Chipmaker GlobalFoundries forecasts Q1 results below estimates, shares drop

GlobalFoundries forecast first-quarter results below Wall Street estimates on Tuesday, as the contract chipmaker faces competition from larger rivals while a supply glut persists in certain pockets of the semiconductor industry.

Shares of the Malta, New York-based company fell more than 6 per cent in premarket trading.

Recent earnings from semiconductor firms have signaled continuing weakness among industrial customers and beginning of a chip inventory build-up in the automotive industry.

Advanced Micro Devices (AMD), a key client and once the parent firm of GlobalFoundries, also forecast its first-quarter revenue below market estimates in January. Revenue from AMD’s embedded segment, which caters to markets such as automotive and industrial, fell roughly 24 per cent in the fourth quarter.

GlobalFoundries expects its first-quarter revenue to be in the range of $1.50 billion to $1.54 billion, compared with analysts’ average estimate of $1.76 billion, according to LSEG data.

It faces competition from larger companies such as Taiwan Semiconductor Manufacturing Co — the world’s largest contract chipmaker.

GlobalFoundries expects adjusted profit per share to be in the range of 18 cents to 28 cents in the first quarter, versus analysts’ estimate of 46 cents.

The company reported revenue of $1.85 billion for the fourth quarter, in line with analysts’ expectations. Its adjusted profit of 64 cents per share for the quarter ended Dec. 31 beat estimates of 58 cents.

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