When GlobalFoundries abandoned development of its 7 nm-class process technology in 2018 and refocused on specialty process technologies, it ceased pathfinding, research, and development of all technologies related to bleeding-edge sub-10nm nodes. At the time, this was the correct (and arguably only) move for the company, which was bleeding money and trailing behind both TSMC and Samsung in the bleeding-edge node race. But in the competitive fab market, that trade-off for reduced investment was going to eventually have consequences further down the road, and it looks like those consequences are finally starting to impact the company. In a recent earnings call, GlobalFoundries disclosed that some of the company's clients are leaving for other foundries, as they adopt sub-10nm technologies faster than GlobalFoundries expected.

"Our communications infrastructure and data center segment continued to show weakness through 2023, partly due to the prolonged channel digestion of wireless and wired infrastructure inventory levels across our customers, as well as the accelerated node migration of data center, and digital-centric customers to single-digit nanometers," said Tom Caulfield, chief executive of GlobalFoundries, at the company's earnings call with financial analysts and investors (via SeekingAlpha).

There are four key reasons why companies migrate to 'single-digit nanometers' (e.g., 5 nm, 7 nm): they want to get higher performance, they want to get lower power, they want to reduce their costs by reducing die size, and most often, they want a combination of all three factors. There could be other reasons too, such as support for lower voltages or necessity to reduce form-factor. For now, the best node that GlobalFoundries has to offer is its 12LP+ fabrication process which is substantially better than its 12LP and 14LPP process technologies and should be comparable to 10nm-class nodes of other foundries.

Meanwhile, based on characteristics of 12LP+ demonstrated by GlobalFoundries, it cannot really compete against 7nm-class process technologies in terms of transistor density, performance, and power. Assuming that TSMC or Samsung Foundry offer competitive prices for their 7 nm-class nodes, at least some of 12LP+ customers are probably inclined to use 7 nm fabrication technologies instead, which is what GlobalFoundries confirms.

"We are actively [watching] these industry trends and executing opportunities to remake some of our excess capacity to serve this demand in more durable and growing segments such as automotive, and smart mobile devices," Caulfield said.

Back in 2022, communication infrastructure and datacenter revenue accounted for 18% of the company's earnings, but in 2023, that share dropped to 12%. Shares of PC and smart mobile devices declined from 4% and 46% in 2022 to 3% and 41%, respectively. Meanwhile the share of automotive-related revenue increased from 5% in 2022 to 14% in 2023, which is a reason for optimism as GlobalFoundries expects automotive growth to offset declines of other applications that transit from 12LP+ to newer nodes.

"[Automotive] products span the breadth of our portfolio from 12 LP+, our FinFET platform, all the way through our expanded voltage handling capabilities at a 130 nm and a 180 nm technologies," said Caulfield. "Through these offerings, we believe that GF will play a key role in the long-term transition of the automotive industry, and our customer partnerships are central to that.

GlobalFoundries revenue topped $7.392 billion for the whole year 2023, down from $8.108 billion in 2022 due to inventory adjustments by some customers and migration of others to different foundries and nodes. Meanwhile, the company remained profitable and earned $1.018 billion, down from $1.446 billion a year before.

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  • Tilmitt - Thursday, February 15, 2024 - link

    I wonder would it be cheaper to build a 7nm fab now than a few years ago when Global Foundries abandoned it. You would imagine there would be more expertise available in the labour market and technological advances that could control costs. It might be worth another crack.
  • zodiacfml - Thursday, February 15, 2024 - link

    They should buy used equipment, they can't keep doing/milking this. I've seen not one article warning about China flooding the world with chips on older process nodes. I believe it and I think it will not be different on how they made solar PVs a lot cheaper. I've been suggesting Tesla/Elon that if they think AI is the future, then they should be able to fab their own chips, buying GF for example.
  • PeachNCream - Thursday, February 15, 2024 - link

    Elon is one revolting individual with far too much inflammatory commentary used in the vain hope of keeping the spotlight on himself so his flamboyance acts as free/low cost advertising to the small minds unable to comprehend his methods.
  • lucaB75 - Thursday, February 15, 2024 - link

    Totally true. He is disgusting person
  • PixyMisa - Thursday, February 15, 2024 - link


    <horses whinny>
  • FWhitTrampoline - Thursday, February 15, 2024 - link

    In a recent interview at Tech Tech Potato GF's CEO Explained to Ian that GF sold off one EUV machine and returned the other to ASML for some reduced amount. And Maybe OpenAI can look at investing there at getting an EUV machine and get GF some funding to produce any in-house OpenAI accelerator designs fabricated on some sub 10nm node. That way GF could continue to produce revenues and try and remain revenue positive and with some outside investment to get back in the leading edge node race if only to meet OpenAI's needed but maybe others as well!
  • Bruzzone - Thursday, February 15, 2024 - link

    GF will pick up and use 193 double patterning machines for 7 and as the used fabrication equipment becomes available on mature techniques GF will offer sub 10 nm. Customer audits are easy and foundries are clubs so as the need arises the outcome is obvious, migration. mb
  • lucaB75 - Thursday, February 15, 2024 - link

    This company was dead on arrival. They stopped investing hoping that clients stay with them forever. Good luck. Amd they even placed shares on the market, a real scam
  • smalM - Friday, February 16, 2024 - link

    Last year TSMC's revenue from 7nm was $13 billion on fully amortized equipment. There is no way for GloFo to compete in 7nm.
  • onewingedangel - Friday, February 16, 2024 - link

    Wonder if IFS may make another offer at some point, they want customers and specialised processes and can provide leading edge.

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