Globalfoundries Inc (NASDAQ:GFS), the world’s third-largest contract chipmaker, stock fell 1.99% (As on May 8, 11:47:53 AM UTC-4, Source: Google Finance) after the company forecast second-quarter revenue above Wall Street estimates, betting on improving demand for semiconductors after a years-long slump that was caused by surplus inventory at its customers. GlobalFoundries had won $1.5 billion in subsidies from the U.S. government earlier this year, which it plans to use for the construction of a new semiconductor production facility in Malta, New York and expand existing operations there and in Burlington, Vermont. In addition, New York State announced over $600 million in planned funding under the New York State Green CHIPS and other state benefits for GF’s two Malta, New York projects. GF is furthering its commitment to sustainable operations and fighting climate change with the announcement of two new long-term goals to achieve net-zero greenhouse gas emissions and 100% carbon neutral power by 2050. The new 2050 goals are aligned with Paris Agreement goals and build upon GF’s Journey to Zero Carbon pledge in 2021.

GFS in the first quarter of FY 24 has reported the adjusted earnings per share of 31 cents, beating the analysts’ estimates for the adjusted earnings per share of 23 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue decline of 16 percent to $1.55 billion in the first quarter of FY 24, beating the analysts’ estimates for revenue of 1.80%. Automotive revenue increased by 48% YoY, while smart mobile devices and IoT markets saw declines. The company shipped fewer wafers at lower prices but expects pricing to remain favorable. Gross profit stood at $405 million, with an operating margin of 12.1%. Net income was reported at $174 million. Cash flow from operations totaled $488 million, with free cash flow of $261 million. Revenue from smart mobile devices and home and industrial IoT markets decreased by 2% and 19% YoY, respectively.

The company expects revenue in the current quarter to be between $1.59 billion and $1.64 billion, the midpoint of which was higher than the LSEG estimates of $1.59 billion. Its adjusted earnings per share forecast in the range of 24 cents to 34 cents for the second quarter was also above analysts’ view of 27 cents. The company is investing in GaN technology for future growth in the data center market. Significant growth is expected in silicon photonics and power delivery for data centers.