GlobalFoundries on Track for Strong Auto Growth in 2023 Despite Macro Headwinds; Raising FVE to $55

GlobalFoundries reported fourth-quarter results slightly ahead of our expectations. Despite macroeconomic uncertainty and elevated inventories at many customers, the firm has executed well to improve its profitability, secure long-term agreements with customers, and diversify its end-market exposure with high-quality offerings. We like that 40% of the firm’s customers are under long-term agreements (up from 38% last quarter), with a total value over $27.5 billion, which offers visibility into future revenue growth and increases customer switching costs as more of GlobalFoundries’ sales are single-source revenue (chips that can only be made at GlobalFoundries’ fabs). Specifically, in 2022 about two thirds of the firm’s revenue was single-source.