Abu Dhabi’s role in GlobalFoundries

Abu Dhabi-controlled GlobalFoundries, a leading semiconductor fab operator and chip designer, has filed for an Initial Public Offering (IPO) on the U.S. Stock Exchange amid a worldwide chip shortage. This move is significant as it highlights Abu Dhabi’s increasing role in the global semiconductor industry and investment landscape.

This article will analyse GlobalFoundries’ U.S. venture and its implications for Abu Dhabi.

Overview of the GlobalFoundries IPO

The GlobalFoundries Initial Public Offering (IPO) was announced in March 2018 with a listing of its shares on the Abu Dhabi Securities Exchange. Emirates NBD Capital, Abu Dhabi Islamic Bank and Dubai Financial Market, with Goldman Sachs and Citigroup Inc. as financial advisers jointly led the offering.

GlobalFoundries is a spinoff from Advanced Technology Investment Company (ATIC), an Emirati-based venture capital firm owned by Mubadala, the investment arm of the Government of Abu Dhabi.

The company, which provides a full range of semiconductor manufacturing services, offers cutting-edge semiconductor technology and competes in markets such as automotive, consumer electronics, servers and high performance computing. Its IPO raised $654 million in funds to pursue technology advancement initiatives and business expansion efforts. With its listing on the Abu Dhabi Securities Exchange, GlobalFoundries has become one of the few companies listed on both US exchanges (Nasdaq) and ADX (Abu Dhabi).

As part of its global expansion plans, GlobalFoundries has acquired IBM’s microelectronics manufacturing business for $1.5 billion in October 2015. This includes IBM’s three major fab facilities in East Fishkill New York; Burlington Vermont; and Greenock Scotland; and their development centre in Essex Junction Vermont, which will bolster GlobalFoundries’ existing network, including 9 fabrication sites spread across Europe and Asia Pacific regions.

Background of Abu Dhabi and GlobalFoundries

Abu Dhabi has become a significant player in the worldwide chip market due to its controlled semiconductor manufacturing company, GlobalFoundries.

GlobalFoundries has recently been gaining attention in the industry, as they filed for the U.S. IPO amid the worldwide chip shortage.

Let’s look at the background of Abu Dhabi and GlobalFoundries to learn more about this event.

Overview of Abu Dhabi’s role in GlobalFoundries

Abu Dhabi, the United Arab Emirates’ wealthy capital, is important in developing GlobalFoundries, one of the world’s largest semiconductor foundries. On behalf of its parent company, Advanced Technology Investment Company (ATIC), Abu Dhabi is investing significant capital in GlobalFoundries and working to ensure it becomes one of the foremost chip manufacturers in the world.

As part of its involvement with GlobalFoundries, Abu Dhabi has invested extensively in manufacturing facilities across three continents and funded research and development projects in various fields. In addition to playing a significant financial role, Abu Dhabi is also actively helping GlobalFoundries execute its mission by leveraging the country’s impressive technological capabilities and relationships with global technology leaders.

Abu Dhabi’s participation in GlobalFoundries has also been instrumental in boosting EDA (electrical design automation) tools such as Cadence and Synopsys for chip design tasks at GF. This has helped create more efficiency across their entire process from start to finish by optimising different components to fit their specific needs. Together these companies have helped create a comprehensive ecosystem for developing cutting-edge products around the world, enabling remarkable advances across several different industries through smarter application designs focused on delivering improved performance.

In short, Abu Dhabi’s involvement with Global Foundries is helping to create a leading edge semiconductor ecosystem that will create advanced opportunities for businesses worldwide.

GlobalFoundries’ role in the chip shortage

The chip shortage has been a challenging global supply issue that has disrupted the production of various electronic components. As manufacturers strive to meet soaring international demand growth in the market, they have turned to GlobalFoundries Abu Dhabi (GFAB) as a leading source of high-performance chips. Through its subsidiary ATIC, GFAB provides advanced three- and fourteen-nanometer processor technology to device manufacturers, who use these components to produce integrated circuits for automotive and mobile device applications.

