GlobalFoundries forecasts hit by slow smartphone demand recovery, shares fall
FILE PHOTO: A screen displays the company logo for semiconductor and chipmaker GlobalFoundries Inc. during the company's IPO at the Nasdaq MarketSite in Times Square in New York City, U.S., October 28, 2021. REUTERS/Brendan McDermid/File Photo
Contract chipmaker GlobalFoundries forecast revenue and profit for the third quarter below Wall Street estimates on Tuesday, as it grapples with a slow recovery in demand from clients in the consumer electronics market.
Shares of the world's third-largest chip foundry, already down around 15 per cent this year, fell another 6 per cent in premarket trading.
U.S. tariff-led economic uncertainty has pressured smartphone sales, with buyers pulling back on orders especially in the low-end segment. Data from IDC in July showed smartphone sales growth slowed to just 1 per cent in the June quarter.
CEO Tim Breen, who was named to the top job in February, said the company was awaiting a "return to meaningful growth across the consumer-driven end markets".
The company expects third-quarter net revenue of $1.68 billion, plus or minus $25 million, lower than the analysts' average estimate of $1.79 billion, according to data compiled by LSEG.
Adjusted profit per share is expected to be 38 cents, plus or minus 5 cents. The midpoint of that was below the 41 cents estimated by analysts.
Still, lower costs and strong growth in its automotive and datacenter businesses helped GlobalFoundries surpass adjusted profit expectations for the second quarter.
The company recently deepened its push into autos with a chipmaking deal with Continental. It also struck a deal in July to buy chip architecture supplier MIPS for an undisclosed sum to boost its offerings in industrial and AI processors.
In June, it increased its investment plans to $16 billion, allocating an additional $1 billion to capital spending and $3 billion to research in several emerging chip technologies, including those used in electric vehicles and AI servers.
Net revenue rose 3.7 per cent in the three months ended June to $1.69 billion, slightly above estimates of $1.68 billion. Adjusted profit per share of 42 cents also beat estimates of 35 cents.
