Q2 2025 GlobalFoundries Inc Earnings Call

August 5, 2025

Operator: Thank you for standing by and welcome to the GLOBALFOUNDRIES Inc. Conference Call to review the second quarter of fiscal 2025 financial results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during today's session, you will need to press star 11 on your telephone. If your question has been answered and you would like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. Now I would like to introduce your host for today's program, Sam Franklin, Vice President, Business Finance and Investor Relations. Please go ahead, sir.

Operator: Thank you for standing by and welcome to the GLOBALFOUNDRIES Conference Call to review the second quarter of fiscal 2025 financial results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during today's session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Sam Franklin, Vice President, Business Finance and Investor Relations. Please go ahead, sir.

Thank you for standing by and welcome to the global boundaries conference call to review. Second quarter of fiscal 2025 Financial results at this time. All participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session to ask a question during today's session. You'll need to press star 1, 1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue simply press star 1 1 again, as a reminder, today's program is being recorded. And now I'd like to introduce your Hostess for today's program.

Sam Franklin: Thank you, operator. Good morning, everyone, and welcome to GLOBALFOUNDRIES second quarter 2025 earnings call. On the call with me today are Tim Breen, CEO; Niels Anderskouv, President and Chief Operating Officer; and John Hollister, CFO. A short while ago, we released GF's second quarter financial results, which are available on our website at investors.gf.com, along with today's accompanying slide presentation. This call is being recorded, and a replay will be made available on our Investor Relations webpage. During this call, we will present both IFRS and non-IFRS financial measures. The most directly comparable IFRS measures and reconciliations for non-IFRS measures are available in today's press release and accompanying slides. Please note that these financial results are unaudited and subject to change. Certain statements on today's call may be deemed to be forward-looking statements.

Sam Franklin, vice president business finance, and investor relations. Please go ahead. Sir.

Thank you, operator. Good morning, everyone and welcome to Global foundries second quarter, 2025 earnings call.

On the call with me today, are Tim Green CEO, Neil vanderkoff president, and Chief Operating Officer, and John Hollister CFO a short while ago. We released gf's second quarter Financial results which are available on our website at investors.gov along with today's accompanying slide, presentation, this call is being recorded and a replay will be made available on our investor relations web page. During this call, we will present both IFRS and non-ifrs. Financial measures the most directly comparable ifs, measures, and reconciliations for. Non-irs measures are available in. Today's press release and accompanying slides.

Sam Franklin: Such statements can be identified by terms such as believe, expect, intend, anticipate, and may, or by the use of the future tense. You should not place undue reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements, and we do not undertake any obligation to update any forward-looking statements we make today. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the press release we issued today, as well as risks and uncertainties described in our SEC filings, including in sections under the caption "Risk Factors" in our annual report on Form 20F and in any current reports on Form 6K filed with the SEC.

Sam Franklin: Such statements can be identified by terms such as believe, expect, intend, anticipate, and may, or by the use of the future tense. You should not place undue reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements, and we do not undertake any obligation to update any forward-looking statements we make today. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the press release we issued today, as well as risks and uncertainties described in our SEC filings, including in sections under the caption Risk Factors in our annual report on Form 20F and in any current reports on Form 6K filed with the SEC.

Please note that these Financial results are on audited and subject to change certain statements on today's call may be deemed to be forward-looking statements. Such statements can be identified by terms such as believe, expect intent, anticipate and may or by the use of the future tense. You should not Place, undue Reliance on forward-looking statements actual results. May differ materially from these forward-looking statements and we do not undertake any obligation to update any forward-looking statements, we make today,

Sam Franklin: In terms of upcoming events, please note that we will be participating in fireside chats at the KeyBank Capital Markets Technology Leadership Forum in Deer Valley on August 11th, the Deutsche Bank Technology Conference in Dana Point on August 27th, and at the Goldman Sachs Communicopia and Technology Conference in San Francisco on September 8th. We will begin today's call with Tim providing a summary update on the current business environment and technologies. Niels will then discuss our recent design wins, highlights, and traction across the end markets, following which John will provide details on our second quarter results and third quarter 2025 guidance. We will then open the call for questions with Tim, Niels, and John. We request that you please limit your questions to one with one follow-up. I will now turn the call over to Tim.

Sam Franklin: In terms of upcoming events, please note that we will be participating in fireside chats at the KeyBank Capital Markets Technology Leadership Forum in Deer Valley on August 11th, the Deutsche Bank Technology Conference in Dana Point on August 27th, and at the Goldman Sachs CommunaCopia and Technology Conference in San Francisco on September 8th. We'll begin today's call with Tim providing a summary update on the current business environment and technologies. Niels will then discuss our recent design wins, highlights, and traction across the end markets, following which John will provide details on our second quarter results and third quarter 2025 guidance. We will then open the call for questions with Tim, Niels, and John. We request that you please limit your questions to one with one follow-up. I'll now turn the call over to Tim.

For more information about factors that may cause actual results to differ, materially from forward-looking statements, please refer to the press release. We issue today as well as risks and uncertainties described in our SEC filings, including in sections under the caption risk factors in our annual report on form 20f and in any current reports on form. 6K filed with the SEC.

In terms of upcoming events, please note that we will be participating in Fireside Chats at the keybanc capital markets. Technology leadership Forum in Deer Valley on August 11th. The Deutsche Bank technology conference in Dana Point on August 27th and at the Goldman Sachs communacopia and Technology conference in San Francisco on September 8th.

We will begin today's call with Tim providing. A summary update on the current business environment and Technologies Niels will then discuss our recent design wins highlights and traction across the end markets following. Which John will provide details on our second quarter results, and third, quarter 2025 guidance,

Tim Breen: Thank you, Sam, and welcome everyone to our Q2 2025 earnings call. I'm pleased to announce that GF delivered strong financial results in Q2 that exceeded the guidance midpoints for revenue, gross margin, and operating margin. Earnings per share exceeded the high end of our guidance range, and these results reflect our continued focus on driving profitability through the cycle. We also made notable progress on other key financial metrics in the quarter, generating $277 million of adjusted free cash flow. Having recently implemented several capacity expansions in capital-efficient manners, GF is poised to capture growth opportunities across our footprint as demand accelerates in critical end markets while continuing to deliver robust adjusted free cash flow. Thanks to the team's excellent execution, we remain on track to generate over $1 billion of adjusted free cash flow in 2025.

Tim Breen: Thank you, Sam, and welcome everyone to our second quarter 2025 earnings call. I'm pleased to announce that GF delivered strong financial results in the second quarter that exceeded the guidance midpoints for revenue, gross margin, and operating margin. Earnings per share exceeded the high end of our guidance range, and these results reflect our continued focus on driving profitability through the cycle. We also made notable progress on other key financial metrics in the quarter, generating $277 million of adjusted free cash flow. Having recently implemented several capacity expansions in capital-efficient manners, GF is poised to capture growth opportunities across our footprint as demand accelerates in critical end markets while continuing to deliver robust adjusted free cash flow. Thanks to the team's excellent execution, we remain on track to generate over $1 billion of adjusted free cash flow in 2025.

We will then open the call for questions with Tim Niels and John we request that you please limit your questions to 1 with 1 follow-up. I'll now turn the call over to Tim.

Thank you Sam, and welcome everyone to our second quarter 2025 earnings call.

I'm pleased to announce the GS delivered strong financial results in the second quarter that exceeded the guidance. Midpoints for Revenue, gross margin and operating margin earnings per share exceeded the high end of our guidance range and these results reflect our continued focus on driving profitability through the cycle.

We also made notable programs on other key financial metrics in the quarter generating 277 million of adjusted free, cash flow.

Having recently, implemented, several capacity, expansions in capital efficient manners GF is poised to capture growth opportunities across our footprint.

At the demand accelerates in critical end markets, while continuing to deliver robust adjusted free, cash flow.

Tim Breen: In Q2, we continue to demonstrate excellent progress in high-growth markets where both the edge and cloud AI transitions are driving the need for secure, high-performance GF technologies. Both our automotive and communications infrastructure and data center end markets demonstrated double-digit percentage year-over-year revenue growth for the third consecutive quarter. As the demand for our differentiated product portfolio aligns with the increasing requirements for high-performance chip solutions in these growth markets, GF is delivering strong design win momentum with existing and new customers. For our automotive and communications infrastructure and data center end markets in 2025, we expect year-over-year growth in the mid-teens and high-teens percentage ranges, respectively.

Tim Breen: In the second quarter, we continue to demonstrate excellent progress in high-growth markets where both the edge and cloud AI transitions are driving the need for secure, high-performance GF technologies. Both our automotive and communications infrastructure and data center end markets demonstrated double-digit percentage year-over-year revenue growth for the third consecutive quarter. As the demand for our differentiated product portfolio aligns with the increasing requirements for high-performance chip solutions in these growth markets, GF is delivering strong design win momentum with existing and new customers. For our automotive and communications infrastructure and data center end markets in 2025, we expect year-over-year growth in the mid-teens and high-teens percentage ranges, respectively.

Thanks to the team's excellent execution. We remain on track to generate over, 1 billion dollars of adjusted free cash flow in 2025.

With markets, where both the edge and Cloud AI, transitions are driving the need for secure high performance, GF Technologies.

Both are automotive and Communications infrastructure and data center and markets, demonstrated double digit percentage year-over-year, Revenue growth for the third consecutive quarter.

As a demand for our differentiated product portfolio, aligns with the increasing requirements for high performance chip Solutions. In these growth markets GS is delivering strong design when momentum with existing and new customers.

For our automotive and Communications infrastructure and data center and markets in 2025.

Tim Breen: Meanwhile, the smart mobile devices and home and industrial IoT end markets have continued to experience a slower recovery as uncertainties brought about by the broader geopolitical environment and global trade tensions have impacted consumer demand and inventory dynamics in these two end markets. To that end, we have been partnering closely with certain customers to support their inventory management and preserve GF's market share, predominantly where we are a dual-sourced foundry supplier. In our smart mobile devices end market, achieving these objectives has involved some one-time adjustments to the average selling price per wafer, or ASP. For one particular customer, we partnered to replace the fixed wafer volume component of their long-term agreement with a shift to a long-term 50% share of wallet, which is expected to result in meaningfully higher wafer revenues over the remaining life of the contract.

We expect year-over-year growth in the mid-, teens and High Teens percentage ranges respectively.

Meanwhile, the smart mobile devices and home and Industrial iot and markets have continued to experience a slower recovery, as uncertainties, brought about by the broader geopolitical environment and global trade tensions, have impacted consumer demand and inventory Dynamics in these 2 end markets.

To that end, we have been partnering closely with certain customers to support their inventory management and preserve gf's market share predominantly where we are a dual source to Foundry supplier.

In our smart mobile devices and Market achieving. These objectives has involved some 1-time adjustments to the average selling price per wafer or asp.

Tim Breen: These types of adjustments for specific customers are leading to improved utilization levels across our footprint in the second half of 2025, but will result in year-over-year ASP declines in the second half of the year for this end market and to a lesser degree for GLOBALFOUNDRIES overall. We continue to observe a constructive pricing environment across automotive and communications infrastructure and data center as the demand for silicon content continues to grow in these end markets, and GLOBALFOUNDRIES' solutions and footprint bring unique differentiation. Notwithstanding these market dynamics, GLOBALFOUNDRIES remains the diversified and differentiated foundry of choice for a growing number of our customers. With our broad product portfolio and our focus on critical performance, connectivity, and power capabilities, GLOBALFOUNDRIES is gaining share and winning key designs across a range of applications and end markets. I would like to provide some important business highlights from the second quarter.

