MALTA — After a tough 2023 when global demand for computer chips dropped significantly, GlobalFoundries CEO Thomas Caulfield believes the industry can only go up from here.
Earlier this month, Caulfield told Wall Street analysts that follow GlobalFoundries' stock that the industry appears to be on the rebound. GlobalFoundries wasn’t immune to the 2023 downturn, recording $7.4 billion in revenue for the year, compared to $8.1 billion in revenue in 2022.
And while the industry and the company have not returned to 2022's record levels, Caulfield believes the worst is likely behind for both.
“It’s clear we’re at the bottom of the cycle,” Caulfield said during the conference call. “The real question is, when do we come up in a meaningful way from the bottom of the cycle? It’s not a monolithic answer because we play in many end markets.”
GlobalFoundries is betting that chip demand will rebound in a big way. Earlier this year the company was awarded a $1.5 billion federal grant to help pay for a second chip factory at its headquarters campus in the town of Malta, where it employs about 3,000 people. The grant will also go toward upgrades at its other U.S. factory outside Burlington, Vt.
One of the fastest-growing markets for GlobalFoundries right now is the auto industry, which is transforming the technology used in vehicles, requiring more and more chips.
“Automotive is a bright spot for us,” Caulfield said.
The growth of GlobalFoundries and chipmakers worldwide is likely to be fueled by artificial intelligence, or AI. That’s the use of advanced chips to enable devices to learn from the data they collect.
“When I think of what’s going to be that catalyst to get real growth, we’re going to have to see if AI-enabled devices drive a refresh cycle,” Caulfield said. “And this is something we’ll see over the coming quarters. And starting maybe in fourth quarter this year when there’s a refresh of particular product line and how that does with the promise of new feature capability in AI.”
Still, Caulfield notes that the chip industry still gets much of its revenue from consumer electronics, which also bleeds into the automotive industry. Much of the industry’s downturn in 2023 was a result of consumers slowing down their replacement of older smartphones and devices for new ones due to varying issues like inflation.
“If you think about the two largest economies, China and the U.S. have different macroeconomic conditions they’re dealing with,” Caulfield added. “In China, it’s real estate overhang that has consumers maybe saving a little bit more than they ordinarily will and being a little gun-shy. In the U.S., we’re still dealing with high interest rates as a result of high inflation. And once those two economies get a little bit more normalized and consumers start to spend and redirect that spending back into electronics, I think that’s when we’re going to see our businesses as an industry pick up.”
https://www.timesunion.com/business...s-caulfield-says-industry-poised-19714909.php
Earlier this month, Caulfield told Wall Street analysts that follow GlobalFoundries' stock that the industry appears to be on the rebound. GlobalFoundries wasn’t immune to the 2023 downturn, recording $7.4 billion in revenue for the year, compared to $8.1 billion in revenue in 2022.
And while the industry and the company have not returned to 2022's record levels, Caulfield believes the worst is likely behind for both.
“It’s clear we’re at the bottom of the cycle,” Caulfield said during the conference call. “The real question is, when do we come up in a meaningful way from the bottom of the cycle? It’s not a monolithic answer because we play in many end markets.”
GlobalFoundries is betting that chip demand will rebound in a big way. Earlier this year the company was awarded a $1.5 billion federal grant to help pay for a second chip factory at its headquarters campus in the town of Malta, where it employs about 3,000 people. The grant will also go toward upgrades at its other U.S. factory outside Burlington, Vt.
One of the fastest-growing markets for GlobalFoundries right now is the auto industry, which is transforming the technology used in vehicles, requiring more and more chips.
“Automotive is a bright spot for us,” Caulfield said.
The growth of GlobalFoundries and chipmakers worldwide is likely to be fueled by artificial intelligence, or AI. That’s the use of advanced chips to enable devices to learn from the data they collect.
“When I think of what’s going to be that catalyst to get real growth, we’re going to have to see if AI-enabled devices drive a refresh cycle,” Caulfield said. “And this is something we’ll see over the coming quarters. And starting maybe in fourth quarter this year when there’s a refresh of particular product line and how that does with the promise of new feature capability in AI.”
Still, Caulfield notes that the chip industry still gets much of its revenue from consumer electronics, which also bleeds into the automotive industry. Much of the industry’s downturn in 2023 was a result of consumers slowing down their replacement of older smartphones and devices for new ones due to varying issues like inflation.
“If you think about the two largest economies, China and the U.S. have different macroeconomic conditions they’re dealing with,” Caulfield added. “In China, it’s real estate overhang that has consumers maybe saving a little bit more than they ordinarily will and being a little gun-shy. In the U.S., we’re still dealing with high interest rates as a result of high inflation. And once those two economies get a little bit more normalized and consumers start to spend and redirect that spending back into electronics, I think that’s when we’re going to see our businesses as an industry pick up.”
https://www.timesunion.com/business...s-caulfield-says-industry-poised-19714909.php
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