GlobalFoundries at Deutsche Bank’s 2025 Technology Conference: Strategic Growth and Geopolitical Positioning

GlobalFoundries (NASDAQ:GFS) presented a strategic overview on Wednesday, 27 August 2025, during Deutsche Bank’s 2025 Technology Conference. The company highlighted its robust market position and growth prospects, while acknowledging macroeconomic challenges. Key topics included technology differentiation, geopolitical strategy, and financial performance.

Key Takeaways

• GlobalFoundries is leveraging differentiated technology and strategic partnerships to strengthen its market position.
• The company is benefiting from CHIPS Act funding and is expanding its geographic footprint outside of China and Taiwan.
• Growth is evident in automotive, communications infrastructure, and data center markets, while inventory challenges persist in smart mobile devices and home/IoT sectors.
• Financial strategies focus on stable pricing, increased gross margins, and capital allocation for strategic growth.

Financial Results

• GlobalFoundries projects approximately $700 million in capital expenditures, aiming for mid-teen percentages of top-line revenue.
• The company maintains stable pricing with occasional adjustments based on market conditions.
• Gross margins are targeted to increase from mid to upper 20s to 30%, with a long-term goal of reaching 40%.
• Factory utilization stands in the low 80s, with plans for incremental expansion.

Operational Updates

• The company emphasizes its unique geographic footprint, including a "China for China" strategy to serve Chinese OEMs locally.
• CHIPS Act funding is progressing, with $16 billion announced for North America over the next decade.
• Investment tax credits are considered crucial for near-term growth.

Future Outlook

• GlobalFoundries is focused on differentiated technology in essential nodes, with 90% of design wins being sole sourced.
• The silicon photonics business is expected to reach $200 million this year, while satellite communications is projected to hit $100 million.
• The automotive sector has grown significantly, with anticipated mid-teens growth this year.
• The company is developing advanced packaging technologies in Malta and Singapore.

Q&A Highlights

• John Hollister, CFO, emphasized the importance of strategic partnerships and geographic diversification.
• The company plans to leverage its capital investments to drive growth and improve utilization.
• GlobalFoundries aims to maintain its full-year guidance, suggesting a strong fourth quarter.

Readers are encouraged to refer to the full transcript for more detailed information.

Full transcript - Deutsche Bank’s 2025 Technology Conference:

Ross Seymour, Semiconductor Analyst, Deutsche Bank: All right, everybody. Let’s get started with the second presentation. I’m Ross Seymour, the U. Semiconductor Analyst here at Deutsche Bank. Our first presentation from CoreWeave was all about AI, and we’re going to get into that as well with our next company up on stage, GlobalFoundries.

But GlobalFoundries is especially well suited to the second most important theme in semis, which is geopolitics where semis have touched all kinds of different angles of tariffs and subsidies and grants and equity investments, all kinds of timely issues and opportunities. So we’re very, very happy to have John Hollister here, the CFO of GlobalFoundries. So John, welcome to Dana Point. Thank you, Ross. It’s great

John Hollister, CFO, GlobalFoundries: to be here. Appreciate the invitation to come out.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: So why don’t we start off with a little bit of that geopolitical side of things and we’ll start with the tariff side. Global Foundries is very unique in that it has a global footprint, but a substantial one on the manufacturing side here in The U. S. So talk a little bit about what tariffs mean to Global Foundries?

John Hollister, CFO, GlobalFoundries: You bet, Ross. So for one thing, is the input cost dynamic, which is fairly limited. We frame that as roughly $20,000,000 impact in the second half of this year, which is less than 1% of our cost of goods sold. The more important point is the point you’re getting at, which is what does it mean around customers’ interest in utilizing GlobalFoundries as a source of wafer fabrication. And this really plays into our strategy very well as a company.

So our strategy is really built on three pillars. We provide differentiated technology solutions in essential nodes of semiconductor fabrication and that means twelve and fourteen nanometer and above. We built very deep strategic partnerships with our customers and our ecosystem partners. And then we have a unique geographic footprint in the world where we are the only major foundry that has the kind of footprint we have with the presence in North America and Europe and in Singapore and Southeast Asia. We have a new China for China partner where we can work locally to provide semiconductors to the Chinese OEMs.