Tim Breen: These types of adjustments for specific customers are leading to improved utilization levels across our footprint in the second half of 2025, but will result in year-over-year ASP declines in the second half of the year for this end market and to a lesser degree for GF overall. We continue to observe a constructive pricing environment across automotive and communications infrastructure and data center as the demand for silicon content continues to grow in these end markets, and GF's solutions and footprint bring unique differentiation. Notwithstanding these market dynamics, GF remains the diversified and differentiated foundry of choice for a growing number of our customers. With our broad product portfolio and our focus on critical performance, connectivity, and power capabilities, GF is gaining share and winning key designs across a range of applications and end markets. I would like to provide some important business highlights from the second quarter.

For one particular customer, we partnered to replace the fixed wafer volume component of their long-term agreement with a shift to a long-term 50% share of wallet, which is expected to result in meaningfully higher wafer revenues over the remaining life of the contract.

These type of adjustments for specific. Customers are leading to improve utilization levels of footprint in the second half of 2025, but will result in year-over-year. ASP, declines. In the second half of the year for this end Market.

And to a lesser degree for GF overall.

We continue to observe a constructive pricing environment across automotive and Communications infrastructure and data center as the demand facilitate content continues to grow in these end markets and GF Solutions in Footprints bring unique differentiation.

Notwithstanding these market dynamics GF Remains the Diversified and differentiated Foundry of choice for a growing. Number of our customers, with our broad product portfolio, and our focus on critical performance connectivity and power capabilities. GS is gaining, share and winning key designs across a range of applications and end markets.

Tim Breen: We secured design wins for applications across automotive processing, data center power delivery, and connected home automation on GLOBALFOUNDRIES' 22FDX MRAM, 55 BCD Lite, and 12 LP Plus platforms, respectively. Niels will cover these in more detail. Moving briefly to the macroeconomic landscape, like others in our industry, we believe that some customers took on additional inventory in the second quarter, particularly in consumer-facing markets, in anticipation of increased tariff-related impacts, which will impact demand in the second half of the year as these inventories normalize. More strategically, it is increasingly clear that the changes and uncertainties brought about by global trade negotiations and tariffs underscore the importance of being a geographically diversified foundry partner to our customers, which GLOBALFOUNDRIES is uniquely positioned to provide with our footprint across the U.S., Europe, and Asia.

Tim Breen: We secured design wins for applications across automotive processing, data center power delivery, and connected home automation on GF's 22 FDX MRAM, 55 BCD Lite, and 12 LP Plus platforms, respectively. Niels will cover these in more detail. Moving briefly to the macroeconomic landscape, like others in our industry, we believe that some customers took on additional inventory in the second quarter, particularly in consumer-facing markets, in anticipation of increased tariff-related impacts, which will impact demand in the second half of the year as these inventories normalize. More strategically, it is increasingly clear that the changes and uncertainties brought about by global trade negotiations and tariffs underscore the importance of being a geographically diversified foundry partner to our customers, which GF is uniquely positioned to provide with our footprint across the US, Europe, and Asia.

I would like to provide some important business highlights from the second quarter.

We secured design wins for applications across automotive, processing data centers, power delivery, and connected home. Automation on GF22, FDX MRAM, 55 BCD, light, and 12 LP Plus platforms. Respectively, Niels will cover these in more detail.

Moving briefly to the macroeconomic landscape like others in our industry. We believe that some customers took on additional inventory in the second quarter particularly in consumer-facing markets. In anticipation of increased tariff related impacts which will impact demand in the second half of the year as these inventories normalize.

Tim Breen: Diverse, dependable supply of semiconductors is not a luxury, but a necessity for national and economic security. For over a decade, GLOBALFOUNDRIES has made investments to build and scale flexible manufacturing capacity across our sites. Our diversification strategy is gaining traction with more and more customers who have recognized the value of partnership with GF: resilience, flexibility, and dependability. In the U.S., we fulfilled our first CHIPS milestone in diversifying our Fab 8 facility with our CHIPS 8.0 project. Our 22FDX technology is on track with qualification, bringing supply chain resiliency and security onshore. This is intended to provide our customers with critical supply as anticipated tariffs on semiconductor imports take effect.

Tim Breen: Diverse, dependable supply of semiconductors is not a luxury, but a necessity for national and economic security. For over a decade, GF has made investments to build and scale flexible manufacturing capacity across our sites. Our diversification strategy is gaining traction with more and more customers who have recognized the value of partnership with GF: resilience, flexibility, and dependability. In the US, we fulfilled our first CHIPS milestone in diversifying our fab eight facility with our CHIPS 8.0 project. Our 22 FDX technology is on track with qualification, bringing supply chain resiliency and security onshore. This is intended to provide our customers with critical supply as anticipated tariffs on semiconductor imports take effect.

More strategically. It is increasingly clear that the changes and uncertainties brought about by global trade, negotiations and tariffs underscore. The Importance of Being a geographically Diversified Foundry partner to our customers with GS is uniquely positioned to provide with our Footprints, the US, Europe and Asia.

Diverse Dependable, supply of semiconductors, is not a luxury, but a necessity for National and Economic Security.

For over a decade, GF has made Investments to build and scale. Flexible, manufacturing capacity across our sites

Our diversification strategy is gaining traction.

With more and more customers.

As the value of partnership with GF resilience, flexibility and dependability.

In the US, we fulfilled our first chip milestone in diversifying our fabric facility with our chips, 8.0 project.

Our 22 FDX Technologies on track with qualification bringing supply chain, resiliency, and security on shore.

Tim Breen: In Europe, we intend to convert our former BOFTEST facility to expand our wafer fabrication capacity and are working to get EU CHIPS approval to support the investment, which would deliver even more efficient scale in Germany and support our European customers like Continental and Bosch with domestic supply. We are enhancing our global reach with our China for China strategy, particularly targeted at the growing automotive sector. I am pleased to announce that we have entered into a definitive agreement with a China-based foundry that will enable our customers to access GF production, performance, and quality to serve their domestic Chinese demand. Initially, this agreement will apply to our automotive-grade feature-rich CMOS technologies, and based on early dialogue with our customers, we expect that this will extend to our automotive-grade BCD technologies.

Tim Breen: In Europe, we intend to convert our former BamTest facility to expand our wafer fabrication capacity and are working to get EU CHIPS approval to support the investment, which would deliver even more efficient scale in Germany and support our European customers like Continental and Bosch with domestic supply. We are enhancing our global reach with our China for China strategy, particularly targeted at the growing automotive sector. I am pleased to announce that we have entered into a definitive agreement with a China-based foundry that will enable our customers to access GF production, performance, and quality to serve their domestic Chinese demand. Initially, this agreement will apply to our automotive-grade feature-rich CMOS technologies, and based on early dialogue with our customers, we expect that this will extend to our automotive-grade BCD technologies.

This is intended to provide our customers with critical Supply as anticipated tariffs ON Semiconductor Imports take effect.

In Europe, we intend to convert, our former bump test facility to expand our wafer fabrication capacity and are working to get EU chips approval, to support the investment, which would deliver even more efficient scale in Germany and support our European customers like continental and Bosch with domestic Supply.

We are enhancing our Global reach with our China, for China strategy, particularly targeted at the growing Automotive sector.

With a China base Foundry that will enable our customers to access GF production performance and quality to serve their domestic Chinese demand.

Tim Breen: This is a unique opportunity for GF to expand our multi-fab customer offering on our successful automotive-grade platforms while maintaining control over both the IP and quality standards that our customers require. We believe an increasingly decentralized world is a net opportunity for GF, and the strength of our opportunity funnel and design win momentum is a compelling validation of our long-term growth strategy. Furthering our efforts to support our customers where and how they need us and to align our business with the secular growth trends accelerated by the deployment of AI, last month we announced a definitive agreement to acquire MIPS, a leading supplier of AI and processor IP. Expected to close later this year, MIPS will be an exciting addition to the GF suite of offerings that will add more value to our customers in completely new ways.

Initially, this agreement will apply to our Automotive grade feature-rich, CMOS Technologies and based on early dialogue with our customers. We expect that this will extend to our Automotive grade BCD Technologies.

This is a unique opportunity for GF to expand our multifab customer offering on our successful automotive-grade platforms, while maintaining control over both the IP and quality standards that our customers require.

We Believe an increasingly decentralized world is a net opportunity for GF.

And the strength of our opportunity, funnel and design when momentum is a compelling, validation of our long-term growth strategy.

Furthering, our efforts to support our customers where and how they need us. And to align our business with the secular growth Trends accelerated by the deployment of AI last month, we announced a definitive agreement to acquire, mips a leading supplier of AI and processor, IP.

Tim Breen: MIPS brings a highly complementary IP portfolio and decades of design and IP innovation that will be accelerated when combined with GF's world-class manufacturing and global ecosystem. As a leader in RISC-V capabilities, MIPS enables efficient processor cores that are tailored for edge AI applications and ideal for the high-performance edge solutions that GLOBALFOUNDRIES Inc. is well positioned to serve. This acquisition is a win for GLOBALFOUNDRIES Inc. and a win for our customers, who will be able to more closely collaborate with GLOBALFOUNDRIES Inc. earlier in the design cycle, with more direct access to process IP and with greater potential for customization. Early customer feedback on the acquisition has been very favorable, as our customers look to an increasingly differentiated GLOBALFOUNDRIES Inc. as their partner in edge AI applications.

Tim Breen: MIPS brings a highly complementary IP portfolio and decades of design and IP innovation that will be accelerated when combined with GF's world-class manufacturing and global ecosystem. As a leader in RISC-V capabilities, MIPS enables efficient processor cores that are tailored for edge AI applications and ideal for the high-performance edge solutions that GF is well positioned to serve. This acquisition is a win for GF and a win for our customers, who will be able to more closely collaborate with GF earlier in the design cycle, with more direct access to process IP and with greater potential for customization. Early customer feedback on the acquisition has been very favorable, as our customers look to an increasingly differentiated GF as their partner in edge AI applications.

Expected to close later this year, mitts will be an exciting addition to the GF Suite of offerings that will add more value to our customers in completely new ways.

MIP Springs are highly complimentary IP portfolio and Decades of design and IP Innovation that will be accelerated when combined with GF World Class Manufacturing and Global ecosystem.

As a leader in Risk 5 capabilities, mips enables efficient processor cores that are tailored for Edge AI applications and ideal for the High Performance Edge solutions. That GF is, well, positioned to serve.

This acquisition is a win for GF and a win for our customers who will be able to more closely collaborate with GF earlier in the design cycle, with more direct access to process IP and with greater potential for customization.

Tim Breen: In conclusion, I want to thank our 13,000 strong employees around the world for their focus on technology differentiation, manufacturing excellence, and driving the momentum with our customers as we continue to execute to our long-term strategy and lay the foundations for a strong future. With that, over to you, Niels.

Early customer feedback on the acquisition has been very favorable as our customers. Look to an increasingly differentiated GF as their partner in Edge, AI applications.

In conclusion, I want to thank our 13,000, strong employees around the world for their focus on technology differentiation manufacturing excellence, and driving the momentum with our customers, as we continue to execute to our long-term strategy.

And lay the foundations for a strong future.

Niels Anderskouv: Thank you, Tim, and welcome to everyone on the call. As Tim mentioned, we are continuously advancing our commercial partnerships and securing design wins with our customers, of which over 90% were awarded on a sole source basis during the last four quarters. Our unique and varied technology portfolio continues to fuel strong design momentum across each of the end markets we serve. In the second quarter, we secured nearly 200 design wins across our end markets, a new quarterly record and almost doubled the number from a year ago. With that, let me walk you through the key highlights for the quarter by end market. In automotive, we continue to outgrow the market and capture share as we expand our breadth of offerings, gain content per vehicle, and enable our customers to win with GF's differentiated features and performance.

With that over to you Niels.

Thank you Tim and welcome to everyone on the call. As Jim mentioned, we are continuously advancing our commercial Partnerships and securing design wins with our customers of which are 90% were awarded on a sole source basis during the last 4 quarters.

All unique and very technology, portfolio continues to feel strong design, momentum across each of the 8 markets. We serve

in the second quarter of secured nearly 200 design. Wins across our end markets, and new clothing record and almost double the number from a year ago.

