GlobalFoundries CEO: We're sold out of semiconductor chip ...

GlobalFoundries debuted on Nasdaq this week, valued at over $25 billion. · The company specializes in manufacturing the kind of less-advanced ... SkipNavigationMarketsBusinessInvestingTechPoliticsCNBCTVWatchlistCramerPROMenuKeyPointsGlobalFoundriesdebutedonNasdaqthisweek,valuedatover$25billion.Thecompanyspecializesinmanufacturingthekindofless-advancedchipsthatarecurrentlyinshortsupplyaroundtheworld.ButGlobalFoundriesneedstoconvincepublicmarketinvestorsthatthecompanyisridingawaveofincreaseddemandthatwon'tfizzleoutafterpandemic-relatedsupplyissuesabate.InthisarticleNXPIGlobalFoundriescampusinMalta,N.Y.MaryThompson|CNBCSemiconductormanufacturerGlobalFoundriesdebutedontheNasdaqthisweek,valuedatover$25billion,asitbecameincreasinglyevidentthataglobalchipshortagecouldpersistthrough2023orlater.NowGlobalFoundriesneedstoconvincepublicmarketinvestorsthatthecompanyisridingawaveofincreaseddemandforallsortsofmicrochips,thatwon'tfizzleoutafterpandemic-relatedsupplyissuesabate,andthatitcanincreaseprofitabilityevenasitspendsbillionsonacapitalintensivebusiness.VIDEO1:4601:46GlobalFoundriesplanstoincreaseproduction,addresschipshortage:CEOClosingBell"Ithinkforthebetterpartofthenextfiveto10years,we'regoingtobechasingsupplynotdemand,"GlobalFoundriesCEOTomCaulfieldsaidinaninterviewwithCNBC.GlobalFoundries'clientsincludeQualcomm,MediaTek,NXPSemiconductorsandQorvo.Automotivecompaniesandhomeappliancemakershavebeenstrugglingformonthstoobtainenoughchipsforbuildingproducts,andnowtheproblemisspreadingtoelectronicsmanufacturersandtheirsuppliers.Apple,forexample,saiditwillmissoutonmorethan$6billioninsalesthisholidayseasonbecauseofchipshortages.IntellikewiseblameditslowerCPUsalesonshortagesinpowersupplyandnetworkingchips.Buttheshortagesaren'tforthemostadvancedchipsthatusethelatestmanufacturingmethods.Instead,theshortagesareforwhatareoftencalled"legacynodes,"orsemiconductorsthatuseoldertechnologytoperformfunctionslikepowermanagement,connectingtodisplaysorenablingwirelessconnections.ThosearethekindsofchipsthatGlobalFoundries,athird-partysilicon-waferfoundry,specializesinmanufacturingforitsclients,Caulfieldexplained.VIDEO2:5302:53JimCramersayschipmakerGlobalFoundriesisabuyafteritsIPOthisweekMadMoneywithJimCramer"That'swherethebiggerpartoftheshortageis,becausethere'sbeenunderinvestmentinthat,"Caulfieldsaid."Forme,we'rehappytoletthebiggercompanieskindofservethatsingle-digitnanometermarket,andwewillbetheverybestinourdifferentiatedtechnology."Profitabilityinthefoundrybusinessislinkedtoutilization,ortheratethatthefoundry'sfactoriesarerunningaroundtheclock.GlobalFoundrieshadautilizationrateof84%in2020,butCaulfieldsaidthatwasrelatedtoslowdownsatthestartofthepandemic."Iwouldsay,sinceAugustof2020,wecan'tmakeenough.Everyday,wetrytosqueezeoutasmuchaswecan.Iwouldsaywe'reover100%,"Caulfieldsaid,addingthatthecompany'swafercapacitywassoldoutthroughtheendof2023.CaulfieldsaidthatGlobalFoundriesmadeastrategicdecisionin2018tostopdevelopingthebleedingedgechipmanufacturingtechnologiesfoundrieslikeTSMCandSamsungareinvestingin,andinsteadfocusonlessadvancedbutstill-essentialsemiconductorsforitsclients.Foundrieshavelow-marginbusinessmodelsandfacehighlabor,equipmentandrawmaterialscosts.Initsprospectus,GlobalFoundriessaiditrecordedagrossmarginofcloseto11%inthefirsthalfof2021.Ofthe$2.6billionGlobalFoundriesraisedonthepublicmarkets,$1.5billionwillbespentoncapitalexpenditurestoincreasecapacitytofilldemand,Caulfieldsaid.ItoperatesplantsintheU.S.,GermanyandSingapore.GlobalFoundriesstockclosed1.3%loweronThursday,underitsdebutpriceof$47,beforerisingover5%onFridaytocloseat$48.74.Thecompanyisstillover85%ownedbyMubadala,theUnitedArabEmiratesstateinvestmentfund.MubadalatookcontrolofthecompanywhenAMDspunoffitsmanufacturingarm,whichbecameGlobalFoundries,andfocusedonchipdesignin2008.CaulfieldsaidthatMubadalawillreduceitsownershipstakeinGlobalFoundriesinthecomingyearsbutwillstillcontinuetosupportthemanufacturer."Overthenext,callitfivetosixyears,inaveryorderlyandtransparentway,[Mubadalawill]takesomeoftheirownershipouttogetmorebalanced,"Caulfieldsaid.VIDEO5:4705:47WatchCNBC'sfullinterviewwithGlobalFoundries'CEOTomCaulfieldonIPOTechCheckTVWATCHLIVEWATCHINTHEAPPUPNEXT|ETListenTVWATCHLIVEWATCHINTHEAPPUPNEXT|ETListen