We’ll talk more about that I’m sure in this conversation, but really we provide a very good solution for customers who are interested in having robust supply of semiconductors outside of China and Taiwan and given the geopolitical changes and state of play that is offering us a lot of interest from customers. You see it more and more press releases are coming out from the largest smartphone maker in the world, Continental recently in the automotive side. So we’re excited about that opportunity and working closely with our customers to continue to leverage that unique geographic footprint in the world.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: Some of those press releases that you mentioned are interesting because they could be with other chip companies, so potentially direct customers, could be with somebody who does a little bit of both, like you said with the biggest handset vendor in The U. S. Or somebody like Continental closer to the OEM side and then years ago you even had them with automotive OEMs. Talk a little bit about what’s bringing them to you, is it just the fact that they need to build in The U. S, is it the unique processes, what’s really the decision making variable?

John Hollister, CFO, GlobalFoundries: Yes, it’s really a combination of those factors. Again, we can work very closely with our customers and be nimble and capable of fine tuning what we do to specifically address what they want, what they need for their solutions. This allows us to provide a differentiated more analog mix signal centric approach to semiconductor fabrication that can be very much oriented to the customer’s needs in areas like low power and high power delivery, RF performance. And we also offer numerous fabrication techniques outside of CMOS and in SIG E and in GaN and in silicon photonics that are highly tuned to exactly what the customer needs. That’s one factor.

And then we think about the possibility of tariffs coming all the way back to your question impacting where folks want to source semiconductors, we have the right footprint to drive that. We have a 300 millimeter fab in Malta, New York. We also have a 200 millimeter fab in Burlington, Vermont and are in the process of adding more and more of our technologies into the Malta Fab and in Burlington, but focusing on the 300 millimeter side with 22 FDX, 40 nanometer, 55 nanometer technologies moving beyond the traditional Malta footprint, which was originally more oriented on the FinFET side. So this is garnering a lot of interest from customers who are looking at domestic sourcing as being a more important part of their manufacturing strategy going forward.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: Some of those press releases with a variety of customers, have they lengthened the engagement duration that you have with them? Few years ago when we had LTSAs all over the place shortages in semis that was kind of that created duration that didn’t end up being quite as long for some companies as we hoped and created a problem down the road. Get the sense these are a little bit different. So what sort of visibility improvement do these provide?

John Hollister, CFO, GlobalFoundries: Yes, for sure is the short answer to your question. In fact, in the second quarter, we entered into an extension and lengthening of our relationship with the major customer in the smartphone space right along the lines that you are talking about. So yes, we are seeing that interest develop and build and it is leading to longer life cycles and customer relationships.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: So why don’t we pivot to another side of the geopolitical side, which is some of the chips acts and government investment or those sorts of things. Of late, it’s gotten a little more popular to talk about equity investments as a possible avenue. Does that apply at all to Global Founders?

John Hollister, CFO, GlobalFoundries: No. Our CHIPS Act CHIPS funding framework is well intact. We are progressing toward our milestones. We are beginning to receive CHIPS funding according to our milestone completion. This is a long term program.

We offered a refreshed announcement, if you will, of $16,000,000,000 which combines a number of prior announcements that we had and also expanded that to a certain extent of $16,000,000,000 in North America. That’s over the next decade plus period of time, Ross. So this is more of a long term play that gets into, as I mentioned, offering greater technology diversity to the multifab and eventually expanding the footprint of the multifab. We have the ability to nearly double the footprint of our multifab and add that capacity and also expand and modernize our Burlington fab as well. So that’s all part of our CHIPS training, but it does not involve equity funding.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: And it seems we were talking a little bit earlier that it seems to me the one big beautiful bill going from the 25% to the 35% investment tax credit is the much more important dynamic of late.

John Hollister, CFO, GlobalFoundries: Yes, that’s right. Near term, that’s a more substantial impact and that’s very helpful to us both in terms of the CapEx portion of our ITC allowance and also the OpEx portion that goes into our SG and A spending in support of those CapEx investments.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: So we talked a lot about the global footprint that you have in The U. S. Centricity and how helpful that is, but you mentioned briefly about the China for China side of things. It’s good to be on one side of this ledger, but you can’t ignore the other. What are

John Hollister, CFO, GlobalFoundries: you guys doing in China? Definitely, the first item to note is that we have existing business in China with China automotive customers and other IoT customers, etcetera, and China smartphone customers. And we represent once again a unique opportunity for the Chinese customer base where we can provide both platforms. There are a number of domestic Chinese fabless semiconductor companies who are interested in having a global source for the global market and that’s more existing and I would say there the interest is even growing in that cohort of customers if you will or those legs of their strategy where they’re looking for a global source for their ex China global business. More recently, we’ve established a framework with a Chinese foundry provider to provide a localized source within China for Chinese OEM customers who also want to have localized supply similar to North American customers and European customers, etcetera.