With that, let me walk you through the key highlights for the quarter by End Market.

Niels Anderskouv: A testament to this strength, in the second quarter, our automotive end market grew over 36% year over year and comprised nearly a quarter of total wafer revenue. We are on track for mid-teens percentage automotive revenue growth in 2025. Our leadership in automotive microcontrollers has driven our strong partnerships with customers around the world. We have gained significant design win traction with China domestic fab-based customers, having secured design wins across battery management systems, radar, microcontrollers, and power management ICs with a dozen customers over the last four quarters. GF automotive products are already shipping to Chinese customers, which will help expand our automotive market share in China. More broadly, we are seeing accelerated design win traction across our portfolio of diversified applications within automotive. In the second quarter alone, we won designs with 25 unique customers.

In automotive, we continue to outgrow the market and capture share. As we expand our breadth of offerings in content per vehicle and enable our customers to win with the GFS differentiating features and performance.

A testament to this strength in the second quarter, our automotive and Market grew, or 36% year-over-year. And comprise nearly a quarter of total wave of Revenue.

We transact the mid teens percentage, Automotive Revenue growth in 2025.

Our leadership, in automotive, microcontrollers has driven our strong Partnerships with customers around the world. We have gained significant design interactions with China, domestic fatless, customers, having secured assignments, across battery, Management Systems, radar micro trollers and power management, Isis. With a dozen, customers ordered last 4 quarters.

Do you have Automotive Products are already shipping to Chinese customers which will help expand our Automotive market share.

In China.

More broadly, we're seeing accelerated design interaction across our portfolio of diversified applications within other both.

Niels Anderskouv: These include wins across automated driver assist processors, zone controllers, display controllers, radar sensors, battery management systems, and interior lighting on our 12 LP, 22FDX, and 130 BCD AutoPro platforms, respectively. Among these, GF won its first automotive design win with the 12 LP Plus AutoPro platform for a next-generation radar processor. These processors interpret high-resolution imaging radar data and are critical for initial object classification, meaning the speed and accuracy that GF provides will make our road safer. In addition, as Tim mentioned, we secured a significant design win for a fifth-generation microcontroller with four megabytes of magnetic RAM on our 22FDX platform. With this win, GF not only demonstrates strong customer momentum in the era of software-defined vehicles, it highlights the value of integrated non-volatile memory that our platforms can provide.

Niels Anderskouv: These include wins across automated driver assist processors, zone controllers, display controllers, radar sensors, battery management systems, and interior lighting on our 12 LP, 22 FDX, and 130 BCD AutoPro platforms, respectively. Among these, GF won its first automotive design win with the 12 LP Plus AutoPro platform for a next-generation radar processor. These processors interpret high-resolution imaging radar data and are critical for initial object classification, meaning the speed and accuracy that GF provides will make our roads safer. In addition, as Tim mentioned, we secured a significant design win for a fifth-generation microcontroller with four megabytes of magnetic RAM on our 22 FDX platform. With this win, GF not only demonstrates strong customer momentum in the era of software-defined vehicles, it highlights the value of integrated non-volatile memory that our platforms can provide.

In the second quarter alone, we want designs with 25 unique customers, these include winds across automated driver, assist processes. Some controllers, display controllers radar, sensors battery Management systems, and interior lighting on our 12, LT 22, FDX. And 130 BCD, Auto Pro platforms respectively.

Among these we have 1 is first automotive design when with the 12 LT Plus Auto Pro platform for the Next Generation radar processor.

I'll go safer.

In addition, as Tim mentioned, we secured a significant assignment for fifth generation microcontroller before megabyte of magnetic RAM on our 22 FTX platform.

Niels Anderskouv: Lastly, in June, Continental announced that GF was strategically brought on as the exclusive manufacturing partner for its newly formed Advanced Electronics and Semiconductor Solutions organization. We are proud to support Continental in this endeavor. This is a powerful testament to the trust in GF's auto-qualified process technologies, quality, and reliability. Through this partnership, GF will enable Continental to deliver innovative solutions for the next generation of safe, connected, and autonomous vehicles. Turning now to smart mobile devices, revenue in Q2 grew off of a seasonally low Q1 but declined year over year due to a reduction in customer underutilization payment from the prior year period, as well as certain ASP adjustments that Tim mentioned.

Niels Anderskouv: Lastly, in June, Continental announced that GF was strategically brought on as the exclusive manufacturing partner for its newly formed Advanced Electronics and Semiconductor Solutions organization. We are proud to support Continental in this endeavor. This is a powerful testament to the trust in GF's auto-qualified process technologies, quality, and reliability. Through this partnership, GF will enable Continental to deliver innovative solutions for the next generation of safe, connected, and autonomous vehicles. Turning now to smart mobile devices, revenue in the second quarter grew off of a seasonally low first quarter but declined year over year due to a reduction in customer underutilization payment from the prior year period, as well as certain ASP adjustments that Tim mentioned.

With this win, do you have not only demonstrates strong customer momentum in the era of software developed Vehicles? It highlights the value of integrated non-volatile memory, that our platforms can provide

Lastly, in June, Continental announced that GF was a TV brought on, as the exclusive manufacturing partner for newly formed, advanced electronics and semiconductor Solutions are extension. We are proud to support Continental in this endeavor. This is a powerful system and to the trust in Gs all the qualified process Technologies quality and reliability.

Through this partnership, GF will enable Financial to deliver innovative solutions for next generation of safe, connected, and autonomous vehicles.

Niels Anderskouv: Notwithstanding this, our long-term outlook for content gains in the smart mobile end market is positive, as we see strong commercial traction with new design wins and partnerships across a broad range of applications in the smartphone and beyond. We also see a tailwind in this market driven by the need for more U.S. sourcing. GF's market share continues to grow in IoT, where we lead the market with our 8SW and 9SW platforms. In Q2 alone, we secured 36 design wins in IoT with nine of the top 10 industry players, further expanding our customer base and GF share of wallet. Beyond our market-leading position in the IoT, we built momentum in 5G transceivers on our FinFET platform by securing committed revenue over the next four years with a key customer. In addition to the smartphone, we engage with leaders in the nascent but emerging smart glasses space.

Niels Anderskouv: Notwithstanding this, our long-term outlook for content gains in the smart mobile end market is positive, as we see strong commercial traction with new design wins and partnerships across a broad range of applications in the smartphone and beyond. We also see a tailwind in this market driven by the need for more US sourcing. GF's market share continues to grow in IFRONDENT, where we lead the market with our 8SW and 9SW platforms. In the second quarter alone, we secured 36 design wins in IFRONDENT with nine of the top 10 industry players, further expanding our customer base and GF share of wallet. Beyond our market-leading position in the IFRONDENT, we built momentum in 5G transceivers on our FinFET platform by securing committed revenue over the next four years with a key customer.

Turning now to smart mobile devices Revenue. In the second quarter grew off of a seasonally low first quarter, but declined year-over-year due to epoxy with customer you utilization payment from the prior year period, as well as certain ASP adjustments, that Tim mentioned.

Not understanding this, our long-term outlook for Content gains in the smart mobile and Market is positive.

As we see strong commercial attraction with new design, rims and Partnerships across a broad range of applications in the smartphone and Beyond.

We also see a Tailwind in this market driven by the need for more us sourcing.

The US market share continues to grow in high front end where we lead the market with our aasw and 9sw platforms.

In the second quarter alone, we secured 36 design wins in high front end with 9 of the top 10 industry. Players. Fair expanding our customer base and PFC of wallet.

Niels Anderskouv: In addition to the smartphone, we engage with leaders in the nascent but emerging smart glasses space. Leveraging our leading technology elsewhere in our portfolio, smart glasses are a new form factor utilizing many of the same essential chips for connectivity, processing, power, imaging, and display. In the second quarter, we secured a new design win for the AI processors used in smart glasses, which built on our design win for micro-LED displays in the first quarter to support GF's growth in this exciting application. In IoT, revenue grew year over year for the second consecutive quarter, and we secured several design wins with leading IoT connectivity players for Wi-Fi 7 and Wi-Fi 8, as well as next-generation Bluetooth, demonstrating our continued leadership in IoT connectivity products.

Beyond our marketing position in the high front end. We built momentum in 5G. Transceivers, on our finfet platform by securing committed Revenue. Over the next 4 years with a key customer.

Niels Anderskouv: Leveraging our leading technology elsewhere in our portfolio, smart glasses are a new form factor utilizing many of the same essential chips for connectivity, processing, power, imaging, and display. In Q2, we secured a new design win for the AI processors used in smart glasses, which built on our design win for micro-LED displays in Q1 to support GF's growth in this exciting application. In IoT, revenue grew year over year for the second consecutive quarter, and we secured several design wins with leading IoT connectivity players for Wi-Fi 7 and Wi-Fi 8, as well as next-generation Bluetooth, demonstrating our continued leadership in IoT connectivity products. These included wins on our 12 LP Plus and 22FDX platforms for Wi-Fi and Bluetooth system-on-a-chip solutions that enable connected home automation applications.

In addition to the smartphone, we engage with leaders in the nation but emerging smart glasses, space leveraging, our leading technology elsewhere in our portfolio. Smart glasses are a new form factor utilizing, many of the same essential tips for connectivity processing, power Imaging and display.

In the second quarter, we secured a new design win for the AI processors used in smart glasses, which spilled on our design, win from micro LED displays in the first quarter to support TS growth in this exciting application.

In iot Revenue grew year-over-year for the second consecutive quarter and we secured several design wins with leading iot connectivity players for Wi-Fi 7.

Niels Anderskouv: These included wins on our 12 LP Plus and 22 FDX platforms for Wi-Fi and Bluetooth system-on-a-chip solutions that enable connected home automation applications. With increasing use cases for keyless entry system and Bluetooth tags, these applications benefit from GF's strength in low power consumption and high security. Beyond connectivity, we are also seeing broad adoption of GF technologies to enable physical AI. These design wins enable important device capabilities such as time-of-flight sensors for home robotics to image and audio processors that bring AI-enabled vision and language functionality to home and industrial applications. Lastly, we see continued traction in medtech and health applications, where the need to acquire, process, and communicate data securely and at low power is paramount. In Q2, we won another design for ultra-low-power AI-enabled hearing aids on 22 FDX.

And Wi-Fi 8 as well as Next Generation Bluetooth demonstrating, our continued leadership in iot connectivity products.

Niels Anderskouv: With increasing use cases for keyless entry system and Bluetooth tags, these applications benefit from GF's strength in low power consumption and high security. Beyond connectivity, we are also seeing broad adoption of GF technologies to enable physical AI. These design wins enable important device capabilities such as timer flight sensors for home robotics to image and audio processors that bring AI-enabled vision and language functionality to home and industrial applications. Lastly, we see continued traction in med tech and health applications, where the need to acquire, process, and communicate data securely and at low power is paramount. In Q2, we won another design for ultra-low power AI-enabled hearing aids on 22FDX. Looking ahead to the second half of 2025, we expect full-year revenue in this end market to decline mid-single-digit % year over year, driven by residual consumer-facing IoT inventories.

These included wins on our 12 LP plus and 22 FDX platforms for Wi-Fi and Bluetooth system on a chip solutions that enable connected home automation applications.

With increasing, use cases for keyless, entry system and Bluetooth tags.

These applications benefit from GF strength and low power consumption and high security.

We all connectivity. We also seeing broad adoption of Geo Technologies to enable physical AI.

These designs enabling important device capabilities such as time of flight centers for home, robotics to image and audio processors. That brings AI enabled vision and language functionality to home and Industrial applications.

Lastly, if she continued Traction in Medtech and health applications where they need to acquire process and communicate data securely, and at low power is Paramount.

