries, kind foundational IP. you is long IP, complex technology in base me buying node, China. the equipment a of to

our to continually already of even having beginning beginning ability it's to we the for value and a And technical. taking is a and base play, business. we've Having the new dream features not a it over where had play we serving a GF continually buy to to want time, much differentiate. provide base [indiscernible] we companies capacity, again, business, still. adding is off of the the right? said not time very for But it sitting not of our to the convert a of is single-source simple going and It's the be is business, feature-rich the well-established a differentiated them a take that meantime, tools In we've new take customers. of tool don't to technology and long that into long over We're a they platforms GF

is is us, in capacity the to second that playing for So some not ways, even replay.

The global seeing second more is footprint. resilient it's thing the concentrated need in more more about for and all We're that capacity a China.

resin serving it the to We in looking can China, the And them customers this that. We part it that footprint add in what our feeds that's the the they're technology more are Singapore in us be looking to on to and of this we back putting build in do to I so it that that most resiliency our them capacity same global to solve looking features. concentration for doesn't And U.S. anything our is third for and for. then And and product differentiated requirement. technologies think interesting, -- differentiate

want biggest issues Some worldwide to resilience GF fabless world they stage they to to the supply taking the need so not tap they into of coming serve have in. they on will they life could that because seriously customers be source our because chain being markets believe concentrated of Chinese the

going UMC you pointed I China. that's envelope think Then around [ So think that intel investment announced. the the out in I ]

to, and western the U.S. diverse it been and I the GF in we of wants has a have demonstrates that's Germany. to that get in once rolled Certainly, geographically what footprint. think again, world the rest

not end so that Sitting in dynamic and will on various continue markets. the have we're as XXXX. to And platform these to we in a that to in I here ready partnership, be XXXX, for is make already and relevant create done our it, understand platform customers it off XX-nanometer innovating

The work is think to we not closely other thing looking market had build. it technology work the about stacked same in same sure that's but margins, and about foundries But from our they're the making the understand that, me a lot X serving us end develop technologies market understand economically, that technology industry, of we requirements will the to I for don't it. with understand how already for our customers,

John Hollister

as John. companies, the we prepared are long-term this agreement. commentary all by of pricing see fact constructive quickly X/X features differentiation, in about talked as Tom taking visibility I'll percentage that account high mentioned, and of light a a relatively just add. of We Yes, is the into source. well support sole the stable In environment, the provided as the business

Structure [indiscernible] Macrolide environment. overall, pricing So

Thomas Caulfield

think pile just you're source, about when if pricing to But demand. not it. you're use going service it, to on more Yes, and you sole you demand, John, true can't create

solutions can it news whatever bad the is for continue you to the your it to is key So can't news more you is winning is, demand. The demand demand. create and so more good create create

Unknown Executive

And of our just design wins XX% remind everybody, to are.

Operator

more Our with next Bank. question comes from Deutsche Ross

Ross Seymore

well. consider and to give question, as dynamic other a comm where missed. localized to business idea business the of or is congrats that areas and you you that you're about. the David Ask it believe reallocating you'll your Can transition node -- Is and segment, dine both of center us be on your percentage talked the infrastructure first should in David, question My data is is you exposed John. of that an you to that? said

Unknown Executive

the the over rapidly. over question as I migrate you and around know, as will XX-ish have that's [indiscernible] think, specifically you what XX%, constantly today. that of think always these That period out migrating again, is I don't probably happen manufactured into is transitions stated, we're talking would I life the business the about Look, time, business It's Yes. the currently a full characterize of node that well. business, long portion of from total cycle percent

of at today out looking migration and at what's the for you're looking migrate, you're from of the rate portion at looking rate really, what versus so business of transition will the pace And the that and transition is you're -- migration pace of not in.

percent to we the XX-ish node same XX-ish just expect on the will migrate we to in. out has it business migrate while of amount today that So for like over time about that historically, have

Did in out, that versus so managing a if follow-up is And you the what question, Ross? you're the sense. have makes

Ross Seymore

of chip an get little wanted bit fax to Yes. update side the on a just things. of I

side, You on the guys the have the the equation. progresses the about especially any more it, through side been updates how year benefits from any kind importantly, on grant that side and of OpEx but very clarity ITC perhaps OpEx clear of

Thomas Caulfield

ATC the take of talk. you don't part why and that, David, I'll

Unknown Executive

States. do know, in qualified every to spending of you essentially you on things United of tax capacity XX% the back money Well, you're Sure. a benefits we of couple have on is, ITC as add where that capacity the get dollar

So been into for that a chips the these advantage projects and above office you're longer-term that's beyond taking of of, that benefit we've submitting that's approval. kind

taking We advantage of or have been that benefit for XXXX.