So that’s now moving on to implementation and look forward to having that be additive to our overall business in China. And I’ll just also quickly highlight, we will control the PDKs, the masks, the front end, the customer relationship that’s all under the GlobalFoundries footprint in that relationship, look forward to working closely with our supplier to provide that localized source of wafer fabrication.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: Does the definition of a localized source to the Chinese government change over time? Is it something that’s fluid or do you think what you’re doing right now sufficiently checks that box for the foreseeable future? I think it’s the latter. I think we are providing what is sought for

John Hollister, CFO, GlobalFoundries: in that dynamic. Got Why don’t

Ross Seymour, Semiconductor Analyst, Deutsche Bank: we pivot over a little bit to the supply side? You just mentioned about expansion and what you’re doing in Malta. How do you see supply demand right now? It looks like we’re coming out of a cyclical bottom. We’ll get into some of the end markets later.

But just from a pure supply point of view, how are you seeing things?

John Hollister, CFO, GlobalFoundries: Yes, I think it’s starting to get there. We had this enormous surge in the COVID era and that led to some accumulation of inventories, particularly in the smartphone market, also the IoT market in particular had fairly high inventory levels. Levels. Some of that remains somewhat persistent, but we are starting to see those inventory levels come down and see more of a normalization there. Our factories are running in the low 80s of utilization on a global basis.

So we have some room to go to further take down inventory and get the utilization factors up, but we’re making progress.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: And the pricing side of the equation, I know you did some strategic things in one of your end markets, but generally speaking pricing has been pretty darn stable. That’s right.

John Hollister, CFO, GlobalFoundries: So you look at our the amount of sole sourced business we have over the last four quarters, 90% of our design wins are sole sourced. That relates to all the factors of our strategy, but clearly looking at the differentiated technology leg of our strategy, it very much relates to that. So on a like for like basis for the most part, we’re seeing quite stable pricing.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: And that’s more from a cyclical perspective that I asked initially. From a longer term perspective, is GF’s strategy to have pricing be a tailwind, a headwind or more of a unit play and just remain neutral?

John Hollister, CFO, GlobalFoundries: Yes, more neutral across. I mean there’s exceptions. We can see allowances at certain times. Sometimes we raise prices given on the situation, but overall more just stable pricing.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: So again going back to the Malta example you gave of potentially increasing capacity over time you just said you’re at about 80% utilized right now. When do you need to really put the pedal down start investing in the CapEx side again?

John Hollister, CFO, GlobalFoundries: That’s right. So GlobalFoundries has been able to benefit from a significant amount of investment in the essential node capacity that we have globally. We invested about $7,000,000,000 over the past several years in our footprint and that’s allowed us to be very capital efficient last year and this year and moving into the next year as we fill up that capacity and leverage our improvements in utilization to drive growth. I would say, Ross, as we get into mid-90s of utilization is when we really need to start thinking about adding on additional capacity. And we have plans in place for all three of our 300 millimeter fabs in Singapore, Dresden and in Malta.

And in fact, we have the ability to expand our capacity within our four walls yet before we even need to get into adding on new clean room space.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: Well, that’s exactly what I was going to ask is, if I remember right in the past, typical new fabs will be they’ll have $1,000,000,000 or $2,000,000,000 handle at least from your CapEx point of view. Is that the sort of step up we should expect or for at least the next year or two, it would be more incremental because you do still have room within the existing four zero

John Hollister, CFO, GlobalFoundries: Yes, it’s more the latter. We’re running in the neighborhood of 10% of our top line. I can see that coming up as we move into the second half of next year, not super dramatically. We need to add equipment within the four walls and then ultimately get into layering on additional clean room space.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: Got you. Let’s talk a little bit about the unique technologies that you have. And I guess before we get into some of those, you mentioned the lithography, as small as you would go, do you have a risk of kind of noting out as customers want to go to smaller nodes and you just really don’t do that? And how do we think about the revenue headwinds that could create before we get into the good side of the revenue tailwinds that the technology would offer? Sure.