Niels Anderskouv: Looking ahead to the second half of 2025, we expect full-year revenue in this end market to decline mid-single-digit percent year over year, driven by residual consumer-facing IoT inventories. Going into 2026 and beyond, we remain bullish on GF's strength and growth potential for home and industrial IoT. As AI increasingly migrates to edge devices, we believe the need for ultra-low power and vigorous connectivity will only grow stronger. Finally, our communication infrastructure and data center end market grew double-digit percentage year over year in the second quarter, and we continue to expect high-teens percentage revenue growth in 2025. Thanks to our focus on differentiated and high-growth opportunities within communication infrastructure and data center, we expect to see multi-year secular growth opportunities for GF. These include high-growth, high-margin areas such as silicon photonics, which we expect to nearly double in revenue from 2024 to 2025 to over $200 million.

in Q2, we want an audit design for Ulta low power, AI enabled, Hearing Aids on 22 FTX

Niels Anderskouv: Going into 2026 and beyond, we remain bullish on GF's strength and growth potential for home and industrial IoT. As AI increasingly migrates to edge devices, we believe the need for ultra-low power and vigorous connectivity will only grow stronger. Finally, our communications infrastructure and data center end market grew double-digit % year over year in the second quarter, and we continue to expect high-teens % revenue growth in 2025. Thanks to our focus on differentiated and high-growth opportunities within communications infrastructure and data center, we expect to see multi-year secular growth opportunities for GF. These include high-growth, high-margin areas such as silicon photonics, which we expect to nearly double in revenue from 2024 to 2025 to over $200 million.

Looking ahead to the second half of 2025, we expect full year Revenue in this end Market to decline. Mids single digit percent year-over-year driven by residual consumer facing iot inventories.

Going into 2026 and Beyond. We remain bullish on GF strength and growth potential for home and Industrial iot.

S, increasingly migrates to Edge devices. We believe the need for ultra low power and difficult is connectivity with only grow stronger.

Finally our communication infrastructure and data center and Market through double digit percentage, year-over-year in the second quarter, and we continue to expect High Teens percentage, Revenue growth in 2025.

to see monthly year cyclic growth opportunities for GF

Niels Anderskouv: Given the strength of our photonics products, we have expanded capacity to meet robust customer demand. We are ramping our silicon photonics capabilities to address the need for high-performance solutions to support both dockable and compact solutions for scale-out and scale-up networks. As the need for optical-driven speed, bandwidth, and power efficiency continues to grow, we believe GLOBALFOUNDRIES Inc. is only in the early stages of this opportunity. GLOBALFOUNDRIES Inc. is engaged with leading industry players in the CPO ecosystem across networking and photonic innovators to support the development of integrated solutions as the demand for data grows exponentially. Satellite communications is another area of significant growth potential for GLOBALFOUNDRIES Inc. as we design into the world's foremost satellite communication companies. GLOBALFOUNDRIES Inc. content can be found in both the rapidly launching satellites as well as user terminals, which are projected to reach millions of units.

Niels Anderskouv: Given the strength of our photonics products, we have expanded capacity to meet robust customer demand. We're ramping our silicon photonics capabilities to address the need for high-performance solutions to support both dockable and co-packed solutions for scale-out and scale-up networks. As the need for obstacle-driven speed, bandwidth, and power efficiency continues to grow, we believe GF is only in the early stages of this opportunity. GF is engaged with leading industry players in the CPO ecosystem across networking and photonic innovators to support the development of integrated solutions as the demand for data grows exponentially. Satellite communications is another area of significant growth potential for GF as we design into the world's foremost satellite communication companies. GF content can be found in both the rapidly launching satellites as well as user terminals, which are projected to reach millions of units.

these include high growth high margin areas, such as silicon photonics, which we expect to nearly double in revenue from 2024 to 2025 to over 200 million dollars.

Given the strength of our platonic products, we have expanded capacity to meet robust customer demand.

A ramping, our siliconas capabilities to address the need for higher performance solutions to support, both clockable and copics solutions for scale up and scale up Networks.

As the need for optical driven speed, bandwidth and power, efficiency, continues to grow. We Believe GF is only in the early stages of this opportunity.

DF is engaged with leading industry, players in the CPO ecosystem, across networking and platonic innovators to support the development of Integrated Solutions as the demand for data growth exponentially.

Niels Anderskouv: With IFRONDENT on our ZigE and IF Siemens, digital beamformers on our 22FDX, and modems on our 12 LP platforms, GLOBALFOUNDRIES Inc. is playing a critical role in enabling this new growth market. Starting from de minimis revenue in 2024, we expect Satcom to contribute approximately $100 million of revenue in 2025. Overall, we continue to make progress in our design win momentum across a wide breadth of applications enabled by our portfolio. Thanks to the trust and partnership with our customers, I'm excited for us to capitalize on these long-term growth opportunities. I'll now pass the call over to John Hollister for a deeper dive on our financial results and guidance.

Niels Anderskouv: With IFRONDENT on our ZigE and IF Siemens, digital beamformers on our 22 FDX, and modems on our 12 LP platforms, GF is playing a critical role in enabling this new growth market. Starting from de minimis revenue in 2024, we expect Satcom to contribute approximately $100 million of revenue in 2025. Overall, we continue to make progress in our design win momentum across a wide breadth of applications enabled by our portfolio. Thanks to the trust and partnership with our customers, I'm excited for us to capitalize on these long-term growth opportunities. I'll now pass the call over to John for a deeper dive on our financial results and guidance.

Satellite communications is another area of significant growth potential for GF, as we design into the world's foremost satellite communication companies. We have content that can be found in both the rapidly launching satellites and user terminals, which are projected to reach millions of units.

But I have front ends on our Siggy and I have Sievers. This is a beam formers on our 22, FDX and modems on our 12, volt P platforms. Do you have is playing a critical role in enabling this new growth Market?

Starting from the Minimus Revenue in 2024, we expect satcom to contribute approximately 100 million dollars of Revenue in 2025

Or you continue to make progress on our design and momentum across a wide breadth application, in Able by our portfolio.

Thanks to the trust and partnership with our customers. I'm excited for us to capitalize on these long-term growth opportunities.

John Hollister: Thank you, Niels. For the remainder of the call, including guidance, other than revenue, cash flow, net interest income, and Q2 CapEx, I will reference non-IFRS metrics, which are included in today's press release and accompanying slides. As Tim noted, our Q2 results exceeded the midpoints of the guidance ranges we provided in our last quarterly update. We delivered Q2 revenue of $1.688 billion, which represented a 6% increase over the prior quarter and an increase of 3% year over year. We shipped approximately 581,300 millimeter equivalent wafers in the quarter, up 7% sequentially and up 12% from the prior year period. ASP, or average selling price per wafer, was down high single-digit percentage year over year due to product mix, pricing adjustments, and a reduction in customer underutilization payments from the prior year period. Wafer revenue from our end markets accounted for approximately 90% of total revenue.

John Hollister: Thank you, Niels. For the remainder of the call, including guidance, other than revenue, cash flow, net interest income, and second quarter CAPEX, I will reference non-IFRS metrics, which are included in today's press release and accompanying slides. As Tim noted, our second quarter results exceeded the midpoints of the guidance ranges we provided in our last quarterly update. We delivered second quarter revenue of $1.688 billion, which represented a 6% increase over the prior quarter and an increase of 3% year over year. We shipped approximately 581,300 millimeter equivalent wafers in the quarter, up 7% sequentially and up 12% from the prior year period. ASP, or average selling price per wafer, was down high single-digit percentage year over year due to product mix, pricing adjustments, and a reduction in customer underutilization payments from the prior year period.

And I'll now pass the call over to John for Diva, dive on our financial results and guidance.

Thank you, Niels, for the remainder of the call, including guidance other than revenue, cash flow, net interest income, and second quarter capex. I will reference non-IFRS metrics, which are included in today's press release and the company slides.

SM noted our second quarter results, exceeded the midpoints of the guidance ranges. We provided in our last quarterly update,

We delivered second quarter revenue of 1.688 billion, which represented a 6% increase over the prior quarter and an increase of 3% year-over-year.

We ship to 581300, mm, equivalent wafers in the quarter up, 7%, sequentially and up. 12% from the prior year, period.

John Hollister: Wafer revenue from our end markets accounted for approximately 90% of total revenue. Non-wafer revenue, which includes revenue from reticles, non-recurring engineering, expedite fees, and other items, accounted for approximately 10% of total revenue for the second quarter. Let me now provide an update on our revenues by end markets. In line with our strategy, we continue to align our business to secular growth drivers and diversify our end market position. Smart mobile devices represented approximately 40% of the quarter's total revenue. Second quarter revenue increased approximately 17% sequentially and decreased approximately 10% from the prior year period. In the second quarter, revenue for the home and industrial IoT markets represented approximately 18% of the quarter's total revenue. Second quarter revenue decreased approximately 9% sequentially and increased approximately 2% from the prior year period.

ASP, or average selling price per wafer, was down high single-digit percentage year-over-year due to product mix pricing adjustments and a reduction in customer underutilization payments from the prior year period.

John Hollister: Non-wafer revenue, which includes revenue from reticles, non-recurring engineering, expedite fees, and other items, accounted for approximately 10% of total revenue for Q2. Let me now provide an update on our revenues by end markets. In line with our strategy, we continue to align our business to secular growth drivers and diversify our end market position. Smart mobile devices represented approximately 40% of the quarter's total revenue. Q2 revenue increased approximately 17% sequentially and decreased approximately 10% from the prior year period. In Q2, revenue for the home and industrial IoT markets represented approximately 18% of the quarter's total revenue. Q2 revenue decreased approximately 9% sequentially and increased approximately 2% from the prior year period. Automotive remained a strong growth driver for us and represented approximately 22% of the quarter's total revenue. Q2 revenue increased approximately 19% sequentially and 36% from the prior year period.

Wafer revenue from our end markets, accounted for approximately, 90% of total revenue, non wafer Revenue, which includes revenue from reticles non-recurring, engineering, expedite, fees, and other items accounted for approximately 10% of total revenue for the second quarter.

Let me now provide an update on our revenues by end markets. Uh in line with our strategy, we continue to align our business to secular growth drivers and diversify our in Market position.

Smart mobile devices represented approximately 40% of the quarter total revenue.

Second quarter revenue increased approximately 17% sequentially and decreased approximately 10% from the prior year period. In the second quarter, revenue for the home and industrial IoT markets represented approximately 18% of the quarter's total revenue.

John Hollister: Automotive remained a strong growth driver for us and represented approximately 22% of the quarter's total revenue. Second quarter revenue increased approximately 19% sequentially and 36% from the prior year period. Finally, our communications infrastructure and data center end market represented approximately 10% of the quarter's total revenue. Second quarter revenue decreased approximately 2% sequentially and increased approximately 11% over the prior year period. For the second quarter, we delivered gross profits of $425 million, which was above the midpoint of our guided range and translates into approximately 25.2% gross margin. Operating expenses for the second quarter represented approximately 10% of total revenue. R&D for the quarter was $125 million, and SG&A was $42 million. Total operating expenses were approximately flat quarter over quarter at $167 million.

Second quarter Revenue, decreased approximately, 9% sequentially and increased approximately 2% from the prior year period.

John Hollister: Finally, our communications infrastructure and data center end market represented approximately 10% of the quarter's total revenue. Q2 revenue decreased approximately 2% sequentially and increased approximately 11% over the prior year period. For Q2, we delivered gross profits of $425 million, which was above the midpoint of our guided range and translates into approximately 25.2% gross margin. Operating expenses for the second quarter represented approximately 10% of total revenue. R&D for the quarter was $125 million, and SG&A was $42 million. Total operating expenses were approximately flat quarter over quarter at $167 million. We delivered operating profit of $258 million for the quarter at an operating margin of 15.3%, which is at the high end of our guided range, and 230 basis points above the prior year period.

Automotive remained a strong growth driver for us and represented approximately 22% of the quarter solar Revenue. Second quarter Revenue increased approximately, 19% sequentially and 36% from the prior year period.

Finally, our communications infrastructure and data center in the market represented approximately 10% of the quarter's total revenue.

