GlobalFoundries Inc.

Thank you for standing by and welcome to Global Foundry's second quarter fiscal year 2022 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 1-1 on your telephone. I would now like to hand the call over to Head of Investor Relations, Suki Nagesh. Please go ahead.

Thank you, operator, and good morning, everyone, and welcome to Global Foundry's second quarter 2022 earnings call. On the call with me today are Dr. Thomas Caulfield, CEO, and Dave Reeder, CFO. A short while ago, we released GF's second quarter 2022 financial results, 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 and adjusted non-IFRS financial measures. The most directly comparable IFRS measures and reconciliations for adjusted non-IFRS measures are available in today's press release and accompanying slides. I would remind you that these financial results are unaudited and subject to change. 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 maturely from these forward-looking statements and we do not undertake any obligation to update any forward-looking statements we make today. For more information about factors that may cause actual results to differ maturely 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 annual report on Form 20F filed with the SEC on March 31st, 2022. We will begin today's call with Tom providing a summary update on the current business environment and update on our capacity expansion technologies, following which Dave will provide details on our end markets and second quarter results and also provide third quarter guidance. We will then open the call for questions. Request that you please limit your questions to one with one follow-up. I would also like to remind you that our first Capital Markets Day will be taking place in New York City tomorrow. If you would like to attend in person, please email ir at gf.com in order to be registered for the event. I'll now turn the call over to Tom for his prepared remarks.

Thank you, Suki, and welcome, everyone, to our second quarter earnings call. I'm pleased to report two key results that were once again ahead of guidance that we provided in May as we continue to make significant progress on our strategic and financial priorities. Amidst a challenging macroeconomic environment, the GF team, 15,000 strong, continues to execute each and every day. So let me start with providing a brief update on the current business environment. Similar to others in the industry, we are seeing some areas of the market beginning to rebalance supply and demand, including end markets such as low-end handsets, PCs, and in general, the lower end of consumer electronics market. Although we've experienced some decrease in some pockets of our unconstrained demand, the total demand for GF solutions remains robust and capacity continues to be oversubscribed. Specifically, we continue to see healthy demand in fast-growing end markets such as home and industrial IoT, automotive, communications infrastructure, and data center. If you recall, we previously mentioned that we started this year oversubscribed with demand that was 25% higher than available capacity. Today, demand continues to outpace our ability to supply by about 10%. We remain oversubscribed for 2022, and 2023, and given the increasingly single-source nature of our business, we expect to continue to grow revenue and profit through the remainder of this year and next. In the second quarter, GF revenue grew 23% year over year, driven by increases in both wafer shipments and ASPs. This, coupled with strong operational excellence, resulted in significant improvement to adjusted gross margin. We reported adjusted gross margin of 28% in the quarter, a 12 percentage point improvement from a year ago period. As a result, we delivered earnings per share of 58 cents, which was 10 cents better than the high end of our guidance. David will give more color on the financials in a moment, but let me now provide you with a brief update on some of our recent customer and partnership activity. At the time of our IPO last year, we had signed long-term agreements totaling approximately $20 billion in revenue. Now, about one year later, we have 36 customers under long-term agreement with revenue totaling approximately $27 billion and prepayments and access fees totaling about $3.6 billion. Yesterday, On the heels of the U.S. CHIPS bill being passed, we announced an extension of our long-term agreement with Qualcomm that adds more than $4 billion in incremental waiver purchases from our Fab 8 facility in upstate New York. With this extension, the long-term agreement with Qualcomm now represents more than $7 billion in global revenue through 2028. Since the beginning of the year, we've secured approximately $6 billion in incremental new long-term agreements with our customers. All these new agreements, as well as extensions to existing long-term agreements, are 100% single-source business. In fact, single-source revenue in the first half of 2022 outpaced overall revenue, growing 37% year-over-year, and 90% of the first-half design wins were single-sourced as well. In the quarter, we also signed a definitive agreement with SD Micro to create a new jointly operated 300 millimeter manufacturing facility adjacent to SD's existing 300 millimeter facilities in Kroll, France. With this agreement and combined with our capacity increase in Germany, GF will be tripling capacity in Europe from 2020 through 2028. This partnership with ST enables GF to add capacity in a highly capital-efficient manner backed by grants from the French government as well as customer prepayments. Finally, let me provide a brief update on some of the important technology milestones we achieved this quarter. In the second quarter, we completed nine technology qualifications. We're extremely pleased to have released our 22 FDX Plus platform. This platform offers greater than 25% power reduction, thereby enabling a technology roadmap to further improve power and performance optimization for many of our customers' IoT applications. Additionally, we have now fully qualified our highly differentiated 45 CLO photonic solution, which we just recently announced at the Optical Fiber Communications Conference. We have over a dozen customers currently developing prototypes in preparation for volume manufacturing in 2023. We believe GS Photonics' solution is the only 300 millimeter monolithic integration of electro-optical components in our industry. We're combining SOI, CMOS, and photonics in a single chip solution. Lastly, we released to production the industry's first 55 nanometer embedded non-volatile memory solution for power management that will be adopted in new releases of premium tier handsets. To summarize, I'm pleased to report another quarter of solid execution as we deliver to our customers and all our stakeholders. We continue to demonstrate steady momentum across our business, that are making significant progress towards our long-term business model. Now, before I hand it over to Dave and Suki, I would like to let you know that normally I would be participating in the Q&A session following our prepared remarks, but I'm currently in Washington, D.C. to witness the signing of the CHIPS bill at the White House. This landmark legislation will have a profound positive impact on our nation, our industry, and GF for years to come. I am looking forward to seeing many of you at our Capital Markets Day in New York City tomorrow. With that, over to you, Dave.