John Hollister, CFO, GlobalFoundries: Yes, I mean, let’s back up and think about the served available market that we’re addressing, which is roughly $80,000,000,000 and we see that growing to $120,000,000,000 over the next several years. This remains a very robust market size, market growth opportunity for global foundries at the run rate we’re at, we’re high single digit market share within that market. So we have plenty of room to grow here and it’s sustainable market that will exist for a very long time. And then we think about how we differentiate our technologies and offer new features to customers within that SAM that are otherwise not available to them. Thinking of both of those factors, think we’ve got plenty of room to grow without that risk.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: So let’s get into some of the unique technologies, things like silicon photonics, some of the power side of things actually allow you to have an ancillary touch to the AI dynamic. So talk a little bit about how differentiated those are, how fast they’re growing the end markets that they can address those sorts of dynamics?

John Hollister, CFO, GlobalFoundries: Definitely. So looking at the silicon photonics business or let me look at the comms infrastructure data center end market more broadly first. Within this, we have silicon photonics satellite communications on the RF side are both performing very well this year. Silicon photonics this year is on a track to be a $200,000,000 business for us, satellite communications is on track to be a $100,000,000 business for us. And these are growing at very high rates, mid to high double digit kind of growth rates year on year as we see in silicon photonics area, the pluggables market performing well and this is more rack to rack communication within data centers.

We also have the opportunity over time here to also offer co packaged optics, which will get into more scaling up in data centers and provide with much more concentration of optical connections within a rack. Over time, we also see the opportunity to offer advanced power delivery solutions for data center applications as well. So yes, these are very much tied to the AI market and have a growth corollary with the ongoing growth in AI.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: You guys have given statistics about the percentage of your design wins that are sole sourced, usually it’s 90% or something like that, so very, very high. What percentage of your revenue comes from those sole sourced design wins?

John Hollister, CFO, GlobalFoundries: Yes, roughly two thirds.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: Is that number going? Obviously, they’re going to converge at some point.

John Hollister, CFO, GlobalFoundries: That’s right. Fairly stable and that should increase over time given the design win traction that we’re seeing.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: So let’s get into one of the other technologies that you didn’t mention at least not directly, but the GaN side of things and I think there’s some interest right now obviously it addresses a can address a sweet spot in some of the Edge AI side of things and even the core, but you’ve also had one of the bigger foundries if not the biggest get out of that business. Talk a little bit about why you’re committed to the business and the opportunity it offers?

John Hollister, CFO, GlobalFoundries: Sure. So we see gallium nitride GaN is offering advanced power delivery solutions for 100 volt to six fifty volt applications in automotive and industrial, as you mentioned in data center and we’re excited about that. We acquired a company last year to Gore to offer more of a system level approach to how we’re addressing the GaN power market and this is under development and being productized now and we look forward to the growth opportunities that that’s going to afford us.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: A little bit of a segue or a little ancillary question, you mentioned about co package optics, the packaging side of the equation, does GlobalFoundries play on that side given that its importance is rising across all these different form factors and applications?

John Hollister, CFO, GlobalFoundries: Definitely. So we’re developing advanced packaging technologies both in our Malta fabs as well as our Singapore fab and this can involve different forms of post wafer fabrication manufacturing services, whether that’s die to die bonding or use of interposer layers, these types of technologies that are not necessarily what you would see in a traditional OSAT environment, but are advanced wafer processing beyond the basic wafer fabrication. So this is important for some of these applications, which you can actually have heterogeneous wafers being combined in these form factors to deliver the performance that’s required and we foresee being able to offer that in our two advanced packaging sites. So just as a wrap up

Ross Seymour, Semiconductor Analyst, Deutsche Bank: question on these different technology topics that we’ve discussed, who do you see to be your primary competitor? You have the unique technologies. You only operate in a certain node window. You have the packaging we just talked about, the global footprint. So it’s all kinds of different questions and answers on that depending upon what investors want to talk about when I have discussions about global foundry.

So how do you guys view the competitive landscape?