Second quarter Revenue decreased approximately 2% sequentially and increased approximately 11% over the prior year period.

For the second quarter, we delivered gross profits of 425 million, which was above the midpoint of our guided range and translates into approximately, 25.2% gross margin.

Operating expenses for the second quarter represented, approximately 10% of the total revenue.

R&D, for the quarter was 125 million and sgna was 42 million.

John Hollister: We delivered operating profit of $258 million for the quarter at an operating margin of 15.3%, which is at the high end of our guided range, and 230 basis points above the prior year period. Second quarter net interest income was $17 million, other expense was $7 million, and we incurred income tax expense of $34 million in the quarter. We reported second quarter net income of $234 million, an increase of approximately $23 million from the year-ago period. As a result, based on a fully diluted share count of approximately 557 million shares, we reported diluted earnings of $0.42 per share for the second quarter, which exceeded the high end of our guidance range. Let me now provide some key balance sheet and cash flow metrics. Cash flow from operations for the second quarter was $431 million. CAPEX for the quarter was $159 million, or roughly 9% of revenue.

Total operating expenses were approximately flat quarter of a quarter at 167 million.

John Hollister: Second quarter net interest income was $17 million, other expense was $7 million, and we incurred income tax expense of $34 million in the quarter. We reported second quarter net income of $234 million, an increase of approximately $23 million from the year-ago period. As a result, based on a fully diluted share count of approximately 557 million shares, we reported diluted earnings of $0.42 per share for the second quarter, which exceeded the high end of our guidance range. Let me now provide some key balance sheet and cash flow metrics. Cash flow from operations for the second quarter was $431 million. CapEx for the quarter was $159 million, or roughly 9% of revenue.

We delivered operating profit of 258 million for the quarter at an operating margin of 15.3%, which is at the high end of our guided range and 230 basis, points above the prior year period.

Second quarter, net interest income of 17 million. Other expense was 7 million and we incurred income tax expense of 34 million in the quarter.

We reported second quarter, net income of 234 million and increase of approximately 23 million from the year ago, period.

As a result based on a fully diluted share count of approximately 557 million shares. We reported diluting earnings of 42 cents per share for the second quarter which exceeded the high end of our guidance range.

Let me now provide some key balance sheet and cash flow metrics cash flow from operations. For the second quarter was 431 million.

John Hollister: Adjusted free cash flow for the quarter, which we define as net cash provided by operating activities plus the proceeds from government grants related to capital expenditure, less purchases of property, plant, and equipment, and intangible assets as set out on the statement of cash flows, was $277 million, which represented an adjusted free cash flow margin of over 16% in the quarter. We view this as strong performance, especially considering market conditions. At the end of the second quarter, our balance sheet remained strong, with our combined total of cash, cash equivalents, and marketable securities stood at approximately $3.9 billion. Our total debt was $1.2 billion, and we also have a $1 billion revolving credit facility, which remains undrawn. Next, let me provide you with our outlook for the third quarter of 2025. We expect total GLOBALFOUNDRIES Inc. revenue to be $1.675 billion, plus or minus $25 million.

John Hollister: Adjusted free cash flow for the quarter, which we define as net cash provided by operating activities plus the proceeds from government grants related to capital expenditure, less purchases of property, plant, and equipment, and intangible assets as set out on the statement of cash flows, was $277 million, which represented an adjusted free cash flow margin of over 16% in the quarter. We view this as strong performance, especially considering market conditions. At the end of the second quarter, our balance sheet remains strong, with our combined total of cash, cash equivalents, and marketable securities stood at approximately $3.9 billion. Our total debt was $1.2 billion, and we also have a $1 billion revolving credit facility, which remains undrawn. Next, let me provide you with our outlook for the third quarter of 2025. We expect total GF revenue to be $1.675 billion, plus or minus $25 million.

Capex for the quarter was 159 million or roughly 9% of Revenue.

Adjusted free cash flow for the quarter, which we Define as net cash provided by operating activities. Plus, the proceeds from government grants related to capital expenditure less purchases of property, plant and equipment, and a tangible asset to set out on a statement of cash flows.

Was 277 million which represented an adjusted free. Cash flow margin of over 16% in the quarter.

We view this as strong performance, especially considering market conditions.

At the end of the second quarter, our balance sheet remains strong, with our combined total of cash, cash equivalents and marketable, securities stood at approximately 3.9 billion. Our total debt was 1.2 billion and we also have a 1 billion revolving credit facility which remains undrawn

next, let me provide you with our outlook for the third quarter of 2025

John Hollister: Of this, we expect non-wafer revenue to be approximately 12% of total revenue. We expect gross margin to be approximately 25.5%, plus or minus 100 basis points, which reflects a sequential and year-over-year growth in gross margin. Lastly, our teams are diligently managing the potential supply chain cost impacts associated with tariff uncertainties. Thanks to GLOBALFOUNDRIES Inc.'s global footprint and diversified sourcing strategy, we expect the cost impacts to be limited to roughly $20 million in the second half of 2025. Our Q3 revenue guidance reflects a slower than expected market recovery, as well as volume adjustments requested by certain customers, which we expect to be fulfilled in Q4. Provided that we see continued growth in our high-margin end markets and the demand for consumer-centric goods stabilizes, we expect gross margin expansion in Q4.

John Hollister: Of this, we expect non-wafer revenue to be approximately 12% of total revenue. We expect gross margin to be approximately 25.5%, plus or minus 100 basis points, which reflects a sequential and year-over-year growth in gross margin. Lastly, our teams are diligently managing the potential supply chain cost impacts associated with tariff uncertainties. Thanks to GF's global footprint and diversified sourcing strategy, we expect the cost impacts to be limited to roughly $20 million in the second half of 2025. Our third quarter revenue guidance reflects a slower than expected market recovery, as well as volume adjustments requested by certain customers, which we expect to be fulfilled in the fourth quarter. Provided that we see continued growth in our high-margin end markets and the demand for consumer-centric goods stabilizes, we expect gross margin expansion in the fourth quarter.

We expect total GF Revenue to be 1.675 billion plus or minus 25 million.

Of this we expect non wafer Revenue to be approximately 12% of total revenue.

We expect gross margins to be approximately 25.5% plus or minus 100 basis points, which reflects a sequential and year-over-year growth in gross margin.

lastly, our teams are diligently managing the potential supply chain cost impacts associated with tariff, uncertainties,

Thanks to gf's Global footprint and diversified sourcing strategy. We expect the cost impacts to be limited to roughly 20 million dollars in the second half of 2025.

Our third quarter revenue guidance reflects a slower-than-expected market recovery, as well as volume adjustments requested by certain customers, which we expect to be fulfilled in the fourth quarter.

John Hollister: Excluding share-based compensation, we expect total operating expenses to be $190 million, plus or minus $10 million. We expect operating margin to be in the range of 14.2%, plus or minus 180 basis points. At the midpoint of our guidance, we expect share-based compensation to be approximately $56 million, of which roughly $18 million is related to cost of goods sold. We expect net interest in other income for the quarter to be between $4 million and $12 million, and income tax expense to be between $26 million and $40 million. For 2025, we expect GLOBALFOUNDRIES Inc.'s effective tax rate for the year to be in the mid-teens percentage range. Based on the multiple jurisdictions where we do business and the dynamic tax policy environment, we expect this indication to be consistent with our normalized tax-friendly rate for the remainder of 2025.

John Hollister: Excluding share-based compensation, we expect total operating expenses to be $190 million, plus or minus $10 million. We expect operating margin to be in the range of 14.2%, plus or minus 180 basis points. At the midpoint of our guidance, we expect share-based compensation to be approximately $56 million, of which roughly $18 million is related to cost of goods sold. We expect net interest in other income for the quarter to be between $4 and $12 million, and income tax expense to be between $26 and $40 million. For 2025, we expect GF's effective tax rate for the year to be in the mid-teens percentage range. Based on the multiple jurisdictions where we do business and the dynamic tax policy environment, we expect this indication to be consistent with our normalized tax-friendly rate for the remainder of 2025.

Provided that we see continued growth in our high margin, end markets, and the demand for Consumer Centric. Goods stabilizes. We expect gross margin expansion in the fourth quarter.

Excluding share-based compensation. We expect total operating expenses to be 190 million plus or minus 10 million.

We expect operating margins to be in the range of 14.2% plus or minus 180 basis points.

At the midpoint of our guidance, we expect share based compensation to be approximately 56 million of, which roughly 18 million is related to cost of goods sold.

We expect net interest and other income for the quarter to be between 4 and 12 million and income tax expense to be between 26 and 40 million.

For 2025, we expect gf's effective tax rate for the year to be in the mid teens percentage range.

John Hollister: Based on a fully diluted share count of approximately 560 million shares, we expect diluted earnings per share for Q3 to be $0.38, plus or minus $0.05. We expect CapEx, net of proceeds from government grants, to be approximately $700 million for the full year of 2025. As our fabs meet expansion milestones around the world, we expect to increasingly benefit from government incentives in the second half of the year. As noted by Tim Breen and Niels Anderskouv, free cash flow and profitability metrics are at the core of GLOBALFOUNDRIES Inc.'s long-term growth objectives, and we remain on track to achieve these. Our results today point to another quarter of strong cash flow generation, and for the full year, we still expect to generate over $1 billion of adjusted free cash flow.

John Hollister: Based on a fully diluted share count of approximately 560 million shares, we expect diluted earnings per share for the third quarter to be $0.38, plus or minus $0.05. We expect CAPEX, net of proceeds from government grants, to be approximately $700 million for the full year of 2025. As our fabs meet expansion milestones around the world, we expect to increasingly benefit from government incentives in the second half of the year. As noted by Tim and Niels, free cash flow and profitability metrics are at the core of GF's long-term growth objectives, and we remain on track to achieve these. Our results today point to another quarter of strong cash flow generation, and for the full year, we still expect to generate over $1 billion of adjusted free cash flow.

Based on the multiple jurisdictions where we do business and the dynamic tax policy. Environment, we expect this indication to be consistent with our normalized tax. Run rate for the manger of 2025

Based on a fully diluted share count of approximately 560 million shares. We expect to diluted earnings per share for the third quarter to be 38 cents plus or minus 5 cents.

We expect to cap X net of proceeds from government grants to be approximately $700 million for the full year 2025.

As our Fabs meet expansion, Milestones around the world. We expect to increasingly benefit from government incentives in the second half of the year.

as noted by Tim and Niels, free cash flow and profitability metrics are at the core of gf's long-term growth objectives and we remain on track to achieve these

John Hollister: In summary, I want to thank our teams across the world for their efforts that drove the strong financial results this quarter. I will now pass it back to Tim Breen for closing remarks before we move to Q&A.

John Hollister: In summary, I want to thank our teams across the world for their efforts that drove the strong financial results this quarter. I'll now pass it back to Tim for closing remarks before we move to Q&A.

Our results today point to another quarter of strong cash flow generation, and for the full year, we still expect to generate over $1 billion of adjusted free cash flow.

In summary, I want to thank our teams across the world for their efforts that drove the strong financial results this quarter.

Tim Breen: Thanks, John. At GF, our unwavering commitment is to serve as a trusted partner to our customers with our broad suite of differentiated essential chip technologies. I am encouraged by the rampant design wins, including many in exciting new applications that support the megatrends that will pull our industry into the future, including the permeation of AI, the criticality of power, and the transition to next-generation connectivity, all areas perfectly aligned with GF's strengths. In addition, our unique and flexible global capacity not only ensures supply resilience and flexibility, it allows us to be wherever our customers need us. Our targeted China manufacturing strategy completes this picture and enables us to participate and grow across the industry. Overall, we are confident in our rock-solid foundation and long-term growth prospects of our core business, but we don't plan on stopping there.

