GLOBALFOUNDRIES Inc.

Scaled, differentiated foundry with solid cash generation but mid-pack returns and stalled growth.

Strengths

• Strong FCF (84th pct) and OCF margin (69th); single-sourced ~63% of volume gives switching-cost differentiation
• Low leverage (D/E 0.10) and ~$1.8B cash; net margin 69th pct, $11B LTA backlog

Risks

• ROE only 7.4% and revenue flat (25th pct) with net income down (6.6th pct); cyclical, capital-intensive
• Customer concentration and China overcapacity/ASP-erosion exposure; gross margin weak (24th pct)

Notable findings

• Customer concentration~89% of revenue from one customer/distributor — ” Global Demand for Semiconductor Products The principal source of our revenue is wafer fabrication and sales of finished semiconductor wafers, which accounted for approximately 89% of our net rev
• Strong balance sheetStrong balance sheet — $1.8B cash & investments
• Insider sellingInsider selling — 26 open-market sale(s) by 4 insider(s) (cluster of 4 insiders, ~$3M, last 6mo) Form 4 ↗