John Hollister, CFO, GlobalFoundries: Yes, I mean if you think about the top foundries in the world, it’s TSMC, UMC, to a certain extent Samsung, these are our traditional competitors, TowerJazz as well as is out there. So but if you really think of once again about what is unique about us in terms of our technology differentiation, our strong customer partnerships and our unique geographical footprint, we really don’t see any one of them that has exactly a precise mix of those factors with us. A lot

Ross Seymour, Semiconductor Analyst, Deutsche Bank: of times I actually think of some of the fab light analog and mixed signal companies as both your customers and your competitors, how do you go about convincing them to do more with you instead of doing it more internally? Yes, it’s a

John Hollister, CFO, GlobalFoundries: good question. It really just depends on the technology. And I’ve seen these companies over twenty five years have no problem finding areas where they can compete, but also areas where they can cooperate as long as it’s good business and we’re driving the market forward that generally is not an issue.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: Let’s talk a little bit about the end markets that you serve and let’s just do the biggest one first on the smart mobile device side of thing. Right. I think it’s about 40% of your sales or so. Can you just talk a little bit about some of

John Hollister, CFO, GlobalFoundries: the recent performance in that end market and then the longer term growth rates you think that you can deliver? Definitely. So we’re bullish in this market over time. It’s been an area where there have been some inventory headwinds and also some consumer sentiment headwinds this year that we work through. But if you look at how we’re diversifying our footprint here across haptics and audio and imaging in addition to the already very strong position we have in the RF front end and in the wireless transceiver space.

We have a strong position here and are bullish about our future here. I don’t necessarily look at this one as being a very high growth rate for the company. I think that’s present in all three of the other end markets, but this is a good stable piece of business for us and we’re bullish about our position going forward.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: And you mentioned on your last earnings call about some price competition, some strategic decisions you made to either maintain or grow market share. Talk a little bit about what goes into that. That’s the first time I can remember you guys calling out something like that in quite some time.

John Hollister, CFO, GlobalFoundries: Yes. In some of these applications, we may have a dual source dynamic with the customer and have the opportunity to proactively gain market share by offering some price concession to increase our share of wallet significantly. That’s the dynamic that we’re talking about here. That helps our utilization, helps the customer, helps us longer time and is a win for us because it provides a greater longer term revenue opportunity for GlobalFoundries. Got you.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: And then automotive is one, it’s about 20% of your sales, that’s been the other end of the spectrum as far as growth, that’s been a home run for you guys. Somewhat ironic because the last year, year and a half has not been the greatest of times for most automotive semiconductor suppliers. Talk about what’s allowed you guys to grow?

John Hollister, CFO, GlobalFoundries: Yes, it’s been phenomenal. I mean if you go back five or six years, our automotive business was around $100,000,000 So we’ve taken it from that to more than $1,000,000,000 and are anticipating mid teens growth in automotive this year again. It’s really Ross started on the back of our 40 nanometer automotive grade microcontroller, which is the has been leading in the market and allowing us to gain significant share there. As we move forward, we’ve also begun to diversify into advanced radar solutions using our 22 FDX platform and now also moving into power, power delivery with some of the other technologies like 55 nanometer BCD. So it’s really been growth in share and growth in silicon content and vehicles that have gone from call it $500 a vehicle to now $1,000 globally and we see that continuing to expand as well.

So while the SAAR has been stable as you mentioned, the silicon content continues to come up and we continue to gain share. So it’s kind of a multiplication of those factors.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: And you have deals within this vertical with chip suppliers, with Tier one and then with the OEMs themselves.

John Hollister, CFO, GlobalFoundries: That’s right.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: It’s a little unique that you have the entire ecosystem. That’s right. Let’s just talk about the Continental one as one example of that. How does that create business for you? Do they get design wins and then bring in the chip guys?

Which level in those that three tier cake for lack of a better word do you focus on Yes, if not all of

John Hollister, CFO, GlobalFoundries: we really do focus on all of them. And as we look at the Continental opportunity, they are beginning to form a semiconductor vertical within platform and we’ve been identified as the exclusive supplier for that. So we’re very excited about that. That’s a relationship that plays very well into our technical capabilities as well as our footprint. Going back to the recent phenomenon in our industry as we faced shortages some years ago, companies began to really understand we need robust semiconductor supply.

It’s strategically important for even national security and economic security. So we need to have robust frameworks around the world to drive our semiconductor supply. This is an example of that.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: Perfect. Two more end markets we will hit on quickly then the home and IoT side of things, a little bit more of an inventory digestion. Still to go there or are we nearing the end? I think we are

John Hollister, CFO, GlobalFoundries: nearing the end. We do have some more inventory digestion to go on to happen there. Good news there is on design wins. We see very good design win traction in IoT. Looking at the company overall, we had 200 design wins in the second quarter, which is nearly double the number of design wins we achieved in the same period of the prior year.