Tim Breen: Thanks, John. At GF, our unwavering commitment is to serve as a trusted partner to our customers with our broad suite of differentiated essential chip technologies, and I'm encouraged by the rampant design wins, including many in exciting new applications that support the megatrends that will pull our industry into the future, including the permeation of AI, the criticality of power, and the transition to next-generation connectivity, all areas perfectly aligned with GF's strengths. In addition, our unique and flexible global capacity not only ensures supply resilience and flexibility, it allows us to be wherever our customers need us. Our targeted China manufacturing strategy completes this picture and enables us to participate and grow across the industry. Overall, we are confident in our rock-solid foundation and long-term growth prospects of our core business, but we don't plan on stopping there.

I'll now pass it back to Tim for closing remarks before we move to Q&A.

Thanks John.

At GF, our unwavering commitment is to serve as a trusted partner to our customers.

Including many in exciting new applications that support the mega trends that will pull our industry into the future, including the permeation of AI, the criticality of power, and the transition to Next Generation connectivity, all areas perfectly aligned with GF strengths.

In addition our unique and flexible Global capacity, not only ensures Supply resilience and flexibility. It allows us to be wherever our customers need us our targeted China, manufacturing strategy completes this picture and enables us to participate in growth across the industry.

Tim Breen: As our customers look for more technology solutions to enable their own success, we will expand our portfolio with acquisitions such as MIPS that bring critical capabilities to accelerate our business in the AI transition. None of this would be possible without the dedication and hard work of our employees. I am looking forward to what we can achieve together. With that, let's open the call for Q&A. Operator?

Tim Breen: As our customers look for more technology solutions to enable their own success, we will expand our portfolio with acquisitions such as MIPS that bring critical capabilities to accelerate our business in the AI transition. None of this would be possible without the dedication and hard work of our employees. I'm looking forward to what we can achieve together. With that, let's open the call for Q&A. Operator?

Overall, we are confident in our rock solid foundation and long-term growth prospects of our core business, but we don't plan on stopping there as our customers look for more Technology Solutions to enable their own success. We will expand our portfolio with Acquisitions such as myths. That bring critical capabilities to accelerate our business in the AI transition.

None of this would be possible without the dedication and hard work of our employees. I'm looking forward to what we can achieve together.

Operator: Certainly. Our first question for today comes from the line of Joseph Moore from Morgan Stanley. Your question, please.

Operator: Certainly. And our first question for today comes from the line of Joseph Moore from Morgan Stanley. Your question, please.

With that, let's open the call for Q&A. Operator.

Certainly. And our first question for today comes from the line of Joseph Moore from Morgan Stanley your question, please?

Various Analysts: Great. Thank you. With regards to Q3, I understand the headwinds you guys are talking about, but it looks like some of your foundry peers are guiding a little bit more optimistically. Can you just talk about what types of headwinds you are seeing and how much follow-through there may be beyond the third quarter?

Analyst: Great. Thank you. With regards to Q3, I understand the headwinds you guys are talking about, but it looks like some of your foundry peers are guiding a little bit more optimistically. Can you just talk about, you know, what types of headwinds you're seeing and how much follow-through there may be beyond the third quarter?

John Hollister: Yeah, sure, Joe. This is John. I will take that one for a start. Our base case for the year remains growth in fiscal 2025. Tim and Niels touched on it some in the prepared commentary, but just kind of breaking that down by end market, we expect solid growth in both automotive and communications infrastructure and data center end markets for the year at mid-teens and high teens, respectively, for both of those end markets. We do expect smart mobile to be down for the year and IoT to be modestly down for the year as our consumer-facing end markets in those areas are managing inventories as we work through the year. On the third quarter in particular, on the automotive end market, we expect year-on-year growth in automotive for the third quarter.

John Hollister: Yeah, sure, Joe. This is John. I'll take that one for a start. And so our base case for the year remains growth in fiscal 2025. Tim and Niels touched on it some in the prepared commentary, but just kind of breaking that down by end market, we expect solid growth in both automotive and communications infrastructure and data center end markets for the year at mid-teens and high teens, respectively, for both of those end markets. We do expect smart mobile to be down for the year and IoT to be modestly down for the year as our, you know, consumer-facing end markets in those areas are managing inventories as we work through the year. On the third quarter in particular, on the automotive end market, we expect year-on-year growth in automotive for the third quarter.

Great. Thank you. Um, with regards to Q3 I understand the headwinds you guys were talking about, um, but it looks like some of your Foundry, peers are guiding a little bit more optimistically. Can you just talk about, you know what what types of headwinds you're seeing and and how much follow through there may be in the in beyond the third quarter?

Yeah, sure. Joe this is John I'll I'll take that 1 for a start. So our base case for the year remains growth.

In fiscal 2025.

Uh Tim Mills touched on it, some in the prepared commentary but just kind of breaking that down by End Market. We expect

Solid growth in both automotive and the communications infrastructure and data center in markets for the year at Mid, teens and High Teens respectively, for both of those and markets.

We do expect smart mobile to be down for the year and iot to be modestly down for the year as our, you know, consumer facing in markets and those uh areas are are managing inventories. Uh as we as we work through the year.

John Hollister: We do have a certain customer who is managing inventory toward the end of year for final deliveries in 2025. So that is, we will have our automotive down slightly in the third quarter. We do expect smart mobile to be up again sequentially in the third quarter. So that is some overall commentary on the trends for the year on top-line growth.

John Hollister: We do have a certain customer who is managing inventory toward the end of year for final deliveries in 2025. So that is, we'll have our automotive down slightly in the third quarter. We do expect smart mobile to be up again sequentially in the third quarter. So that is some overall commentary on the trends for the year on top-line growth.

Uh on the third quarter in particular at the on the automotive and Market, we expect year-on-year growth in automotive for the third quarter. But we do have uh a certain customer who is managing inventory toward the end of year for final deliveries in 2025. So that is uh we'll have our Automotive down slightly in the in the third quarter uh we do expect smart mobile.

To be up again, sequentially in, in the third quarter.

Uh, so that, uh, there's some overall commentary on the trends for the year on on Topline growth.

Various Analysts: That is helpful. Thank you. For my follow-up, I wanted to explore the China for China strategy a little bit. Can you talk about who are the sort of partners that you are working with there? It seems like that is interesting to a lot of people. Is it the sort of Western automotive OEMs? Is it Western semiconductor companies? Is it Chinese companies? Who is kind of going to be your lead customer as you start to manufacture in China through this partnership?

Analyst: That's helpful. Thank you. And then for my follow-up, I wanted to explore the China for China strategy a little bit. Can you talk about who are the sort of partners that you're working with there? It seems like that's interesting to a lot of people. Is it the sort of Western auto OEMs? Is it Western semiconductor companies? Is it Chinese companies? Just, you know, who is kind of going to be your lead customer as you start to manufacture in China through this partnership?

Couple. Thank you. And then for my follow-up, I wanted to um explore the China for China strategy. A little bit. Can you talk about

Who are the?

Tim Breen: Yeah, thank you, Joe. This is Tim. It's a great question. Our customers have been telling us, loud and clear what they need. Take for now our non-China customers as one group. For their non-China demand, very clearly they are not sourcing in China. Their strategy is to remain sourcing globally, and the GLOBALFOUNDRIES Inc. footprint is well suited for that. For them, and especially for those who focus on the automotive end market, they get significant interest from their customers in China to localize a portion of that manufacturing. Those have been the driver customers for us to work with and why we have been focusing on those specific customers and the specific technologies, microcontrollers, BCD for power management, and those kind of applications, very focused on automotive.

Tim Breen: Yeah, thank you, Joe. This is Tim. It's a great question. I mean, our customers have been telling us, you know, loud and clear what they need. And take for now our non-China customers as one group. For their non-China demand, very clearly they're not sourcing in China. Their strategy is to remain sourcing globally, and the GF footprint is well suited for that. But for them, and especially for those who focus on the automotive end market, they get significant interest from their customers in China to localize a portion of that manufacturing. And so those have been the driver customers for us to work with and why we've been focusing on those specific customers and the specific technologies, microcontrollers, BCD for power management, and those kind of applications, very focused on automotive. So that will be the first wave of these transfers.

Sort of partners that you're working with there is that it seems like that's interesting to a lot of people is it the sort of Western Auto oems is it Western semi-truck companies? Is it Chinese companies just you know, who is kind of going to be your lead customer as you start to to to manufacture in China through this partnership

Tim Breen: That will be the first wave of these transfers. What is interesting is once we announced that, we actually started to get a significant amount of interest from Chinese customers. What they are looking for is the reverse, but also the flexibility that this optionality provides. So sourcing locally with us in China with our manufacturing partner, but then also serving their non-China, non-Taiwan demand outside China. We actually have design wins in flight right now with Chinese customers for global sourcing, given many of these companies have strong export ambitions. When you net it out, this is why we have been quite clear that for us, China is more of an opportunity than anything else, given the differentiation that we have and this unique ability to offer that flexibility.

Tim Breen: What's interesting is once we announced that, we actually started to get a significant amount of interest from Chinese customers. And what they're looking for is the reverse, but also the flexibility that this optionality provides. So sourcing locally with us in China with our manufacturing partner, but then also serving their non-China, non-Taiwan demand outside China. And we actually have design wins in flight right now with Chinese customers for global sourcing, given many of these companies have strong export ambitions. You know, when you net it out, this is why we've been quite clear that for us, you know, China is more of an opportunity than anything else, given the differentiation that we have and this unique ability to offer that flexibility.

Yeah, thank you Joe. It's this is Tim. It's a great, it's a great question. I mean our customers have been telling us, you know, L and clear what they need and take for now are non-china customers as 1 group for their non-china demand. Very clearly they're not sourcing in China, their strategies to remain sourcing globally. Uh, and the GF footprint is is well suited for that. But for them and especially for those who focus on the automotive uh, and Market they get to, you know, significant interest from their customers in China, to localize, a portion of that manufacturing. And so, those have been the driver customers for us to work with and why we've been focusing on those specific customers and the specific Technologies microcontrollers, uh, BCD for power management and and those kind of applications very focused on Automotive. So that'll be the first wave of of these, uh, these transfers. Um, what's interesting is once we announced that we actually started to get a significant amount of interest from Chinese customers.

Niels Anderskouv: Maybe if I can just add to that, Tim, really the advantage here both for the international customers as well as the Chinese customers is they can do one development, one tape out, and take care of both the China market as well as the non-China market.

Niels Anderskouv: And maybe if I can just add to that, Tim, really the advantage here both for the international customers as well as the Chinese customers is they can do one development, one tape out, and take care of both the China market as well as the non-China market.

Uh, and what they're looking for is the reverse, but also the flexibility that this optionality provides. So sourcing locally with us, uh, in China, uh, with our manufacturing partner, but then also serving their non-China, non-Taiwan demand outside China. Uh, and we actually have design wins, uh, in flight right now, with Chinese customers for global sourcing. Uh, given many of these companies have strong export, uh, ambitions. You know, when you net it out, this is why we've been quite clear that for us, you know, China is more of an opportunity than anything else, given the, you know, differentiation that we have and this unique ability to offer that flexibility.

And take care of both the China Market as well as the non-china markets.

Various Analysts: Great. Thank you.

Analyst: Great. Thank you.

Thank you.

Operator: Thank you. Our next question comes from the line of Harlan Sur from J.P. Morgan. Your question, please.

Operator: Thank you. And our next question comes from the line of Harlan Sir from JP Morgan. Your question, please.

Various Analysts: Good morning. Thanks for taking my question. Utilizations were around 80% in Q1, and with the growth view, and that was with a growth view for the full year 90 days ago, I believe, the team was anticipating taking utilizations up through the year. What were utilizations in Q2? With just a slightly more muted second half outlook, how is the team thinking about utilizations as you move to the second half of this year?

Analyst: Good morning. Thanks for taking my question. Utilizations were around 80% in Q1, and with the growth view, and that was with a growth view for the full year 90 days ago, I believe, the team was anticipating taking utilizations up through the year. What were utilizations in Q2? And with just a slightly more muted second-half outlook, how is the team thinking about utilizations as you move to the second half of this year?