charges what $XX through specifically, of impacted quarter, our in was in commentary had some in way And the quarter. fact, us spread In were as accrued or benefit that of as saw the prepared in will it line accrued. expenses that the the fourth you was million in that we the there positive line fourth a back CapEx were those ultimately operating which expenses be benefits well. there's additional flowing those in lines benefit And to those that's also --

how and a upon the benefits be remain the through And based much like-for-like so U.S. in we deploying to those benefit are life that we the essentially expect program. of money

about a it's benefit. XX% So

Thomas Caulfield

of bit And then status the the chips first the bill. part those second discussions the or little Look, confidential. part, a are

ambitions those in You the of will patient. in would to more White deployed role can wants I start dollars post-haste. U.S. these that things. Be I you an GF imagine important create on ask House know the getting manufacturing play U.S. the semiconductor the to timing

So that. just be on patient

about build just on remember, right not business point But to it's I think bigger SaaS. the having to is creating It's about dollars the model.

million through the look have of ability X the what we year growth for revenue a end already about investments fair shipped ship have we X.X million That's all sorry, By year, will the this we've to make shipped at we'll you we that amount made, XXXX, this If revenue wafers. We XXXX. in hand. in [indiscernible] and of

ahead they and what do we to in fact us customers was looked Now that a of us to that's XXXX saw capacity put part business. were our that as had because of none of asked going the hit on ahead demand

to about demand. leading business, capacity grow shape we're term so in think having of good And the the in near really to our

means be an profitability. the our certainty When ITC funding market. their the future, our durability investment we betting their think that is capacity, they're manufacturing going arm The demand we customers to come our chips that see back and certainty, to clarity for we about and in how we're getting we business, do of are what invest

strength. rather come the And pain then them. to them we're the devices profitability government in a talked that only create about for So facilities I'd in partnership about we where mobile run. is to connectivity our to the economics sure of make the We end lot markets want in automotive. differentiation We much call these these competitive and of not co-investments, capital subsidies really go where how really That smart the closes plays economic look talked durable to that our it We do matters. expense. or create deployment in to government to

longer So our to the I this think of grow for medium nicely strategy long-term these is government to term. business with programs aligning

Operator

with Morgan Stanley. question next comes Our Moore from Joseph

Joseph Moore

business. ask smartphone to the about want I

customers reduction guided days in and much fourth all in kind inventory inventory quarter QX. at by like of Your all about biggest XX reduced sounds collectively. pretty that It they the need X do well to least

as But should factor unless be we return big snapback like to there like in-sourcing, some it I'm missing that. anything that there's from consumption pretty a seems

talk just could you if maybe to So environment. demand

Unknown Executive

Yes. Yes. the Tom, on go -- first, I can if you

So all you're and from you being starting to saw we're burning mean the off see normalized correct. inventory earlier. levels. to announcements for the getting And more I coming

have VAs do move forward. as to year we S&D this we expect return So a

exactly right. you're yes, So

Thomas Caulfield

burn. early we If normalized inventory pointed is and here, levels. real at to to get the QX level you Look, that start commentary it key Yes. that continues

in ever now that have had a maybe handsets. XG position a position even hair want handsets We tier And really than premier the good capability. in the there. stronger we not

positions us the for depigment. of I we smart return mobile inevitable it think well hope the

Unknown Executive

and in Tier pleased our the design X. we're premium both with wins very Yes, the

Joseph Moore

is relatively number. about Yes. to follow-up I low here? CapEx, enough? a on on that where is the realize money it Great. that money utilization know need And is million spend With assume from But going? talk you $XXX then low I to is regards What you I can

Unknown Executive

Yes.

when the CapEx of the total journey capacity you look been from XXXX, as beginning 'XX. at a on we've our grow to know, at million I for think X about you wafers specifically,

as the longer-term And to So needs million final some terms end agreements this portfolio. about X that be to to the $XXX add of purchased wafers to where in million really well represents of tooling satisfy be the continue kind we'll facilities year. essentially at of of the those be that to that completion you've added as us need seen

of So U.S. additional memory, here XX-nanometer the by of It some with will us capabilities fully some to migrating spending and wafers. we manufacturing to bringing the will about also some into think that SOI get embedded this us that centers, depleted it incremental X as U.S. capability the capability amount, million give our some flexibility

for also that only it final domestic So customers [indiscernible] bill the not flexibility it's only But the the million million not want being wafers. the it'll that's added $XXX completion capacity being to represents that's kind manufacturing added and will of -- the of X

Thomas Caulfield

new as features. Yes, and of features we give tool, it creating well as in comes call our some can network need we it capability fungibility create fab that the that we capacity so across investments that to R&D

CapEx in So there our business. is business. a That's of certain our sustainability level about of

John Hollister

John. is add. Yes, Joe, I'll this just

bit 'XX, half do the on as second the company in far first XXXX, expect spend. in saw a similar over half the we the of stronger CapEx to shape that CapEx to be in As what

Operator

Chris comes question Research. Wolf with next Our Caso from

Christopher Caso

QX mention and And through margins did the that Do I Thank of for on as as are a some at puts is lot believe Yes. moving And it as the you if year? revenue through gross the what we that question But obviously, on the first of that guess pace dependent depend look you parts will that would the go year be holds as we believe give we well? and gross you you can bottom. on margins. you color gross be -- recovery. go takes the us margin

