Globalfoundries Delays Abu Dhabi Fab to Concentrate on Profitability - Report

Globalfoundries Aims to Become Profitable by 2015, But Freezes Investment into Abu Dhabi Plant

by Anton Shilov
11/01/2012 | 07:14 PM

Globalfoundries, the world’s second largest contract maker of semiconductors, has recently adjusted its expansion plans with the aim to become profitable by the year 2015. The company decided to postpone building of its semiconductor fab in Abu Dhabi by several years, but will continue to expand its facilities in Dresden, Germany and New York, USA.

 

In a bid to focus on rapidly growing parts of the business, Advanced Technology Investment Co. (ATIC), the owner of Globalfoundries, plans to continue investing into expansion of Fab 1 in Dresden, Germany and Fab 8 in Saratoga County, New York. The Bright Side of News web-site reports that Mubadala, the parent company of ATIC, will additionally inject around $3 billion to expand the manufacturing capacities.

While Globalfoundries is growing rapidly, it is not profitable. Since the fab 1 and fab 8 produce chips using leading-edge technologies, they are more likely to bring profits than facilities which produce commodity products using outdated technologies, partly because there is a lot of competition in low-end of the market. One of the key effort that is expected to drive Globalfoundries revenues and profits up is timely start of production using 14nm (14nm-XM) process technology in 2014, ahead of other foundries.

But the concentration on the U.S. and German facilities will have a negative impact on other projects. ATIC will reduce investments into expansion of Singapore operations and will delay building the first semiconductor facility in Abu Dhabi from 2015 to 2018 – 2020, according to BSN.

According to recently published financial results of Mubadala, Globalfoundries earned around $2.15 billion in revenues in the first half of 2012, well ahead of United Microelectronics Corp., which 1H 2012 earnings were $1.73 billion, but well below the arch-rival Taiwan Semiconductor Manufacturing Co with around $7.992 billion in revenue. Financial statements of Mubadala also point to shrinking losses of Globalfoundries, which is an indicator that the company is on-track to become profitable by 2015.