Thank you. And our next question comes from the line of Harland sir from JP Morgan your question, please.

John Hollister: Hi, Harlan. Yeah, this is John. I will take that one. So you are right. Utilization was around 80% in the first quarter. We did progress into the low 80s in the second quarter with an uptick in wafer volume to 581,300 millimeter wafers. We do see that progressing a bit further as we move our way through the second half of this year into the low to mid 80s. That is, you know, part of where we see the opportunity to expand our gross margins as we move into the end of the year.

John Hollister: Hi, Harlan. Yeah, this is John. I'll take that one. So you're right. Utilization was around 80% in the first quarter. We did progress into the low 80s in the second quarter with an uptick in wafer volume to 581,300 millimeter wafers. And we do see that progressing a bit further as we move our way through the second half of this year into the low to mid 80s. And that is, you know, part of where we see the opportunity to expand our gross margins as we move into the end of the year.

Good morning. Thanks for taking my question. Utilization, we're around 80% in q1, and with the growth view, uh, and that was with, uh, you know, a growth View for the full year. 90 days ago, I believe the team was anticipating taking utilization of through the year, uh, what were utilizations in Q2 and with just a slightly more muted, second half Outlook, how is the team thinking about utilizations as you move through the second half of this year?

Various Analysts: I appreciate that comment. With utilizations looking like they will be up slightly in the second half of the year, I know you guys are working with your customers, maybe taking down some ASPs for some extensions on sort of lifetime volume. Kind of prudent moves with some of your consumer-focused products. I think the prior view by the team that you were pretty confident in driving full-year growth and exiting the year with 30% gross margins. Given all of these dynamics, including slightly weaker second half profile, how should we think about the gross margins now exiting this year? Any way to kind of quantify that?

Analyst: I appreciate that comment. So with utilizations looking like they'll be up slightly in the second half of the year, I know you guys are working with your customers, maybe taking down some ASPs for some extensions on sort of lifetime volume. So kind of prudent moves with some of your consumer-focused products. I think the prior view by the team that you were pretty confident in driving full-year growth and exiting the year on 30% with 30% gross margins. But given all of these dynamics, including slightly weaker second-half profile, you know, how should we think about the gross margins now exiting this year? Any way to kind of quantify that?

Hi Harland. Yeah, this is John. I'll take that 1. So, um, you're right. Utilization was around 80%. In the first quarter, we did progress into the low 80s in the second quarter with an uptick in in wafer volume to 58130 millimeter Wafers. And we do see, uh, that progressing a bit further. As we move our way through the, the second half of this year into the low to mid 80s. Uh, and that is uh, you know, part of where we see the opportunity to expand our gross margins as we move into, uh, into the the end of the year.

No, I appreciate that. Comment utilization.

John Hollister: Yeah, Harlan, John, again. So you know, first, we delivered on our second quarter gross margin at 25.2%. That was above the midpoint of our guidance range. And for the third quarter, well, I'll also point out that the second quarter year-on-year compare, if you take into account the fact that we had significant underutilization payments in the second quarter of 2024, was up significantly on a comparative basis in the second quarter of 2025. As we look ahead for our guidance, we do see gross margins expanding to 25.5%. That's up sequentially and year-on-year. So we're making progress on our gross margin improvement. The outlook for the rest of this year would be driven by several factors.

Looking like, they'll be up slightly in the second half of the year. I know you guys are working with your customers, uh, maybe taking down from asps for, uh, some extensions on sort of Lifetime Vol. So kind of prudent moves, uh, with some of your consumer focused products. Um, I think the prior view by the team that you were pretty confident in driving fully your growth and exiting the year on 30% with 30%, gross, margins, but giving all of these Dynamics including slightly weaker, second half profile. You know, how should we think about the gross margins now? Exiting this year anyway, to kind of quantify that

Yeah, Harland John again. Uh so you know, first we're we uh uh, delivered on our second quarter gross margin at 25.2%, that was above the midpoint of our guidance range and for the third quarter it. Well I'll I'll also point out that the second quarter year-on-year, comparer.

if you take into account the fact that we had significant under your underutilization, payments, in the second quarter of 2024 was up significantly on a comparative basis, in the second quarter of 2025,

John Hollister: One is a richer mix in terms of our products as we move into the fourth quarter, a bit of improvement in utilization, as you indicated, as well as some further roll-off of our depreciation in the fourth quarter. And finally, we anticipate strong non-wafer revenue performance in the fourth quarter. Those factors together should deliver significant improvement in gross margin as we move through the fourth quarter.

As we look ahead for our guidance, we do, we do see gross margins expanding to 25.5%, that's subsequently and year-on-year. So we're making progress on our gross margin Improvement. Uh, we the uh, outlook for the rest of this year would be driven by several factors 1 is, uh, Richard mix in terms of our products as we move into the fourth quarter.

Uh, a bit of improvement in utilization, as you indicated, as well as, uh, some further roll-off of our depreciation in the fourth quarter.

Tim Breen: And maybe, Harlan, that.

And finally, we anticipate uh strong uh non wafer Revenue performance in the fourth quarter. Uh, those factors together. Should should deliver significant Improvement in gross margin, uh, as we move through the fourth quarter,

Operator: Yeah.

Tim Breen: Maybe I just, since you brought up pricing, I'd like to kind of make a few comments about that. So, you know, overall, for the whole enterprise, taking 2025 as a whole, on a like-for-like basis, we'll see ASPs down mid-single digits. But if you look at where that's happening, that's very much confined to that smart mobile device segment. And within that segment, very much confined to those customers with whom we have a dual sourcing arrangement. And we've been very deliberate in thinking through both for the short term, but also for the long term, what's the right strategy for GF in terms of supporting that customer and maximizing our share, again, not just for revenue today, but also for the longevity of those sockets. We've been very deliberate.

Tim Breen: By the way, if you exclude those impacts, then like-for-like pricing for the year for GF will be less than 1% down. So I think it's very fair to conclude the pricing environment overall is very stable, except for these areas where we're making these decisions deliberately in partnership with our customers.

And, and maybe hard that, yeah, maybe I just can since you brought up pricing, I'd like to kind of make a few comments about that. So, you know, overall, for, for the whole Enterprise, taking 2025, as a whole on the like, for like basis, we'll see asps down mid single digits, but if you look at where that's happening, uh, that's very much confined to that smart mobile device, uh, segments. And within that segment, very much confined to those customers with whom. We have a dual sourcing uh, Arrangement. And we've been very deliberate in thinking through both for the short term. But also for the long term, what the right strategy for GF, in terms of supporting that customer and maximizing our share. Again, not just for Revenue today, but also for the longevity of those sockets. So we've been very deliberate.

Analyst: Yeah, very insightful. Thank you.

By the way, if you exclude uh those impacts then like for like pricing for the year for GF will be less than 1% uh down. So I think it's very fair to conclude the pricing environment. Overall is very stable, uh, except for these areas where we're making these decisions deliberately uh, in partnership with our customers.

Yeah, very insightful. Thank you.

Operator: Thank you. And our next question comes from the line of Jim Schneider from Goldman Sachs. Your question, please.

Thank you. And our next question comes from the line of Jim Schneider from Goldman Sachs your question, please.

Analyst: Good morning. Thanks for taking my question. I was wondering if you could maybe sort of comment on sort of the inventory levels at your customers that you highlight in the prepared remarks, and especially in IoT and smartphones. You know, would you expect those to be at normal levels in Q4, or could it take a little bit longer than that?

And and smartphones, you know, would you expect those to be at normal levels uh, in Q4, or could it take a little bit longer than that?

Tim Breen: Yeah, thank you, Jim. I'll take a stab at that. I mean, if you take a big step back, right, if you look at the last three years, really '23, '24, '25, we've been closely monitoring inventory as a kind of long-term predictor of health, of where we are in the cycle. And obviously, that's been a long duration, but inventories have in all sectors come down materially. It hasn't always been smooth. And if you look at some of our customers reporting in Q2, there are some others still to report. But you saw actually some small, I'd say, modest upticks in inventory. That tells you something about kind of demand dynamics. And again, I'd say particularly in the consumer-focused segments where there has been more demand uncertainty, as we commented. I think overall, we continue to see the trajectory of inventories normalizing.

Tim Breen: And actually, we hear from customers that downstream of them, inventories could even be too low, right? And they see some pockets where there could be some tightness that could lead to some demand spikes in the future. So we continue to monitor this closely. It's difficult to call, but we see we're coming to the end of that inventory digestion long period over the last couple of years.

Yeah, thank you, Jim. I'll take a, I'll take a stab at that. I mean, if you take a big step back, right? If you look at the last 3 years, really 23 225. We've been closely monitoring inventory as a kind of long-term predictor of, of, of health of where we are in the cycle. And obviously that's been a long, uh, duration. But inventories, have in all sectors, come down, uh, materially it hasn't always been smooth. Uh, and if you look at some of our customers reporting in Q2, there are some others still to report. But you saw actually some small, I think modest, upticks, uh, in inventory that tells you something about kind of demand Dynamics. And again, I'd say, particularly in the consumer folk focused segments, where there has been more Demand, on certainty. As we, uh, we commented, I think overall, we continue to see the trajectory of inventories, uh, normalizing. And actually, we hear from customers, that Downstream of them. Inventories, could even be, you know, too low, right? And they see some Pockets, where they can be some tightness, that could lead to some demand spikes in the future. So we continue to monitor this closely, it's difficult to call, um, but we see we're coming to the end of that inventory digestion, long period over the last

couple of years.

Analyst: That's helpful. And then as a follow-up, can we maybe just kind of expand on the MIPS acquisition? You know, what is the strategic importance of that acquisition for you? You know, what customers did you kind of consult with in terms of before you announced that acquisition? And maybe talk about, are there any different revenue models you expect to recognize as a result of that? Thank you.

Tim Breen: Yeah, I'll take a first crack, and then I'll ask John to add a little bit on the financial model of MIPS and MIPS-type businesses. Obviously, we're very excited about this acquisition. It's a great fit for the GF portfolio. And there's a couple of reasons for that. MIPS has a long track record, a fantastic leadership team, really, you know, cutting-edge IP in processors. There are really some strong advantages around multi-threaded cores, software, and subsystems, particularly targeted at physical AI space. And if you listen to industry pundits, people talk about things like everything that moves will be autonomous in the future. We strongly believe that. And MIPS is extraordinarily well positioned to capitalize on that from an IP perspective. So we love the business. We love what it can do. And it's a strong fit for GF's customer base.

That's helpful. And then as a follow-up, can we be just kind of expand on the mips acquisition? You know, what is the Strategic importance of that acquisition for you? You know, what customers do you do kind of consult with in terms of before you you announce that acquisition and maybe talk about? Are there any different Revenue models? Do you expect to recognize as a result of that, thank you.

Tim Breen: And actually, the overlap of customers is very, very strong. In fact, many of GF's leading customers are already engaged with MIPS, or in some cases have reached out post the acquisition to say, listen, let's explore, let's do more together. So we think of this as a way to accelerate our customer engagement, to deepen it in new ways, and to also increase our differentiation. And it has the added benefit of, with an in-house team like MIPS, we'll get an in-house customer, if you like, for our technologies that's giving us real-time feedback on performance so we can continue to tune our technology platforms for those edge AI applications in order to be the best we can be for those platforms. Maybe I'll ask John to comment a little on the financial model.

Yeah, I'll take a first crack and then I'll ask John to add a little bit on the financial model of of mitts and mitts type type businesses. Obviously, we're very excited about this acquisition. It's a great fit for the GF portfolio and there's a couple of reasons for that. MIT has a long track record. A fantastic, uh, leadership team really, uh, you know, Cutting Edge IP in processes. The reading some strong advantages around multi-threaded Kors, software and subsystems, particularly targeted that physical AI space. And if you, you know, listen to Industry pundits. People talk about things like everything that moves will be autonomous, uh, in the future. We strongly believe that and mitts is extraordinarily, well positioned to capitalize on that. From an IP perspective. So we love the business, we love what it can do, uh, and it's a strong fit for GS customer base. And actually, the overlap of customers is very, very strongly. In fact, many of GS leading customers are already engaged with mips or in some cases have reached out post, the acquisition to say. Listen, let's explore. Let's do more, uh, together. So we think of this, as a way to accelerate our customer engagement to deepen, it in new ways.

