GLOBALFOUNDRIES(US:GFS)2024-02-13 20:21Financial Data and Key Metrics Changes - Fourth quarter revenue increased sequentially to approximately $1.854 billion, a decline of 12% year-over-year [73] - Adjusted gross margin for the quarter was 29%, at the upper end of the guidance range [45] - Full year revenue for 2023 was approximately $7.4 billion, down 9% year-over-year [53] - Full year net income was approximately $1.3 billion, with diluted earnings per share of $2.24 [81] - Free cash flow for the fourth quarter was $456 million, marking the third consecutive quarter of positive free cash flow [65] Business Line Data and Key Metrics Changes - Smart mobile devices represented approximately 41% of total revenue for the fourth quarter, with a revenue decline of about 7% year-over-year [74] - Automotive revenue grew approximately 180% year-over-year, exceeding $1 billion in 2023, representing about 14% of total revenue [56] - Communications infrastructure and data center revenue declined 39% year-over-year, accounting for approximately 12% of total revenue [95] - Home and industrial IoT revenue represented approximately 19% of total revenue, declining 6% year-over-year [75] Market Data and Key Metrics Changes - The smartphone market saw elevated inventory levels, impacting demand and shipments [48] - Automotive market revenue is expected to continue growing in 2024, driven by diverse applications [94] - The communications infrastructure segment showed weakness due to prolonged inventory digestion [50] Company Strategy and Development Direction - The company is focusing on diversifying its manufacturing footprint and enhancing technology transfers to meet customer demands [69] - Continued investment in automotive and smart mobile device segments is a priority, with a focus on high-performance RF technologies [68] - The company aims to maintain a stable pricing environment through long-term agreements, with approximately two-thirds of revenue coming from sole-source agreements [128] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2024, anticipating inventory corrections and improved demand dynamics [64] - The ongoing high interest rate environment has led to a prolonged downturn, but inventory levels are beginning to improve [62] - The company expects to generate free cash flow in 2024 that is two to three times the total for 2023 [134] Other Important Information - The company expects CapEx for 2024 to be approximately $700 million, aligning with a disciplined, demand-driven philosophy [36] - The company has a healthy cash position of $3.9 billion and an undrawn $1 billion revolving credit facility [100] Q&A Session Summary Question: How does the profile of the business shape up through 2024? - Management noted that while 2023 saw a 9% decline year-over-year, they expect inventory corrections in 2024 to lead to improved demand dynamics [108] Question: What are the expectations for Q1 sales by end market? - Management indicated that automotive and smart mobile devices are expected to perform better than the average decline, with growth anticipated in both segments [123] Question: What is the impact of the termination of a supplier agreement with a large RF customer? - Management characterized the termination as a technicality and emphasized that it does not indicate a loss of business, as they continue to work with customers to balance supply and demand [113]