To The Moon

$GLOBALFOUNDRIES Inc.(GFS)$ , chip foundry leader, issued third quarter results yesterday, and the stock price rose more than 9% at one point in intraday trading, the largest increase in recent months. In terms of performance, although revenue and profit in the third quarter exceeded analysts' expectations, the growth rate is still deteriorating in terms of trend. Specifically, GlobalFoundries's revenue in the third quarter was $1.852 billion, down 10.7% year-on-year, and slightly better than analysts' expectations of $1.85 billion: Obviously exceeding expectations was profit, with adjusted net profit in the third quarter of $308 million, significantly exceeding analyst expectations of $279 million, showing GlobalFoundries's strong ability to maintain profitability in the semiconductor downcycle. Although GlobalFoundries is also a chip foundry, unlike $Taiwan Semiconductor Manufacturing(TSM)$ $Samsung Electronics Co., Ltd.(SSNLF)$ $Intel(INTC)$ and $SMIC(00981)$, they are competing for advanced process manufacturing, GlobalFoundries gave up research and development of technologies below 12 nm in its early years and focused on mature processes. The strategy avoids the endless battle for advanced technology, reduces capital expenditure, increases profitability and makes it a safe haven. In terms of revenue sources, the main revenue of GlobalFoundries is from Smart Mobile Devices, which contributed $779 million in revenue in the third quarter, accounting for 42% of the total revenue, but the business declined by 18.3% year-on-year due to the destocking of the mobile phone industry: Among all the business categories, the fastest growing is the automotive chip business, with revenue was $300 million in the third quarter, a year-on-year surge of 218.9%, which is the most potential business of GlobalFoundries. Other businesses were basically not growing, so we will not discuss too much here. The company's automotive chips are mainly used in microcontrollers for electric seats, airbags and braking, sensing chips for cameras and lidar, as well as battery management chips for electric vehicles, generally benefiting from the overall trend of vehicle electrification and intelligence. Considering the initial signs of stabilization in the mobile phone industry and the high growth of superimposed car chips, GlobalFoundries is also expected to usher in a turning point in performance, but it is much weaker compared with TSMC. For example, GlobalFoundries expects fourth-quarter revenue will be $1.825 billion to $1.875 billion, at the median, down 11.8% from the same period last year, an expansion from the 10.7% decline in the third quarter. While TSMC expects fourth-quarter revenue growth to slow from double-digit declines to low single digits. Although the growth is not as good as TSMC, GlobalFoundries is located in the United States. In the Sino-US chip war is in full swing at the moment, TSMC faces geopolitical risks, some customers began to pursue TSMC +1, in order to disperse the supply chain risk. Obviously, GlobalFoundries benefits from the trend.