https://www.timesunion.com/business/article/So-is-GlobalFoundries-profitable-Yes-and-no-12906650.php
So is GlobalFoundries profitable? Yes and no...
Updated 3:32 pm, Friday, May 11, 2018
Malta
There is a question that is often on the minds of people when they think of GlobalFoundries, the computer chip maker that employs 3,500 people in the town of Malta at its Fab 8 factory.
Is it profitable?
The answer, it turns out, is both yes and no. It just matters how you define profitable.
GlobalFoundries is privately held and one of many companies owned by Mubadala Investment Co., a private equity fund owned by the government of Abu Dhabi.
Because of that, GlobalFoundries' financials aren't broken down like they would be by a public company that trades on U.S. stock market, like chip giant Intel, which had $9.6 billion in bottom-line net income during 2017 on $62.8 billion in revenue.
IC Insights, a company that tracks semiconductor data, estimates that GlobalFoundries had $6 billion in revenue in 2017, although it does not break that down in terms of profit.
Mubadala does release financial data on the various sectors that it invests in twice a year, and on paper it would appear that GlobalFoundries does not yet make a profit.
But in an interview this week with Bloomberg TV, GlobalFoundries CEO Tom Caulfield said profitability in the bottom line sense isn't what GlobalFoundries is after right now.
Caulfield, a New Yorker who was general manager of Fab 8 before becoming CEO of the entire company earlier this year, said that GlobalFoundries measures itself by its EBITDA, which is earnings before interest, taxes, depreciation and amortization.
A lot of companies do release EBITDA because it is a useful way to look at a company's future profitability, especially if it is investing heavily in research and development and capital spending. And GlobalFoundries does, having acquired chip making facilities from IBM and Chartered Semiconductor and spending $15 billion on Fab 8.
In the Bloomberg TV interview recorded Monday when Mubadala CEO Khaldoon Al Mubarak visited Fab 8, Caulfield said that GlobalFoundries is "EBITDA positive," meaning the company is profitable before paying for things like taxes and interest and factoring in depreciation costs.
In fact, Caulfield wants to double GlobalFoundries EBITDA under his watch, meaning there is plenty of room to grow.
Bloomberg TV host Erik Schatzker asked if GlobalFoundries was "net income" positive, which is the bottom line number that companies have on their balance sheet that includes all costs and accounting subtractions.
"Different story," Caulfield said. "That's an investment depreciation story."
In order for GlobalFoundries to achieve the scale it needs to compete with the biggest chip makers like Taiwan Semiconductor Manufacturing and Samsung, it needs to build more capacity, which means expanding its factories like Fab 8 and adding new factories, which could also happen at Fab 8. It also means upgrading clean room equipment so that its factories are making the most sophisticated chips possible and command the highest return on investment.
That takes a lot of capital and research spending, which lowers net income.
"You have to decide where do you want to win this game, and for us it's all about generating cash to continue to invest and fund ourselves," Caulfield said. "So it's an EBITDA business until further instructed."
