GlobalFoundries Advancing Semiconductor Leadership in America - GLOBALFOUNDRIES INC

Financial Performance:

• The project involves a total investment of up to $21 billion funded entirely by a U.S.-Japan government Special Purpose Vehicle (SPV), meaning GlobalFoundries (GF) incurs no direct capital expenditure or capital utilization risk.
• Revenue recognition is projected to begin in 2027, with an initial contribution of approximately $50 million.
• Gross margin is expected to accrete by 30–50 basis points in 2027, expanding to 100–200 basis points long-term.
• Operating margin is anticipated to accrete by 100–200 basis points in 2026–2027, growing to 200–300 basis points over the long term due to construction management fees recognized during the build-out phase.
• Earnings per share (EPS) accretion is projected at 10–15 cents in 2027, rising to 50–75 cents long-term.
• The model is expected to generate approximately $3 billion in cumulative free cash flow for GF over the next 10 years.
• Profit per wafer for this arrangement is structured to match what GF would have earned via internal funding, without the associated fixed costs.

Guidance and Future Outlook:

• Construction for Phase 1 is shovel-ready with a break ground expected this quarter; facility readiness for equipment is targeted for 2028, with first wafers in 2029.
• Phase 2 is contingent on a stakeholder "go/no-go" decision before the end of 2028.
• Total added capacity across both phases is approximately 1.8 million 300mm wafer equivalents annually, increasing total U.S. wafer capacity by ~10%.
• The project represents a 20-year minimum term, accelerating GF's trajectory toward strategic goals without displacing existing growth plans.
• $955 million of previously awarded U.S. CHIPS funding will be repurposed for R&D and capital expenditures beginning in 2027.
• The U.S. Department of Commerce will take an approximate 4% equity stake in GF, with no further anticipated government equity participation.

Business Segments and Product Lines:

• The new fabs will utilize GF's differentiated platforms: FTX (edge AI, physical AI compute, automotive, industrial), BCD (power management for AI data centers), and UX (industrial and connected infrastructure).
• Additional technologies may be added over time based on customer requirements.
• GF serves as the construction manager, operations manager, and technology provider, earning fees for construction management, operations management, technology licensing, and EBITDA sharing.
• Existing Malta, NY campus infrastructure will provide economies of scale and cost absorption benefits from day one.

Market and Competitive Landscape:

• The initiative addresses the critical shortage of domestic semiconductor supply in the U.S., specifically for foundational technologies supporting AI data centers and the "physical world" AI.
• GF is positioned as the only at-scale foundry with meaningful expansion capability on U.S. soil, making Malta a top semiconductor cluster.
• The project creates ~27,000 construction/ecosystem jobs and over 1,000 high-skilled manufacturing jobs, driven by complementary strategic imperatives of the U.S. (supply security) and Japan (reducing geographic risk).
• Customer demand is cited as exploding across autonomous vehicles, intelligent factories, cloud infrastructure, next-gen communications, and robotics.

Risks and Challenges:

• Specific construction and operational timelines depend on the successful delivery of permits, approvals, and the finalization of definitive agreements for the SPV structure.
• Phase 2 execution carries the risk of a potential "go/no-go" delay if stakeholders do not decide in favor of expansion before the end of 2028.
• Forward-looking statements carry inherent risks regarding actual results differing materially from expectations, particularly regarding project timelines and financial accretion.

Management Commentary and Tone:

• Management tone is highly confident and enthusiastic, describing the announcement as "consequential" and a "win-win" for the U.S. and Japan.
• CEO Tim Breen emphasized GF's unique proven track record in rapid greenfield construction (Malta) and brownfield expansion (Singapore) as key selection criteria.
• CFO Sam Franklin highlighted the "first-of-its-kind" financial model that allows GF to monetize expertise without capital risk.
• Both executives expressed strong alignment with government partners and confidence in the long-term value creation for shareholders.

Analyst Questions and Answers:

• Note: The provided transcript excerpt contains only the prepared remarks and closing statements; no specific analyst questions and answers from a Q&A session are included in the text.

Other Key Points:

• The project leverages the U.S.-Japan Agreement on Strategic Investments, where Japan funds the investment and GF provides technology and operations.
• GF remains the sole operator and manager, earning a share of future EBITDA alongside standard management fees.
• The initiative includes an EBITDA sharing mechanism eligible from first production, growing in line with the fab ramp.
• GF is accelerating parallel investments in Silicon Germanium, Silicon Photonics, and Interposer technologies to support AI data center demand.
• Strategic customer relationships with Renesas, Tokyo Electron, Apple, Cirrus Logic, and General Motors underpin the demand for U.S.-based capacity.