Watch Live

Tweet TWEET

Globalfoundries 2011 Sales to Outpace Computer-Chip Market, CEO Grose Says

Globalfoundries Inc., seeking to become the world’s largest contract manufacturer of computer chips, expects sales to grow more than 15 percent this year and gain on industry leader Taiwan Semiconductor Manufacturing Co.

Sales will rise to at least $4 billion this year from about $3.5 billion in 2010, Chief Executive Officer Douglas Grose said in an interview today in Tokyo. Sales growth at the closely held company, the world’s third largest foundry, will outpace a market expected to expand between 11 percent and 15 percent.

The company, owned by an investment arm of the government of Abu Dhabi, is taking aim at Taiwan Semiconductor and United Microelectronics Corp. in the growing market for outsourced chip production. Globalfoundries -- formed out of the manufacturing operations of Advanced Micro Devices Inc. and Chartered Semiconductor -- plans to double spending to $5.4 billion this year, Chief Financial Officer Robert Krakauer said this month.

“We’re going to go by UMC this year and set our sights on getting more share of the industry versus TSMC,” Grose said. “Cell phones, smartphones, the full range of mobile devices, are the key drivers.”

The Sunnyvale, California-based company will increase production capacity of 300 millimeter silicon wafers by 25 percent to 100,000 wafers per month by the end of the year, Grose said.

‘Serious Investor’

“If you were a public company, obviously you wouldn’t get away with investing more than your revenue,” Grose said. “But we have a very serious investor with a long-term horizon who wants us to be a winner in this marketplace.”

Taiwan Semiconductor, the largest made-to-order chip producer, said in October that capital spending this year will likely surpass the $5.9 billion level of 2010. Intel Corp., which budgeted $5.2 billion for last year, and Samsung Electronics Co., which spent about $10 billion, are also in that range.

Fewer companies are making their own products because of the rising cost of building a chip factory. That’s increasing the pool of customers for contract-manufacturing plants, known as foundries. A factory requires an investment of over $4 billion, with individual machines costing more than $10 million apiece.

Globalfoundries has won contracts from customers such as Qualcomm Inc. and STMicroelectronics NV since its creation in 2009. Those orders -- along with sales from Chartered’s customers -- have lessened its reliance on AMD, which initially provided all of its revenue.

The company inherited plants from AMD in Dresden and a proposed factory near Albany, New York. That facility will begin production in 2012 and shipments to customers in 2013. Globalfoundries’ proposed Abu Dhabi plant is part of that country’s effort to lessen its reliance on oil revenue.

To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Maki Shiraki in Tokyo at Mshiraki1@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.