Globalfoundries targets profitability, IPO in 2015

According to Mike Noonen, executive vice president for Globalfoundries, an initial public offering (IPO) could be staged by the company once it achieves profitability.

The chipmaker expects to be profitable come 2015 while also not requiring added funding from the Advanced Technology Investment Company (ATIC), its parent company. The plans were laid out during a press conference held in Abu Dhabi which coincided with the one year anniversary of Ajit Manocha's appointment as CEO of Globalfoundries in October 2011.

An IPO of shares would then be an option, but moving the company to profitability was the first order of business, stressed Noonen.

An IPO could be used to raise funds for Globalfoundries as well providing the means for ATIC to reduce its ownership and get a return on its investment. Much would depend on how the IPO is structured.

Still unresolved is whether the Abu Dhabi government, which currently owns Globalfoundries through ATIC, remains committed to the construction of a wafer fab in Gulf state or whether the 2015 expectation signals that government officials might scale back the project. ATIC is owned by Mubadala Development Co., an investment vehicle of the Abu Dhabi government.

In May 2011, Globalfoundries was reportedly planning to spend as much as $8 billion building its next wafer fab in Abu Dhabi with groundbreaking to take place in 2012 and chip production scheduled to start in 2015. That plan was reportedly put on hold late in 2011, with a reassessment sometime this year.

Noonen said this week that the foundry is making progress towards profitability with industry-leading annual sales growth.

Globalfoundries is ranked as fastest growing of the world's top 20 chip companies by IC Insights. The market researcher estimates that Globalfoundries grew from about $3.48 billion sales in 2011 to $4.56 billion in 2012, a 31 per cent increase. That compares with 17 per cent growth for market leader Taiwan Semiconductor Manufacturing Co., which recorded sales of about $17 billion in 2012, a $2.4 billion increase over 2011.

Globalfoundries is enjoying a boom year as a pure-play foundry supplying leading-edge silicon for mobile phones and tablet computers.

"The move towards profitability allows all sorts of options to open up," Noonen said. "One option would be to take the company public. Profitability gives us control of our own destiny." But he stressed that does not mean ATIC, Mubadala and Abu Dhabi would cut off additional funding. "There is additional capital spending planned for 2013," said Noonen.