- GlobalFoundries has enjoyed double-digit revenue growth due to high demand amid a low supply of the less advanced chips.
- Comparison with Taiwanese UMC shows that subsidies through the CHIPS act can improve the company's gross margins, with GFS having the ability to add capacity faster than its giant peer.
- On the other hand, higher labor costs could impact operating margins, but these have already been considered in the first quarter 2022 guidance.
- The company also has a small revenue exposure to China, but its factories are positioned appropriately to circumvent geopolitically sensitive Taiwan.
- GFS is a buy due to its cash-generating capability and its low price to cash flow multiple, and its stock could move higher following updates on subsidies.
For further details see:
GlobalFoundries: Profiting From The Supply Crunch