Abu Dhabi’s Mubadala eyes $20bn IPO for chipmaker GlobalFoundaries

By Ashika Rajan, Trainee Reporter
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GlobalFoundries

Abu Dhabi-based investment company Mubadala is planning for a US initial public offering (IPO) of its wholly-owned chipmaker subsidiary GlobalFoundries.

Mubadala has been in initial talks with potential advisors about listing GlobalFoundries, which could be worth about $20 billion. According to reports, technology companies have already raised $20 billion in IPOs in the US this year.

Mubadala and GlobalFoundries representatives declined to comment on the news.

GlobalFoundries Chief Executive Officer Mr. Thomas Caulfield stated that the organization always looks for strategic options, and the timetable for an IPO “has always been some time in 2022”.

Since last year, the IPO industry has exploded, with companies ranging from South Korean eCommerce operator Coupang to food-delivery service DoorDash making their debuts.

GlobalFoundries

GlobalFoundries is a contract chip manufacturer that competes with market leader Taiwan Semiconductor Manufacturing Co. The company was formed when Mubadala bought Advanced Micro Devices Inc.’s manufacturing facilities in 2009 and merged them with Singapore’s Chartered Semiconductor Manufacturing Ltd.

GlobalFoundries is in a peculiar situation as the industry is sucked into the trade war and conflict between China and the US, with factories in both Europe and the US. The majority of chip foundry production takes place in Taiwan or South Korea, and politicians in the US and Europe are gradually pressuring chipmakers to expand capacity outside of Asia.

GlobalFoundries has seen an increase in demand for the tiny electronic components it produces for other companies as the world economy continues to recover from the coronavirus pandemic.

Demand still remains unfulfilled

Working and studying from home, as well as a reluctance to use public transportation, fuelled a surge in demand for computers and automobiles, surprising some in the chip industry. The present rise, according to Mr. Caulfield and his colleagues, is not a one-time occurrence.

Mubadala manages around $232 billion in assets, with investments ranging from private equity company Silver Lake to the retail division of Indian conglomerate Reliance Industries Ltd. It was one of a few sovereign investors who took advantage of market disruptions caused by the coronavirus pandemic last year.

The fund is currently overhauling its structure and investing resources to double in size to nearly half a trillion dollars over the next decade, putting it among the largest sovereign wealth funds in the world. Mubadala is being looked at by Abu Dhabi to help tap energy revenue and power broader growth at a time when the public finances are being squeezed by lower crude prices.

Related: Abu Dhabi’s Mubadala to invest in German ophthalmic lens manufacturer Rodenstock


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