Mubadala-owned GlobalFoundries files for Nasdaq IPO as chip demand soars

 Mubadala-owned GlobalFoundries files for Nasdaq IPO as chip demand soars

Abu Dhabi’s GlobalFoundries Inc has filed for an initial public offering on the Nasdaq stock exchange, seeking to tap into growing demand for high-tech companies even as the world reels under a shortage of semiconductor chips.

GlobalFoundries, which is owned by Mubalada Investment Company, said in a prospectus filed with the US Securities and Exchange Commission that the Abu Dhabi sovereign wealth fund will continue to own a substantial controlling stake in the company after the listing.

The company hasn’t yet decided on the terms of the IPO or the share price. But it said the maximum indicative size of the offering would be up to $1 billion—a number that’s likely to change when it decides the final terms of the IPO.

GlobalFoundries is the third-largest chip fabrication company in the world. behind Taiwan Semiconductor Manufacturing and South Korean electronics giant Samsung. The company was formed in 2008 when a Mubadala arm acquired AMD’s manufacturing facility in Dresden, Germany.

Apart from the German unit, GlobalFoundries has two plants in the US—one each in New York state and Vermont—and another facility in Singapore. It had sold one of its New York units last year, which will go off its books next year.

GlobalFoundries supplies chips to marquee clients including Qualcomm, Samsung, Broadcom and AMD, with its top 10 customers bringing in 75% of the revenue.

“Although the supply-demand imbalance is expected to improve over the medium-term, the semiconductor industry will require a significant increase in investment to keep up with demand,” GlobalFoundries said in the filing.

The company’s revenue had fallen since 2018, but rebounded when a global shortage made chips—used by practically every tech-based industry—pricier. This is what likely led the company to bring its IPO forward by a year or two as the listing had initially been targeted for 2022 or 2023.

The company’s net revenue for the six months ended June 30 rose 13% from a year earlier to $3.04 billion. Net loss narrowed to $301 million from $534 million, it said in the filing.

For Mubadala, Abu Dhabi’s second-largest but most active wealth fund, this is the third IPO it has been involved in this year. Earlier this year, Mubadala-owned satellite company Yahsat floated its IPO in Abu Dhabi while Blue Whale Acquisition I, a special purpose acquisition company (SPAC), filed for a Nasdaq IPO.

Aman Malik

The Capital Quest