John Hollister

by follow-up? Similar recover is very to payments work as demand or some this gross the clearly, along stronger the important the utilization. well. growth numbers, are But agreement as other comments, Do that business we as inventory much so customer sequential begin see you in as with as the prior to post of have variables that, factory would influenced we that the improvement to environment factors can gross pace Chris, clearly on on. have expect of There and and some with we'll that John. is drawdown margin mix well rate a the -- margin, to rate

Christopher Caso

sign as capacity. of capacity in regard the going Sure. what during from to the things that how of been of talked rest the kind that the year. to of cash cycle. GLOBAL going those you up year. shipped forward? new last X XX% the new And Can you what you make and capacity, of use with recovery Is mean terms pricing expect end you And of as that monetize the progresses. the in speak that to so flow million some with wafers on where this last impact about agreements load here we've That's going expect up the the do have to you that the of you're other agreements go by is you investment that same terms of or be then Foundries up from of seen load to you'll what kind the and that's made, I

John Hollister

the -- cash growth in again. in we in strong free its cash third encouraged Yes, company I John consecutive but Chris, quarter, free has annual plus fourth XXXX. had We made is the the the X XXXX, see flow for of the And fourth million by very neighborhood the to opportunity total free in this quarter the of the performance. $XXX quarter. progress in flow continue we flow cash to generate generated Xx to and build through progress as that number, upon the

cash positioned generation. flow yes, with free company influence the is positively answer we're short strong well we So very think to

Thomas Caulfield

Yes.

But XX% a free about at becomes can talked view. back sustainable we rating are now for and -- both the free we long-term capacity, cash time, our Let talked revenue We flow. our think couple of to flow. question ago. our converging our advantage. million could about we demand on a same When we CapEx, going where wafers, years growth this roadshow to it roughly not a spend drive model what and it's invest business on scale facility pace billion, me start with X quickly then do And we about of if in longer-term take $XX to have grow take where to business cash of its getting

Unknown Executive

see final see in are building very one flexibility monetization pricing, our that at We continue of points then we demand at look that manufacturing for of us those facilities, the -- We one. everyone all you look being on market kind two, comment we're into and to that perspective, X online. we that when outlook resiliency a like-for-like raised. address look by build very the encouraged the to rational to as And like And future investments is the One, stable. and from made. manufacturing we into we're that we've in quite what facilities building could number

one we'll take more question. Kevin,

Operator

Sure.

with from last Krish Sankar Our question Cowen. comes TD

Sreekrishnan Sankarnarayanan

and John. And thanks welcome, Dave, a lot,

Tom 'XX know don't volume think you speak and about or relative did I calendar how was, to 'XX. to had I Dave, question about First calendar ASP

Unknown Executive

Yes.

probably XXXX similar like-for-like I about for specifically that expect our the we 'XX. pricing very be didn't essentially think we year basis talk pricing a commentary calendar So infer versus can from But you same. that to on

ASPs to And either market one driven product will so you'll in the movements another. from one customer another that end to or primarily from mix by be see shifting

basis of terms sequential down for well as the basis, on guiding volume, quarter. we're In obviously, a as a year-over-year first

reduce there we're XXXX, will volume done continue been I again, we in the progress and you've really when first it to some they did down make you to think of from recovery reporting we draw inventory. for that of as total that on that the seen inventory And so and made pace anticipating have mention, think they quarter. the the it's to And continue here rate reduction inventory customers, that's progress is our some about

down. the really, growth of and the be to will pace volume upon is so And the that dependent comes rate return it

Sreekrishnan Sankarnarayanan

demand a pandemic, then Very during long-term for When you the global above look big helpful, Tom. electronics picture is trend. the And question David. at

been now, just-in-time talking You're about some going weakness also channel in but a macro cyclical there's customers to manufacturing. recovery destocking

in the cyclical I'm think where curious, do could the even recovery below a think snapback? you recovery of kind So seen have that Or cyclical you see you sharp trend? past do be you've

Thomas Caulfield

Look, time. of bit a Black I've been as what long it equally to black little around this the see it's industry And stimulation. for And is a I box. Box responds

industry So if overcorrect. you really go this down

So what binding everybody nothing. then happened? ourselves down to We inventory and with found excess merit

is inventory -- what OEMs in take the industry down be the going think our quite you're people seen the how things certain I because customers, So low. going proportional markets, is we've see in quickly to recovery to now went end to end

it's can chance has and and next in call. if me who let's great So our has decline, just everybody [indiscernible] when -- of being equal you it hold that back I the predicts And reaction could becomes a that been see to a always industry steep predictable see, so future at the look wrong. opposite

Operator

turn remarks. like over for this any back does call gentlemen, the portion Q&A to of and conclude I'd closing Ladies today's to Sam the conference.

Sam Franklin

Thanks, get list. Kevin. conference [indiscernible] many in forward can you to joining we the for Thanks, to everyone, [indiscernible] at everyone Thank look We you. call of the seeing upcoming today and

Operator

this today's presentation. Ladies gentlemen, does and conclude

have a and disconnect, now wonderful may day. You

GLOBALFOUNDRIES (GFS) 13 Feb 242023 Q4 Earnings call transcript