Revenue and Shipments
Q1 revenue of $1.634B (down 11% sequentially, up 3.1% YoY); shipped ~579 300-mm equivalent wafers (down 6% sequentially, up 7% YoY).
GlobalFoundries Inc
· GFS
May 5th, 2026
Summary
- Earnings Call Date:
- 2026-05-05
- Change Since:
- +16.49%
- Next Earnings Date:
- 2026-08-11
Earnings Call Sentiment
PositiveThe call highlights strong operational execution and profitability improvements, driven by higher-margin end-market mix (communications/data center, automotive), record gross margin expansion (+510 bps YoY), robust cash generation and accelerating design-win momentum (50% YoY increase). Strategic progress in silicon photonics and SiGe (capacity oversubscription into 2027), M&A (MIPS closed, Synopsys ARC pending) and large customer partnerships reinforce a positive multi-year growth and margin story. Offsetting this are near-term cyclical pressures: sequential revenue decline (-11% Q1), softness in smart mobile (-15% seq) and IoT (-22% YoY) alongside expected working-capital normalization, higher Q2 CapEx, and incremental supply-chain costs tied to geopolitical risks (~0.5 pt margin headwind per quarter). Overall, positives around margin expansion, secular growth in high-value corridors, strong balance sheet and clear strategic momentum materially outweigh the manageable short-term headwinds.
Company Guidance
GF guided Q2 2026 revenue of $1.76 billion ± $25 million with gross margin ~28.5% ±100 bps (midpoint = ~300 bps YoY expansion), non‑IFRS operating expenses ex‑SBC of $225 million ± $10 million, operating margin 15.7% ±180 bps, share‑based compensation ≈ $71 million (≈ $19M in COGS), net interest & other between -$6M and $2M, and tax expense $28M–$48M (full‑year effective tax rate expected in the high‑teens); EPS guidance was $0.43 ± $0.05 on ~555M diluted shares. They expect Q2 net CapEx to rise, full‑year net CapEx ~15–20% of revenue, and adjusted free cash flow margin ≈10% for 2026 (skewed to H2). For context, Q1 actuals included $1.634B revenue, 29% gross margin (+510 bps YoY), $271M operating profit (16.6% OM), $227M net income, $0.40 diluted EPS, $542M cash from operations, $309M net CapEx (~19% of revenue), $233M adjusted FCF (≈14% margin), ~$3.8B cash & equivalents, $1.1B debt, and $400M of share repurchases completed.
Record Gross Margin Expansion
Non-IFRS gross profit $474M representing a 29.0% gross margin, up ~510 basis points year-over-year — the largest YoY expansion in over 3 years and above the high end of guidance.
Operating Profit and EPS
Operating profit $271M with operating margin 16.6% (up ~320 bps YoY). Net income ~ $227M (+$38M YoY). Diluted EPS $0.40 at the high end of guidance.
Strong Cash Generation and Balance Sheet
Cash flow from operations $542M; adjusted free cash flow $233M (14% margin in Q1). Cash, cash equivalents and marketable securities ~$3.8B; total debt $1.1B; $1B undrawn revolver.
Capital Returns
Repurchased $400M of shares under $500M buyback authorization in Q1; ~$100M authorization remains.
Communications Infrastructure & Data Center Momentum
CID revenue ~14% of total, up 2% sequentially and 32% YoY (sixth consecutive quarter of double-digit YoY growth). Company expects high-30s% YoY growth in CID for 2026 and forecasts silicon photonics to roughly double in 2026 with >$1B run-rate exiting 2028.
Design Wins and Customer Partnerships
50% increase in design wins YoY across all four end markets; notable strategic partnerships and transactions including a multibillion-dollar collaboration with Renesas, AMF acquisition integration (photonic capabilities), Apple collaboration for U.S. fab, and partnerships (Siltech, Corning, EXFO) showcased at OFC.
SiGe and Silicon Photonics Capacity Demand
SiGe capacity at Vermont fab reported as oversubscribed well into 2027; company is expanding SiGe capacity and targeting accretive long-term revenue from SiGe and photonics.
Strategic M&A and Business Model Evolution
Closed MIPS acquisition (Aug 2025); Synopsys ARC IP acquisition expected to close by end of H1 2026. Company redefined revenue categories to 'manufacturing services' (87% of Q1 revenue) and 'technology services' (13% of Q1 revenue) expecting Technology Services to trend toward the high end of 10–12% in 2026.
Q2 and Full-Year Guidance Highlights
Q2 revenue guidance $1.76B ±$25M; Q2 gross margin ~28.5% ±100 bps (midpoint implies >300 bps YoY expansion). Full-year 2026 net CapEx expected 15–20% of revenue; adjusted free cash flow margin expected ~10% for 2026 with second-half skew.
Operator
Welcome to GlobalFoundries First Quarter 2026 Financial Results Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Eric Chow, Head of Investor Relations. Please go ahead, sir.
Eric Chow
Thank you, operator. Good morning, everyone, and welcome to GlobalFoundries' First Quarter 2026 Earnings Call. On the call with me today are Tim Breen, CEO; and Sam Franklin, CFO. A short while ago, we released GF's first quarter 2026 financial results which are 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 web page. During this call, we will present both IFRS and non-IFRS financial measures. The most directly comparable IFRS measures and reconciliations for non-IFRS measures are made available in today's press release and accompanying slides. Please note 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 the terms such as believe, expect, intend, anticipate and may or by the use of the future dense. 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 make today. For more information about factors that may cause actual results to differ materially from forwar...
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