Jim Cramer, the animated host of the cable TV investment show “Mad Money,” was beside himself last week, a day after GlobalFoundries’ initial public offering of stock on the Nasdaq raised $2.6 billion.
“I can’t believe how quietly this thing happened … The lack of hype is stunning,” he said. The Saratoga County-based chipmaker’s trading debut was the third largest IPO of the year “and nobody paid any attention to it,” Cramer said.
His beef? That at a time when the world is “desperate” for computer chips to power everyday life – GlobalFoundries’ bread and butter – investors seemed uninterested, letting shares drift below the $47 offering price last Thursday rather than bidding them up. (Shares popped into the mid-50s this week.)
The company manufactures “full-feature chips,” Cramer noted, and while those are regarded as “cheaper, less sophisticated,” they “go into all sorts of machines – especially cars – [and] that’s a good place to be right now.”
Such a broad industry focus wasn’t always the case, though.
GlobalFoundries, spun off from Advanced Micro Devices in 2009, originally set its sights on manufacturing “bleeding edge” chips for semiconductor companies looking to produce ever-smaller but more powerful transistors. It researched ways to do that alongside the likes of IBM and Samsung at the Albany Nanotech complex near the University at Albany, with an eye to then producing the chips at its “fabs.”
That changed in 2018, however, in a “strategic repositioning” that GlobalFoundries undertook “to better align with our customers’ needs, drive margin expansion and accelerate value creation for our stakeholders,” according to a prospectus filed with regulators for the IPO.
The stakeholders include a private wealth fund, Mubadala Investment Co., owned by the Emirate of Abu Dhabi, which financed the original spinoff. The fund sold shares in the offering but still retains an 89% stake in GlobalFoundries.
Today, GlobalFoundries’ target is the “pervasive semiconductor market,” which includes smartphones, cars, personal computing, and home and industrial “internet of things” connectivity. It’s a potential $54 billion market, according to the company.
Demand is creating “a new golden age for semiconductors,” the prospectus says, which GlobalFoundries looks to help satisfy at plants in New York, Vermont, Germany and Singapore. Its global footprint also can allay worries that chip production is too concentrated in China and Taiwan.
GlobalFoundries already is investing in expanding its fabs, and will put IPO proceeds toward that too. The local plant in Malta expects $1 million in upgrades, and a second fab could be built nearby.
Cramer, whose show offers predictions, call-ins and a sound machine to add emphasis, served up a joke at our expense Friday night, telling viewers they shouldn’t attempt to use Google to search for “Malta.”
Doing so, he smirked, will return links to the Mediterranean island country of the same name – or “a falcon!” He practically screeched that punchline, an apparent reference to the Humphrey Bogart movie “The Maltese Falcon.”
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]