Contract chip manufacturer GlobalFoundries did not have a picture-perfect beginning to its life as a public company Thursday, as sellers outnumbered buyers during the company's first trading day.
To pull off a textbook initial public offering, the bankers involved attempt to ensure through pricing and hype that a stock will receive a nice pop on its first trading day — though not too much. A large first-day surge could suggest to executives that they potentially left fundraising money on the table.
GlobalFoundries didn't exactly achieve that, and shares slid 1.3% to close at $46.40.
Yet, the business is becoming more profitable, albeit slowly. In 2020 it reported revenue of $4.9 billion on a loss of $1.35 billion, compared with the previous year when it logged sales of $5.8 billion and a loss of 1.37 billion, according to the prospectus. GlobalFoundries see the industry as entering a "new golden age" propelled by cars, mobile devices and intelligent software, which has increased the number of chips needed in many products across a range of industries.
GlobalFoundries counts big chip designers such as Qualcomm and AMD among its customers. The roster also includes companies such as Samsung Electronics and Broadcom. More than half of the chips the company makes for its customers can only be made with its manufacturing technology.
GlobalFoundries pointed out in its IPO filing that it's one of the few chip makers that isn't based in China or Taiwan, theoretically giving investors a hedge against geopolitical tensions there.
But, it's worth pointing out that even though the company is based in Malta, N.Y., it is controlled by Abu Dhabi's sovereign wealth fund, Mubadala Investment. After the IPO, Mubadala will own an 89.4% stake in the business, giving it de facto control.
AMD created GlobalFoundries in 2009 when it spun out its chip manufacturing business, opting to just design the chips it sells.
Climate TRACE's data show emissions at the facility-level.Image: Climate TRACE