And if you look at what’s driving IoT, it’s around some of these technical factors again of low power superior RF performance. We’ve seen success in design wins with our 22FDX platform as well as our 12LP plus platform for Wi Fi applications. This is an area of diversity in terms of the end markets that we can achieve and the overriding phenomenon ultimately of this will be Edge AI driving proliferation of AI capability not from the core out to the edge as processing capability continues to pick up.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: And should we or investors think of this market as mainly cyclical or do you think there’s a strong secular dynamic underneath the cost I believe there’s

John Hollister, CFO, GlobalFoundries: a very strong secular dynamic with this market as you see more and more wirelessly connected, even battery operated applications throughout the economy proliferating over time.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: And then the last one and definitely not the least, only about 10% of sales were growing really fast as the comm infrastructure and data center segment. This is where silicon photonics sits, it doubled or nearly doubled year over year this year versus last. Talk a little bit about where you’re exposed there. I know we talked a little bit earlier about it, but summarizing it into this end market, what’s the growth driver there? It doesn’t seem like there’s any cyclicality per se right now.

John Hollister, CFO, GlobalFoundries: Yes, no, I don’t think so. So this is an end market where the fastest growing pieces of this are now approaching roughly half the total end market exposure that we have. And I’m expecting that to continue to develop over the coming years here. So you’ve got more and more need for communications and data centers and what can be achieved using copper connectivity is reaching its limit. Companies need to shift to optical communication that brings in silicon photonics and we have a leading solution initially for the pluggables market and over time moving into co package optics as we talked about earlier.

And that’s not the only application, we also have satellite communications with our unique capabilities providing communication inside satellites themselves and also in the ground terminals that are the receivers for satellite communications and that’s with multiple leading satellite providers in the world.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: So wrapping up the end market discussion, you guys guided what you did for the third quarter, still some areas were good, some areas had some inventory to burn, but you still were pretty confident in your full year goal, which seems to apply a pretty good fourth quarter. What’s going on in the fourth quarter? And I know you didn’t guide overtly for the fourth quarter, but with your full year guidance, what’s going on in 4Q versus 3Q that gives you that optimism?

John Hollister, CFO, GlobalFoundries: Yes, see continued momentum and importantly, we do have one particular example of a customer repositioning some of their deliveries from Q3 to Q4. We spoke about that on the earnings call. So that’s out there for a pickup in the fourth quarter and we see the ability in fourth quarter to expand our gross margins as we look at both the mix improving, depreciation continuing to roll off, some pickup in utilization and also continued management of costs for the company.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: That’s a perfect segue into gross margins, which is going to be the next thing I was going to ask about anyway. You guys did a great job. The LTSAs, which some people think that’s a bad four letter word, actually did exactly what they were supposed to do for you guys. Year over year, that might look like there’s some difficult comps right now, but you’ve held in pretty well even excluding those from last year. Talk about the March from where you are now in the mid to upper 20s to 30 and then eventually getting to 40, what does it take to get to your target?

John Hollister, CFO, GlobalFoundries: Yes, definitely, Ross. It really takes a continuation of the factors that spoke about picking up our factory utilization, enriching our mix, having a depreciation platform that’s stable and even rolling off a bit more as we head into 2026. Those are the main drivers for the onward improvement in gross margin to 30% and ultimately to our goal of 40%.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: What this pricing still that’s just kind of a neutral in your equation or do you as you move from the two thirds of revenues being sole sourced to closer to the 90% being sole sourced, where your design wins are, does that have a natural uplift for you?

John Hollister, CFO, GlobalFoundries: Yes. So that’s a good question. And I would say like for like pricing, yes, is more of a neutral effect, but as we can leverage more greater profitable product lines and applications, this can drive mix improvement in the overall dynamic of pricing and more importantly gross margin. We focus a lot on price, but the ultimate test is the gross margin delivery and we do see the mix getting richer in terms of gross margin delivery over time.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: How much variability you guys have done a great job of holding your price pretty steady, but in the next upturn when utilization does go from say 80% to 90% or 95% and things get a little tighter, how much variability is there on the pricing side or do you try to keep that relatively stable, go for market share, create longer term relationships, those sorts of things?

