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GlobalFoundries (GFS), a specialty semiconductor foundry focused on differentiated process technologies like RF, power, and silicon photonics, is trading lower today after reporting Q3 results this morning. The company beat EPS expectations, while revenue declined 3% yr/yr to $1.69 bln, in line with estimates. For Q4, GFS guided revenue to $1.775-1.825 bln (midpoint above estimates) and EPS of $0.42-0.52, roughly in line.

• Automotive rose 20% yr/yr and now makes up about 18% of sales, driven by rising chip content in EVs and smart vehicles, with management expecting roughly $1.5 bln in annual revenue this year.
• Communications Infrastructure and Datacenter climbed 32% yr/yr on strength in optical networking and SATCOM, including three new design wins worth $150 mln.
• Smart Mobile Devices, about 45% of total revenue, was softer, down 13% yr/yr on pricing and shipment timing, though it did increase 10% sequentially.
• Management said hyperscalers are shifting to pluggable and co-packaged optics to meet AI data needs, with GF expecting its optical networking market to grow about 40% annually through 2030 and silicon photonics revenue to double this year toward a $1 bln run rate later in the decade.
• GFS also stands to benefit from reshoring tailwinds as customers seek non-China, non-Taiwan manufacturing, expanding fab investments across the U.S. and Germany with support from customers like Apple (AAPL), AMD (AMD), SpaceX, Qualcomm (QCOM), and NXP Semi (NXPI).

Briefing.com Analyst Insight

GlobalFoundries delivered a solid Q3 anchored by strength in automotive and datacenter, though smart devices, its largest segment by revenue, remains sluggish. While not a direct AI foundry powerplay like TSMC (TSM) or Broadcom (AVGO), management sounded confident about AI-driven optical interconnect and photonics demand, a growing TAM, and continued onshoring momentum. That said, this remains an execution story: Q4 revenue guidance still implies a yr/yr revenue decline, and the faster-growing segments accounted for about 28% of total sales in Q3. For now, the structural tailwinds are clear, but investors appear to be waiting for them to translate into more tangible top-line growth.