Text size:

  • Small
  • Normal
  • Large

Globalfoundries hopes to gain on chip outsourcing

The microchip foundry plans on business picking up as the industry restructures.

Globalfoundries, the customised microchip foundry owned by the Abu Dhabi Government, is hoping to pick up more business next year as the US$300 billion (Dh1.1 trillion) worldwide industry tries to cut costs by outsourcing chip making.

Advanced Technology Investment Corporation (ATIC), owned by the Abu Dhabi Government, has a 73 per cent stake in Globalfoundries and plans to build a US$6 billion (Dh22.03bn) microchip making plant in the emirate by 2015.

The technology research company Gartner expects global semiconductor revenue to grow 32 per cent to $300.3bn this year but anticipates a slowdown in the rate of growth next year.

Gartner also estimates the global contract microchip market's growth will slow to 9.4 per cent next year from 40 per cent this year.

But despite the projected slowdown, Doug Grose, the chief executive of Globalfoundries, expects the company to add customers in the next year to help it outperform the wider industry and become the second-largest foundry in the world.

Globalfoundries is the third-largest microchip foundry in the world by revenue, behind Taiwan Semiconductor Manufacturing Corporation (TSMC) and United Microelectronics, with projected revenues of $3.5bn this year.

Globalfoundries was created in 2008 after ATIC bought a majority stake from the US chip maker Advanced Micro Devices for $2.1bn.

"The foundry element of the overall semiconductor industry is actually growing faster than the actual semiconductor industry," said Mr Grose inside the Yas Hotel ahead of semiconductor summit hosted by ATIC.

He said Globalfoundries's growth would continue over the next year despite the slowdown in the wider industry, which analysts attribute to a lack of spending on electronic goods.

Globalfoundries is looking to land several new customers in the wireless market over the next year to take advantage of the growing trend of technology companies outsourcing their chip production to facilities such as Globalfoundries and TSMC, Mr Grose said.

"[Companies] can't afford the huge investments, whether its infrastructure or the people to do the process work. So more and more people are going to come this way," he said.

Ibrahim Ajami, the chief executive of ATIC, said Globalfoundries's revenues had this year grown by about 40 per cent from last year and he expected continued "double-digit" growth over the next few years.

"Our goal in 2011 is to continue to grow by double-digits and grow faster than any other foundry in the industry," Mr Ajami said.

"Because we're investing so much and building so much, we need to keep the momentum on our side to grow. The industry is projected to grow between 5 and 10 per cent next year.

"We need to beat that industry growth because if we are growing at the same rate as the industry, we're not doing anything special."

ATIC has pledged about $10bn in investment to Globalfoundries, with $3.6bn set aside to expand the current facilities and the rest towards building Abu Dhabi's foundry.

Mr Ajami said ATIC did not at present plan to increase its investment in Globalfoundries but that could change, depending on competition.

"We are increasing in a very competitive world and the plans could change, the industry could change, [market] cycles could change," he said. "We need to prepare to continue to the commitment we have about how serious we are about this industry."

 

dgeorgecosh@thenational.ae

Back to the top

More articles


Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Above, the private pool of Ocean Heights' five-bedroom penthouse flat. Courtesy Christie’s International Real Estate

In pictures: Penthouse flat is height of Dubai luxury living

A five-bedroom penthouse in Ocean Heights in Dubai Marina is on sale for Dh25 million and comes with a private pool and an unparalleled view of Dubai.

 The cooling towers of the Temelin nuclear power plant near the Tyn nad Vltavou in Czech Republic. The country wants to continue expanding nuclear energy capacity despite cancelling a tender to build two new units. David W Cerny / Reuters

In pictures: Best business images for the week to April 17, 2014

Here are some of the best business images for the week to April 17, 2014.

 Three generations of the Hakimi family tend to their stall Crawford Market in Mumbai. Subhash Sharma for The National

In pictures: Shopper’s delight at Crawford Market in Mumbai

Crawford Market is an old British-style covered market dealing in just about every kind of fresh food and domestic animal imaginable. Later on renamed Mahatma Jotirao Phule, the market remains popular among locals and visitors by its old name, taken from Arthur Crawford who was the first municipal commissioner of the city.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National