GlobalFoundries Guides to $2 Billion Quarter as Data Center Revenue Soars 81%

GlobalFoundries guided fourth-quarter revenue to $2.0 billion, plus or minus $25 million, after third-quarter sales rose 12.5% year over year to $1.899 billion. The contract chipmaker reported results on Nov. 4. Growth came from data center networking, not phones.

Revenue from communications infrastructure and data center customers rose 80.6% to $316 million. GF credited data center networking products built on its silicon photonics (SiPh) and silicon germanium (SiGe) processes. Home and industrial IoT rose 48.8% to $384 million. Automotive climbed 20.3% to $368 million. Smart mobile devices, still the largest end market, fell 18.8% to $611 million. GF blamed weak smartphone demand tied to memory prices.

Non-IFRS gross margin reached a record 31.4%, up from 26.0% a year earlier. CEO Tim Breen attributed the gain to "a richer mix of business across high-value, high-growth AI applications." On an IFRS basis GF lost $270 million, or $0.49 a share, against a $249 million profit a year earlier.

What drove the IFRS loss?

The loss stemmed from a $441 million non-cash charge covering 9.9 million ordinary shares issued to the U.S. government in September. Strip that out, and the picture changes. Non-IFRS net income rose 28% to $298 million, or $0.53 a share, compared with $0.41 a year earlier.

The quarter by the numbers:

• Revenue: $1,899M, up from $1,786M in Q2 and $1,688M a year ago
• IFRS gross margin: 30.1%, versus 24.8% in Q3 2025
• Non-IFRS gross margin: 31.4%, a record, versus 26.0% a year ago
• IFRS net loss: $270M, versus a $249M profit in Q3 2025
• Non-IFRS diluted EPS: $0.53, versus $0.41
• Wafer shipments: 647,000 (300mm-equivalent), up from 602,000

Operating cash flow fell 43% to $341 million. Non-IFRS adjusted free cash flow was $136 million. GF ended the quarter with $3.2 billion in cash, cash equivalents and marketable securities.

What does Q4 guidance include?

Beyond the $2.0 billion revenue target, GF guided non-IFRS gross margin to 31.5% and IFRS diluted EPS to $0.47, plus or minus $0.05. Non-IFRS EPS guidance stands at $0.59, plus or minus $0.05. The company said guidance excludes further non-cash charges for additional share issuances to the U.S. government, because their timing and size remain uncertain.

End-market revenue for the quarter, against Q3 2025:

• Smart mobile devices: $611M, down from $752M
• Home and industrial IoT: $384M, up from $258M
• Automotive: $368M, up from $306M
• Communications infrastructure and data center: $316M, up from $175M
• Technology services: $220M, up from $197M

Which deals back the AI strategy?

The AI pitch rests on concrete agreements signed in recent weeks. In October, GF signed a multi-year, $2 billion agreement to make silicon interposers for TSMC's CoWoS advanced packaging at its Malta, New York fab. Volume production is expected to ramp in the first half of 2028.

GF was also picked as technology provider and operator for two new fabs at Malta under a U.S.-Japan initiative worth up to $21 billion. GF will receive management and technology fees. An initial investment of roughly $10 billion is accelerating a 300mm fab expected to add capacity in 2029.

The U.S. government agreed to reallocate $955 million of GF's existing CHIPS Act award toward silicon photonics, silicon germanium and advanced packaging in Malta and Burlington, Vermont.

Two further deals round out the quarter. GF expanded a SiGe capacity agreement with Marvell at Burlington for optical transceivers and co-packaged optics. It also signed a long-term deal to run Monolithic Power Systems' process technology at its Singapore 300mm fab, with volume production planned for early 2027.

The board approved a $0.12 per-share dividend payable Jan. 14, 2027.

With CoWoS interposer revenue still more than a year away and the Malta expansion set for 2029, near-term growth rests on photonics and SiGe networking demand carrying a record gross margin into the fourth quarter while smartphone weakness persists.