GlobalFoundries Files For Initial Public Offering – Report

GlobalFoundries has reportedly submitted a confidential filing for an initial public offering (IPO) in amid acquisition speculation about the US chipmaker.

In July the Wall Street Journal reported that Intel was in talks with GlobalFoundries, as part of its $20bn IDM 2.0 strategy, in which it hopes to manufacture more chips for other companies.

The deal would have valued GlobalFoundries at $30 billion, but at the time GlobalFoundries CEO Tom Caulfield told Bloomberg that in regards to the reported Intel acquisition interest, “there’s nothing there in that discussion.”

Public listing

Caulfield said at the time that the company would be sticking with its plan to go public next year.

And it should be noted that Intel has not made any official acquisition offer for GlobalFoundries so far.

But now according to Reuters, citing people familiar with the matter, GlobalFoundries has filed confidentially with US regulators for an initial public offering (IPO) in New York that could value the chipmaker at around $25 billion.

The possible GlobalFoundries IPO comes amid a difficult period for the semiconductor industry, as it seeks to expand production to counter a worldwide shortage of processors, which is hurting multiple industries and hampering production of goods worldwide.

In March 2021, GlobalFoundries said it would invest $1.4 billion in 2021 in an effort to ramp up production at three factories in the United States (Malta and New York), Germany (Dresden) and Singapore.

Santa-Clara-based GlobalFoundries, is now a unit of Abu Dhabi’s government-owned fund Mubadala Investment.

The firm is a contract chip maker that has grown into the world’s second-largest semiconductor manufacturer, after it was spun out of AMD’s former microprocessor business back in 2009.

It competes directly with Taiwan-based TSMC, the largest independent semiconductor foundry.

IBM clash

In June GlobalFoundries asked a US court to dismiss a claim by IBM that it is owed $2.5 billion in damages, over an alleged contract violation.

GlobalFoundries has also counter sued IBM.

Big Blue is alleging that GlobalFoundries violated a manufacturing agreement that was reached seven years ago between the two parties.

It should be remembered that back in October 2014 IBM had admitted defeat in the semiconductor business, and actually paid Globalfoundries $1.5 billion to take over IBM’s loss-making chipmaking operations.

As part of that deal, Globalfoundries agreed to supply Power processors in return for access to IBM manufacturing process intellectual property, as well as the physical assets of IBM Microelectronics.

However Globalfoundries placed little or no value on IBM’s factories due to their age.

Now IBM has alleged that GlobalFoundries failed to comply with the terms of the 2014 manufacturing contract, and is therefore seeking $2.5 billion in damages.

IBM told media outlets it had “contributed $1.5 billion to GlobalFoundries to supply the next generation of chips, and GlobalFoundries utterly abandoned IBM as soon as the final payment was received and sold off assets from the deal for its own enrichment.”

In 2018, IBM selected Samsung Electronics as its foundry for advanced computer chips.

GlobalFoundries however in its counter lawsuit stated that since IBM signed that deal with Samsung, IBM “went silent for nearly two-and-a-half years.”

In April, IBM asserted in a letter to GlobalFoundries that it was in violation of its contract, according to the filing with a New York state court.