Globalfoundries aims to double its revenue and market share within the next three years by tapping into the booming markets for smartphones and graphic chips.
Globalfoundries sees growth path
Globalfoundries aims to double its revenue and market share within the next three years by tapping into the booming markets for smartphones and graphic chips. The maker of customised computer chips was created in March though a joint venture of the Advanced Technology Investment Company (ATIC), an investment firm fully owned by the Abu Dhabi Government, and Advanced Micro Devices of the US. Since then, Globalfoundries has increased its investment in the sector with the acquisition of Singapore's Chartered Semiconductor for S$5.6 billion (Dh14.61bn). It has also broken ground for a foundry in New York state, which will add capacity to its operations in Germany.
With the acquisition of Chartered completed, Globalfoundries is the second-largest customised chip maker in the world with revenues for the first nine months of the year of US$1.83bn (Dh6.72bn). It has an estimated combined market share of 16.7 per cent, the technology consultancy iSuppli reports. Taiwan Semiconductor Manufacturing Company controls a leading 47.7 per cent share of the market. "In this industry, a sub-$5bn company means that you have not got the scale to become a serious player," said Ibrahim Ajami, the chief executive of ATIC. "And we want to be a serious, significant player in the next two to three years."
Mr Ajami said that Globalfoundries could control a 30 per cent share of the foundry market by 2013 by meeting the growing demand for smaller and more efficient consumer electronic products such as smartphones and video game consoles. "We are very aggressive in our targets but we also need to be realistic," he said. "We need to recognise that there's other players that have been in the market for a long time and they are serious leaders that really do a tremendous amount of excellent work for their customers."
Mr Ajami pointed to Intel's recent announcement that it had joined Nokia, the largest mobile handset maker in the world, to design chips for its devices as a clear indicator of where the semiconductor business and Globalfoundries is heading. Globalfoundries will also target leading market positions in chips for netbook computers, a lightweight version of the laptops, and graphic chip processors. "It's an indication that Intel is thinking five years ahead. For a company that has about $40bn in revenue, it's about how do you continue to drive growth," Mr Ajami said.
The industry's quarterly revenue growth indicates that more electronic products are being ordered to satisfy consumer demand as the economic slowdown ends, iSuppli said recently. Global customised semiconductor revenue is set to grow to $5.6bn in the current year, an increase of 53.7 per cent from last year. Mr Ajami said that the Abu Dhabi Government had committed $10bn over four years to developing its high-tech hopes with ATIC.
About $6bn has already been spent to set up Globalfoundries and buy Chartered, leaving the remainder to be used for product development and building a new foundry in Abu Dhabi that is expected to begin construction in 2012. Further acquisitions have not been ruled out, he added. "[The Abu Dhabi Government] came into this industry believing in the following: we have to play to win, we would have to have the holding power, we would have to take a long-term perspective and we would have to be very aggressive in how we go after this industry," Mr Ajami said.