GlobalFoundries projects quarterly revenue below estimates

GlobalFoundries Inc projected quarterly revenue below estimates on Tuesday as the chip manufacturer takes a hit from slumping sales of smartphones and other consumer electronics, sending its shares down nearly 5% in premarket trading.

The chip industry has struggled in the past few months due to a slowdown in orders from data center operators and consumer electronics maker, with a recovery expected only later this year.

GlobalFoundries forecast second-quarter revenue between $1.81 billion and $1.85 billion, the midpoint of which was slightly lower than estimates of $1.85 billion, according to Refinitiv. Its profit outlook was also below expectations.

The company reported a nearly 30% drop in revenue at its mainstay business that caters to the smartphone market and accounts for more than a third of its total sales.

But the automotive unit was a bright spot, with revenue there more than doubling to $180 million thanks to a burst of demand from car makers, which were ramping up output after a dearth of chips hampered operations over the past two years.

Last week, Qualcomm Inc also posted a 20% jump in its automotive business – a positive spot in what was an otherwise dull report due to smartphone market weakness.

GlobalFoundries’ revenue came in at $1.84 billion for the quarter ended March 31, beating analysts’ estimates of $1.83 billion, according to Refinitiv.

A bulk of the company’s business comes from making silicon wafers for chip designers such as Advanced Micro Devices and Qualcomm Inc, which do not have their own fabrication plants, called fabs.

GlobalFoundries reported an adjusted profit of 52 cents per share, exceeding Wall Street estimates of 49 cents per share.

In a separate statement, the company said Tim Stone would be its new chief financial officer, taking over from David Reeder, and Niels Anderskouv would be its new chief business officer. Reuters