John Hollister, CFO, GlobalFoundries: Yes, I mean, it really just depends on the situation, but it is a competitive market, we have to be responsive on price. We do have the ability to raise price in some cases, but also want to deliver to our customers’ needs on where they need to be economically. So it just depends on the situation. Overall, I’d say more stable pricing is the right expectation.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: Let’s wrap up in the last few minutes we have here talking about cash, what it all kind of comes down to. We talked a little bit about CapEx earlier, but we’ll put a little finer point out it here. You talked about I think this year’s guidance is about $700,000,000 in CapEx, 10% or so capital intensity, how do you think about that going forward? Do we go up back up to the 15% to 20% range? Can you stay in kind of the

John Hollister, CFO, GlobalFoundries: low double digits? Is it

Ross Seymour, Semiconductor Analyst, Deutsche Bank: really dependent upon how much demand booms at any given time?

John Hollister, CFO, GlobalFoundries: Yes, it really is. As we talked about earlier, I think staying roughly where we are for the next year or so is a reasonable expectation. I think as we continue to see top line growth, utilization pickup, see the need for more CapEx out there to expand our capacity. I can see that moving into the mid teens and up to 20%. Long term model would be 2020% free cash flow.

So that’s those are synergistic with each other as we continue to grow the top line and draw cash.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: And when you guys run out of the internal capacity within the walls that you already have, how do we think about the stair step up? Let’s talk in dollars, not percentage of revenue.

John Hollister, CFO, GlobalFoundries: Yes, mean you can see going from $700,000,000 to $1,000,000,000 and beyond of CapEx to drive that and we’ll be thoughtful about it, Ross, and think about how to phase that over and as move forward. But once again, we have robust support from governments around the world helping us with these investments in this critically important strategic technology that we offer. So that helps a lot.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: And you guys are throwing up, think still $1,000,000,000 in free cash flow this year, adjusted free cash flow. It seems like at this point in the cycle, that’s a pretty good base to be able to look at. So hopefully that can grow going forward. How do you think about capital allocation? Sure.

And we can get a little into your MIPS acquisition if you want to talk about M and A?

John Hollister, CFO, GlobalFoundries: Yes, sure. Yes, so I think we will continue to look for opportunities like that to add interesting technology and businesses that can help us further differentiate what we offer. MEMS is a great example of that. We will continue to evaluate opportunities there. And over time, we remain a fairly recent public company and we’re continuing to form our thoughts on whether it’s dividends or share repurchases more ahead for that, but all three of those pillars are potential applications of capital allocation.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: And there’s no limitations on that per TIPS Act or any other government incentives that you have in any of the various regions?

John Hollister, CFO, GlobalFoundries: Nothing that’s we can’t manage. Got you.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: So what’s the wrapping up then, typically would you agree we’re kind of coming off the bottom across the majority of your more cyclical segments and now the secular is starting to shine through?

John Hollister, CFO, GlobalFoundries: Yes, I would. I think that’s a fair assessment as we look ahead. Just we will have to be mindful of the macroeconomic conditions and what’s happening more broadly, but it does look like we’re starting to clear out the inventory, generally speaking.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: And then secularly, it seems like post the pandemic, get rid of the LTSAs, but have significantly longer relationships that you’ve signed with all these press releases that we have. The secular outlook for the company seems as positive as ever?

John Hollister, CFO, GlobalFoundries: Yes, I believe so. I think we’ve got a good stable position in the smart mobile devices market where we have growing diversity in what we’re offering and strong growth expectation than the other three end markets that we’re serving for the reasons that we talked about.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: While we wrap up with one question, I’ll give credit to my predecessor, Brad, who asked this, but I’ll ask it in two ways. What’s the thing that you’re most excited about that we haven’t discussed here today or investors don’t appreciate? And then also what keeps you up at night?

John Hollister, CFO, GlobalFoundries: Yes, I think I’m very excited about our strategy. I think it’s coming together. We’ve got the three pillars of the strategy that I talked about earlier, I think that really come into fruition now is exciting and offers us a great platform to grow from for what we do. We look at the policy angle and what’s going on in the world with respect to this broad macroeconomic conditions related to that. We just have to be mindful of that and be reactive and responsive to that.

Ross Seymour, Semiconductor Analyst, Deutsche Bank: Perfect. Well, we are pretty much right on time, John. So thank you so much for Thank joining us

John Hollister, CFO, GlobalFoundries: All right. Appreciate it very much.

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