GlobalFoundries(GFS.O)forecast upbeat current-quarter sales on Tuesday, in its first earnings update after going public in October, banking on a spike in chip demand as companies scramble to secure supplies amid a global semiconductor crunch.
The Malta, New York-based company makes silicon wafers for chip designers such as Advanced Micro Devices, Broadcom Inc and Qualcomm Inc, which do not have their own fabrication plants, called fabs.
Although the pandemic has fueled demand for laptops, mobile phones and cars, it has also exacerbated a worldwide shortage of semiconductor chips, forcing automakers and electronic firms to curtail production and delay rollouts of new products.
The current shortage centers around less-advanced chips used in making integrated circuits (ICs) and microcontrollers and comes as foundries such as Taiwan Semiconductor Manufacturing Co Ltd(2330.TW)shift their focus on making higher-margin, cutting-edge chips used in smart phones and laptops.
That, in turn, has helped GlobalFoundries, which is the world's third-largest foundry by revenue, to stay competitive in that segment of the market.
The company forecast fourth-quarter revenue of between $1.8 billion and $1.83 billion, the low end of which was in line analyts' estimates, according to Refinitiv data.
GlobalFoundries posted revenue of $1.7 billion and a profit of 7 cents per share for the third quarter ended Sept. 30, both of which beat Wall Street's estimates.
Chief Executive Officer Tom Caulfield said higher wafer output primarily drove revenue growth.
Still, the company's gross margins remained markedly low at about 18% in the latest quarter, compared with foundry rivals TSMC and Intel, whose gross margins came in well above 50%.
Shares of the company rose 1.27% in extended trading. They have risen nearly 50% since going public, valuing the company at more than $37 billion.