GlobalFoundries Inc.

Thank you for standing by and welcome to Global Foundry's third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference may be recorded. Should you require any further assistance, please press star 0. I would now like to hand the conference over to your host, Head of Investor Relations, Suki Nagash. Please go ahead.

Thank you, Lateef, and good afternoon, everyone, and welcome to Global Foundry's third quarter 2021 earnings conference call, our first as a public company. On the call with me today are Tom Caulfield, our CEO, and Dave Reeder, our CFO. A short while ago, we released GF's third quarter financial results press release, which is available on our website at investors.gf.com, along with today's accompanying slide presentation. This call is being recorded, and a replay will be made available on our investor relations webpage. During this call, we will present both IFRS as well as non-IFRS financial measures. The most directly comparable IFRS measures and reconciliations for our non-IFRS measures are available in today's press release, and accompanying slides. I would remind you that our financial measures are unaudited. Certain statements on today's call may be deemed to be forward-looking statements. Such statements can be identified by terms such as believe, expect, intend, anticipate, and may. You should not place undue reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements. and we do not undertake any obligation to update any forward-looking statements we may make today. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the press release we issued today, as well as risks and uncertainties described in our SEC filings, including in the sections under the caption, Risk Factors in Our Financial Prospectus, filed with the SEC on October 29, 2021, in connection with our IPO. We will begin today's call with Tom providing a summary update on our end markets, capacity expansion, and technologies, following which Dave will provide details on our third quarter financial results and fourth quarter guidance. We will then open the call up for questions. We request that you please limit your questions to one with one follow-up. With that, I will now turn the call over to Tom for his prepared remarks. Thank you, Suki.

Well, welcome everyone to our first earnings conference call as a public company. Our IPO on October 28 was an important milestone for Global Foundries. It was a culmination of over a decade of work to build an at-scale global semiconductor foundry with strong technology differentiation. In 2018, we drove a fundamental change in our strategy to become a more relevant and, more importantly, a more vital contributor to this industry by becoming a profitable and sustainable business. We strengthened the management team. We refocused our investments in R&D and CapEx to differentiated feature-rich solutions. We forged stronger customer partnerships, and we streamlined our manufacturing footprint and cost structure. Our strategic initiatives are now well in place, and we anticipate driving profitable growth. While we are seeing the initial results of this in 2021, we are really at the beginning of this journey. We expect this will become more apparent in 2022 and beyond, as our revenue will continue to grow with the capacity investments we are making, and as a result of this increasing scale, we expect even faster growth in our margins and earnings. We have significant business visibility and certainty with customer long-term agreements. This gives us confidence that the fundamentals of our business will continue to improve at a rapid pace over the next three to five years. Now, while we are excited and proud of our IPO, we recognize it is ultimately just the first step in a much longer journey. We take our responsibility and duty to create long-term value for investors, our customers, our employees, and our many other stakeholders with a heightened sense of urgency. We'll do this by continuing to focus on creating innovative solutions for our customers by partnering closely with them, embracing the diversity of our team, and delivering services and products that allow our customers to win in the markets they serve. Now, moving on to our third quarter, we are pleased to report a quarter of strong top-line and profitability growth, demonstrating the continued success of our strategy. Third quarter revenue grew 5% quarter-on-quarter, driven by a higher wafer output and the continued improvement in mix as our differentiated solutions become a larger portion of our total business. Third quarter adjusted earnings per share came in at $0.07. Now, David will provide more details on the financials in just a moment, but first let me give a summary of third quarter revenue by our end markets. First, in our smart mobile end market, which comprised roughly 50% of our third quarter revenue, we saw strong year-over-year growth of roughly 45%, driven mostly by the continued ramp of our single-source design wins in the growing markets such as 5G RF front-end modules for mobile handsets, for image sensors, and Wi-Fi 6. Our differentiated technologies continue to do well in the 5G sub-6 gigahertz market. We are still, though, in the early innings of the industry transition to 5G with market estimates of doubling of 5G handsets to nearly 500 million units this year. Next, our communications infrastructure data center end market, which constituted approximately 17% of our third quarter revenue, saw over 30% year-over-year growth, driven by a combination of shared gains by our customers, continued strength in the enterprise data center, cellular infrastructure, and RF transceiver markets. Moving on to home and industrial IoT end market, third quarter revenue was roughly 13% of the total and grew approximately 37% year over year. The growth was driven by a combination of higher ASPs as well as the ramp of IoT products from some of our key customers for applications such as digital TVs, Wi-Fi, and secure contactless transactions. In addition, we saw broad-based growth for MCUs in the quarter. Touching next on automotive, revenue in this end market was approximately 6% of our total third quarter revenue and grew almost 4x from the year prior period. The strong growth in our automotive end markets was driven by the ramp of new designs that have been in development and qualification over the past years. GF's automotive products are now going into a variety of automotive uses, such as in-vehicle comfort, safety, sensing, and battery management solutions in EVs. The chip shortage in the auto industry has accelerated demand for many of our customers who have entered into long-term agreements with GF to ensure supply continuity for their new products that ramp over the next three to five years. We are very excited about our strong traction in the automotive end market. In our compute end market, revenue was roughly 77% of total and declined year over year as expected. As some of our customers' designs continue to transition to smaller nodes, We continue to forecast a decline in this end market for the first half of 2022 and then see stabilization as an improvement in the second half of 2022 from ramps from newer high-margin customer designs. We expect, however, the decline in revenue in this end market to be more than compensated with growth in other end markets. Next, I'd like to provide a brief update on our ongoing capacity expansion plan. Overall, our global installed capacity will increase approximately 4% from 3Q to 4Q, which is approximately 12% increase from the fourth quarter of last year. Our installed capacity in our Fab1 facility in Dresden, Germany, is increasing output by approximately 16% from 3Q to 4Q this year, and this also represents about a 50% expansion at that facility from a year ago. All of this expansion and capacity is in support of customer demand for our differentiated technologies such as 22FDX, 20 nanometer ISP, and our BiCMOS technology. Also, construction on our phase one module expansion in Singapore remains on track with equipment slated to go in the facility in the second half of 2022 to support first production outs in the first half of 2023. In addition to our ongoing capacity expansion, we continue to make strong progress in enhancing our differentiated technologies. For instance, in 3Q, we completed automotive grade one qualification of our 22 FDX, RF, and millimeter wave platform, including reference IPs for complex analog and RF blocks, a complete ecosystem of design services, including IP providers, EDA vendors, and turnkey services. This feature-rich platform is targeting automotive smart sensors and processors. For example, Bosch is a lead customer for ADAS radar SOCs, and they're leveraging our 22FDX platform for their next-generation radar systems. Our technology team also delivered the first functional resistive RAM bit cell, an enhanced version of FDX we refer to as 22FDX+, which is targeted for Tier 1 customers seeking next-generation wireless secure transaction capability in mobile, IoT, and automotive end markets. These achievements are truly differentiated and are allowing our customers to win with ultra-low power in analog, RF, and MCU designs. In silicon photonics, our 45 CLO platform delivered first customer prototypes that demonstrated an eight lambda, 32 gigabit per second optical length with extremely low bit error We are the technology leader in silicon photonics as we are the only provider of integrated CMOS, RFSOI, and optical devices in a monolithic solution. This unique capability will drive a whole new upgrade of connectivity and data centers over the next decade. So to summarize, we are seeing strong growth from our customers in the end markets we serve, and we are prudently and in partnership expanding our capacity to serve their needs and making great progress in accelerating our differentiated technologies for the future. With that, let me turn the call over to David to provide the financial details for the third quarter and also provide you our guidance for the fourth quarter. David?