Revenue growth for 5 consecutive quarters is difficult to match the market's cold weather, and wafer foundries will continue to compress costs within the year


Release time:

2023-02-16

Before the U.S. market closed on Feb. 14, Glchip announced its fourth quarter 2022 financial results: Revenue increased 14% year-over-year to $2.101 billion, adjusted gross margin to 30.1%, and adjusted EBITDA (earnings before tax, interest, depreciation and amortization) increased 41% year-over-year to $821 million, both record highs.

Revenue growth for 5 consecutive quarters is difficult to match the market's cold weather, and wafer foundries will continue to compress costs within the year

GlobalFoundries, the world's fourth-largest foundries manufacturer, has posted record revenue for the fifth consecutive quarter.

Before the U.S. market closed on Feb. 14, Glchip announced its fourth quarter 2022 financial results: Revenue increased 14% year-over-year to $2.101 billion, adjusted gross margin to 30.1%, and adjusted EBITDA (earnings before tax, interest, depreciation and amortization) increased 41% year-over-year to $821 million, both record highs.

Gramchip's 2022 revenue was up 23% year-over-year to $8.108 billion. Adjusted EBITDA was $3.088 billion, up 67% from the prior year; For the year, 2.472 million wafers with 12-inch equivalent wafers were shipped, an increase of 4% year-on-year. Chief Executive Thomas Caulfield said the increase was driven by an improved product mix and higher average selling prices.

In the second quarter of 2022, Gramchip's share of the global foundry market was 5.9 percent, ranking fourth, according to market research firm Jibon Consulting. The top three were Taiwan Semiconductor Manufacturing, Samsung and United Electric with 53.4 percent, 16.5 percent and 7.2 percent, respectively. In October 2021, Gramchip was listed on NASDAQ.

Influenced by factors such as the macroeconomic downturn combined with the Russia-Ukraine conflict and the local epidemic, the global consumer electronics market demand has been weak. In the third and fourth quarters of last year, the global semiconductor industry also entered a downward cycle as the chill in the terminal market spread to upstream chip and wafer foundry sectors. In particular, the fourth quarter, this trend is particularly significant. Thomas Caulfield acknowledged that the company cannot escape market headwinds and inventory corrections.

In terms of applications, mobile smart devices, the company's largest revenue source, fell sharply to $823 million in the fourth quarter, down 7% year-on-year and 14% sequentially. Chief financial officer Dave Reeder explained that this was mainly due to a decline in the mid - and low-end smartphone market. In a similar situation for mobile smart devices, Glchip's personal computing terminals (PCS) business grew 1 percent year-over-year to $115 million in the fourth quarter, and Reeder said he expects the business to continue to decline this year.

Growth was driven by the home and industrial Internet of Things and communications infrastructure and data centers. In the fourth quarter, Glchip's home and industrial Internet of Things revenue jumped 64 percent year over year to $416 million, the highest growth of any business. Communications infrastructure and data center revenue rose 27 percent from a year earlier to $386 million.

In addition to the above business, the company has high hopes for the automotive business, which is still in the ramp of production capacity. The business revenue in the quarter was $115 million, up 24% year on year, up 21% quarter on quarter, accounting for 5% of the total revenue, showing a rapid growth trend. In the long term, Thomas Caulfield said, Chip has an opportunity to gain market share in high-end smart mobile devices, automobiles and the Internet of Things, with particular potential for sensors, security, infotainment and battery chips for the automotive industry.

Affected by the industry cut orders, the capacity utilization rate of major factories generally declined. Among 8-inch wafer production lines, capacity utilization is expected to fall to 97%, 80%, 73%, 86% and 79.5%, respectively, for Taiwan Semiconductor, United Electric, World Advanced, China Semiconductor and SMIC (about 8-inch wafer), according to CIMB.com. For the 12-inch wafer production line, the capacity utilization rate of TSMC, Samsung and United Electric decreased to 96%, 90% and 92% respectively. Samsung did not break out revenue from its wafer foundry business separately, but said it posted record quarterly revenue in the fourth quarter, helped by higher sales to key customers. Samsung also said capacity utilization in its foundry business had begun to decline in the fourth quarter due to customer inventory correction.

This is indicative of a widespread inventory adjustment problem at fabs amid sluggish market demand and customer delays. Glchip doesn't disclose capacity utilization figures, but Thomas Caulfield noted that capacity utilization was around 95 percent in the fourth quarter of last year and is expected to fall to 85 to 90 percent in the first quarter of this year.

In response to the weak market, the major wafer foundries have adjusted their pricing strategies. According to Taiwan's Digital Times, Samsung, Semiconductor Manufacturing, chip and other direct price cut news; TSMC, United Electric, World Advanced and other OEM prices did not change, but privately coordinated with customers to give concessions, in order to maintain ASP (average selling price) and gross profit margin.

The chipmaker forecast first-quarter revenue of $1.81 billion to $1.85 billion, with gross margin falling to 27.1%. The decline in capacity utilization has pulled down gross margins in tandem, Reeder said.

"" Despite record revenue in 2022, we remain cautious on the macroeconomic headwinds facing the industry in the first half of 2023." " The company also announced layoffs late last year in response to an industry inventory correction and inflation headwinds, Thomas Caulfield said.

The company said it would reduce its global workforce by fewer than 800 by the first quarter of this year as a result of cost-cutting measures across the business. The cuts amount to about 5.3 per cent, based on a headcount of about 15,000 on the company's website. Dave Reeder highlighted that these measures are expected to save about $110 million in 2023, with additional cost savings planned during the year.

After the release of the results, chip shares rose 8.44% to close at $71.73. Shares are up 33.10% year-to-date.