GFAB has traditionally focused on developing cutting-edge production process technology to improve energy efficiency and power consumption — particularly in semiconductor fabrication across different industry verticals. Within this context, GFAB’s role in addressing the ongoing chip scarcity issue is evident from their ability to provide industry partners with cost-effective solutions through advanced shared engineering along with SmartFab™ technology that consistently enables optimal fabrication capacity utilisation.

In addition, by focusing on industry best practices around manufacturing processes such as ‘batch processing’ and ‘multi-bridge scaling’ compliant wafer structures, GFAB seeks to reduce overall processing time associated with chip production without compromising product quality standards. Additionally, its growing portfolio of services encompasses advanced 3D modelling and design support for further speeding up delivery times for more timely project completion — key factors in helping the company meet customer deadlines while mitigating disruption during the global chip shortfall over the past year or so.

Abu Dhabi-controlled GlobalFoundries files for U.S. IPO amid worldwide chip shortage

Abu Dhabi-controlled GlobalFoundries filed for a U.S. initial public offering (IPO) amid a worldwide chip shortage. This IPO and the resources it will bring could profoundly impact the company’s ability to address the increasing demand for semiconductor chips as the world transitions to a more digital economy.

Let’s take a look at the potential importance of this IPO.

Potential impact on the chip shortage

Abu Dhabi’s plan to take semiconductor foundry GlobalFoundries public in late 2021 could impact a severe chip shortage that worsened throughout 2020. However, as a long-term strategy, the Abu Dhabi deal could significantly improve supply chain capacity and potentially reduce the risk of future shortages.

The chip shortage stems from several factors, including increasing demand for semiconductors due to consumer technology products such as smartphones and laptops and stretched global manufacturing capacity as automakers prioritise consumer goods over automotive electronics orders. As a result, the shortage impacts multiple industries, from consumer electronics production to medical device manufacturing and aerospace development.

For end-users and industries directly impacted by the chip shortage, an improved supply chain resulting from the GlobalFoundries IPO could positively contribute toward reducing its effects in 2021. According to reports, the initial investment in GlobalFoundries will create 3,000 new jobs, ultimately providing an alternative source of chips currently sourced mainly from Taiwan Semiconductor Manufacturing Company (TSMC). In addition to creating jobs that contribute back into local economies, increased production may expand market competitions and reduce prices through economies of scale. Both outcomes will benefit aluminium foil producers.

The success of Abu Dhabi’s offering will depend on how they approach investment decisions following their entrance into this competitive space — investments in advanced research, process technology improvements geared toward higher efficiency systems or expanding IT infrastructure around analytics are all ways potential investors can expect Abu Dhabi’s IPO to further solidify their position within the still-emerging global semiconductor market.

Potential impact on the global economy

The impending public offering of GlobalFoundries, the microchip producer based in Abu Dhabi in the United Arab Emirates (UAE), is expected to have significant implications for the global economy.

This IPO could generate significant long-term economic growth through direct and indirect investments from potential investors in the UAE and worldwide. Over recent years, GlobalFoundries has emerged as a leader in integrated circuit technology near Abu Dhabi, primarily because of strategic investments made by Abdul Latif Al-Fozan & Sons (AFAF), a family business with strong financial stability. AFAF’s ability to invest strategically has allowed GlobalFoundries to invest heavily in new technologies and expand its capacity significantly.

It is anticipated that this IPO could result in additional international investments in healthcare, energy, infrastructure, education and finance sectors. This could stimulate economic growth both directly and indirectly within the UAE and associated countries, impacting foreign direct investment into Abu Dhabi and other surrounding economies. Additionally, this IPO could act as an impetus for local economies to modernise their industries, leading to technological advances and providing an opportunity for innovative ideas to flourish throughout the region.

Other improvements which may be seen from this IPO include increased credit access for smaller businesses and increased focus on quality control measures which can help promote sustainable long term growth within the economy at large. Furthermore, with newfound capital resources, investors will become more motivated to develop new projects or pursue further mergers & acquisitions activities, which will drive innovation even further and create more opportunities within multiple fields of business within Abu Dhabi itself.