John Hollister: Yeah, sure, Jim. So we see this as on a full-year run rate basis in the neighborhood of a $50 to $100 million addition of top line for GF. That's very exciting. Really happy to see us get this acquisition completed. This will be an IP-based high-margin revenue stream for us, which over time can lead to greater hardware sales as well. And we see the revenue opportunity over the coming years getting into hundreds of millions of dollars of incremental revenue for global foundries again, which would be accretive to our gross margin.

Uh, and also increase our differentiation and it has the added benefit of with an in-house team. Like, mips will get an in-house customer if you like for our Technologies that's giving us real-time feedback on performance. So we can continue to tune our technology platforms for those Edge. Edge AI applications in order to be, you know, the best we can be for those, uh, for those platforms. Maybe, I'll ask John to comment a little on the financial model. Yeah, sure. Um, so we we see this as a on, a full year, run rate basis, uh, in the neighborhood of a 50 to 100 million edition of top line for GF, that's very exciting. I'm really happy to see us get this acquisition completed. Uh, this will be, uh, IP based, uh, high margin, uh, Revenue stream for us, uh, which over time can lead to Greater hardware sales as well. And we see the revenue opportunity over the coming years, getting into hundreds of millions of dollars of incremental revenue, for Global foundries. Again, which would be a creative to our gross margin.

Operator: Thank you. And our next question comes from the line of Ross Seymour from Deutsche Bank. Your question, please.

Analyst: Hi guys. I just wanted to pivot back to an answer I think it was John that gave to an earlier question about a couple of things. Specifically, you said the base case remains for growth and revenue this year, and then you also mentioned non-wafer revenue as part of another question as being strong this year. Could you clarify a little bit on those? And I guess what I'm really getting at is it seems like given your second quarter guidance is a little bit more cautious for a number of reasons, it seems to imply a big fourth quarter and wondered if that's the incorrect read. And if it is, why is the optimism kind of changing versus the third quarter?

Thank you. And our next question comes from the line of Ross Seymour from Deutsche Bank. Your question, please?

John Hollister: Yeah, Ross, this is John. You are understanding us, and you got it right. The base case is for growth this year. And we do see a strong fourth quarter outlook for our non-wafer revenue, and that's really driven by NRE programs as well as tapeouts. You know, a strong tapeout quarter is anticipated in the fourth quarter, which is a great precursor or, you know, leading indicator for hardware sales going forward. So that's what we see for the fourth quarter. And as we indicated, you know, particularly in the automotive end market, see year-on-year growth in the third quarter, but we do see it modestly down sequentially in the third quarter as certain customers are managing their inventory to the end of the year.

Hi guys, I just wanted to Pivot back to answer. I think it was John that gave to an earlier question uh about a couple things specifically. You said the base case remains for growth and revenue this year and then you also mentioned non wafer Revenue. As part of another question, is being strong this year. Could you clarify a little bit on those and then I guess what? I'm really getting at is, it seems like giving your second quarter guidance is a little bit more cautious for a number of reasons, it seems to imply a big fourth quarter and wondered if if that's the correct read. And if it is why is the optimism uh kind of changing versus the third quarter?

You're on, you're on your growth in the third quarter, but we do see it modestly down. Sequentially in the third quarter, a certain customers are managing their inventory to the end of the year.

Analyst: Got it. And then I guess on the tariff side of things, and I know this is nobody's crystal ball is particularly that good in this, but you guys talked about a little bit of caution. You have your China for China strategy. To the extent you sell the pull-ins, was that something I would have thought the pull-ins would have potentially led to upside in your business in the second quarter, and you had a fine quarter, but it didn't seem to upside that much. Is the worry that there was some pull-ins inherent in your original guide, and that's where the conservatism comes going forward? I just want to get a little more color on where you saw pull-ins and the duration of that headwind.

Tim Breen: Yeah, thank you, Ross. So I'll comment on this. And I think we haven't seen, you know, very significant direct pull-ins at our level, right? And we haven't seen those orders change in a material way in Q2. Obviously, our customers have talked about some of their own dynamics, and each one has had a bit of a different story of how they've seen it depending on the market. We think the overall overlay of tariffs' impact is consumer confidence and perhaps, if anything, you know, a slight dent in short-term consumer confidence around ordering patents. And we saw that particularly, like we said, in the smart mobile device and IoT market, and I think that's consistent with what others are seeing. I think the bigger question for us on tariffs is really the longer-term opportunity.

Got it. And then I guess on the Tariff side of things, and I know this is a, nobody's crystal ball is particularly that good in this, but you guys talked about a little bit of caution. You have your China for China strategy, to the extent, you sell the pull-ins was that something I would have thought the Poland would have potentially led to upside in your business in the second quarter, uh, and and you had a fine quarter but it didn't seem to upside that much, is the worry that there was some Poland's inherent in your original guide and that's where the conservatism comes going forward. I just want to get a little more color on where you saw Poland's in the duration of that headwind.

Tim Breen: And I think what has definitely changed, I'd say, dramatically in 2025, and it has been accelerating, is really the inbound interest from customers to say, I need to now diversify my sourcing. I need US manufacturing. We were very clear when we announced, you know, our long-term strategic investment plans, not just that we had those plans, but that a lot of major customers were very seriously backing those plans with projects and so on. And all the customers we announced, you know, have active projects with us today. And I think as those move forward from, you know, the initial conversations to the design wins to the ramps, we'll be able to update on all of those. But I think that's how we think of the tariff story more broadly is the strategic, you know, implications for GF from a long-term growth and market share gain perspective.

Yeah. Thank you Ross. Um, so I'll comment on this and I I think we haven't seen, you know, very significant direct Pullins at at all level, right? And we haven't seen those those oldest change in the material way, um, in, in, in Q2, um, obviously our customers have talked about some of their own Dynamic Dynamics. In each 1 has had a bit of a different story of how they've seen it. Depending on the market. We think the overall overlay of tariffs impact is consumer confidence. And perhaps if anything, uh, you know, a slight dent in short-term consumer confidence, around ordering patterns. And we saw that, particularly, like we said, in the smart mobile device and iot market, and I think that's consistent with what others are saying. I think the bigger question for us on tariffs is really the, the the longer term opportunity. And I think what has definitely changed? I'd say dramatically uh, in

Analyst: Thank you.

In 2025, and it has been accelerating, is really the inbound interest from customers to say, I, I need to now, diversify my sourcing, I need us manufacturing. Um, we were very clear when we announced, you know, our long-term Strategic investment plans. Not just that we have those plans, but that a lot of major customers were very seriously, uh, backing those plans with with, with projects and so on. And all the customers we announced, you know, have active projects with us today. And I think as those move forward from, you know, the initial conversations to the uh, design wins to the ramps, will be able to update on all of those, but I think that's the, that's how we think of the terrorist story. More broadly is the Strategic, you know, implications for GF from a long-term growth and Market again, uh, perspective.

Operator: Thank you. And our next question comes from the line of Chris Case of Wolf Research. Your question, please.

Thank you.

Analyst: Yes, thanks. Good morning. I guess the first question I want to talk about about, you know, some of the ASP declines you were seeing in mobile, rather, and, you know, some of the actions that you were taking there. Could you go into a little more detail of, you know, the reason for the actions that you've taken there and, you know, how that affects global foundries as you go into calendar 26? How much additional volume do you expect to get from those actions and what impact is that going to have on revenue and margins as you go into next year?

Thank you. And our next question comes from the line of Chris kesser from Wolfe research. Your question, please.

Tim Breen: Yeah, thank you. Thank you, Chris. I mean, maybe to just go a little bit deeper into it, as we said, you know, this has been very much focused on the mobile space, and there are reasons for that in terms of the dynamics of the market. And it's actually very much with, you know, a few customers where we are operating on a dual source basis, where, you know, we have decisions to make around what share we would like to have, how those customers' growth in different applications is transitioning. And we make deliberate calls in partnership with them around what's the right way to maximize our revenue opportunity. And that's not just a tactical step for this year. That's also a long-term step for securing, you know, longevity in a number of those sockets. So we're not ready yet to quantify kind of 26.

Yeah, thanks. Good morning. Um, I guess the first question I wanted to talk about about uh, you know, some some of the ASP declines. You were seeing in Auto in Mobile rather and um, you know, some of the actions that that you were taking their um could you go into a little more detail of? You know, the the reason for the actions that you've taken there and you know how that affects Global foundries as you go into calendar 26, how much additional volume uh do you expect to get from those actions and and and what impact is that going to have on revenue and margins as you go into next year?

Tim Breen: We're obviously not going to guide 26 at this stage, but, you know, we see this as a strong upside around maintaining GF relevance in those technologies at higher share levels. And our customers are obviously pleased with that outcome as well.

Yeah, thank you. Thank you Chris. I mean, maybe to just go a little bit deeper into, as we said, you know, this has been very much focused on the mobile space, uh, and there are reasons for that in terms of the Dynamics of of the market, um, and it's actually very much with, you know, a, a few customers where we are operating on a dual Source, uh, basis where, you know, we have decisions to make around what share, we would like to have how those customers growth uh in in different applications is is is transitioning and we make deliberate calls in partnership with them around what's the right way to maximize our Revenue opportunity? And that's not just a tactical step for this year. That's also a long-term step for securing you know longevity in a number of those uh those sockets. So we're not ready yet to quantify kind of 26. Obviously it's not going to guide 26 of the stage but you know, we see this as a strong upside around maintaining GF relevance in those Technologies at higher share levels. And our customers are obviously pleased with that outcome as well.

Niels Anderskouv: And just as a follow-up on maybe I can just add to, you know, the share gains that we're targeting here both short and long term. And I think that's an important detail to add. So some of these are long-term agreement oriented.

and and just as a follow up on maybe maybe I can just add to, you know, the

The the sheer gains that we're targeting here, both both short and long term. And I think that's an important detail to her. So some of these are, uh, long-term agreement oriented

Analyst: Right. Okay. And just as you look into next year, you know, it looks like you're going to exit the year with utilization, I guess, in the 80s or so. Also contemplating, you know, some of what you're doing in mobile. Where do you stand on a capacity standpoint right now? And, you know, for how long is global foundries going to be able to keep the CAPEX at relatively low levels and, you know, presumably drive some cash flow as you go into next year?

Tim Breen: Yeah. I mean, macro picture, obviously, without getting too specific about 2026, you know, financially at this stage, you know, we definitely see the mega trends we've been, you know, underwriting to be continuing going into the year. You look across the markets that we are serving, we see the data center market, the CID market for us continuing to deliver strong growth. Niels mentioned a couple of those ramps that are really from a standing start moving into the hundreds of millions of dollars, you know, growth rates are sort of 2x year on year. And we see really at the early innings of that. So there are some secular drivers there that are compelling. We see a continued really strong story in automotive, you know, as we grow into new applications. You know, again, we more than doubled automotive sensing in 2025 over 2024.

Right. Okay. Uh, and and just, uh, as you look into next year, uh, you know, looks like you're going to exit the year with utilization. I I, I guess in the 80s or so. Um, also contemplating, you know, some some of what what you're doing in Mobile. Where do you stand on a capacity standpoint right now and uh, you know, for how long is global Foundry is going to be able to keep the capex at at relatively low levels and and you know, presumably Drive some cash flow as you go into next year.

Tim Breen: And that's a new category. A lot of people think of us as an MCU player, but actually our car content is growing and diversifying into new areas like sensing, including radar, including imaging, but also areas like battery management and other applications. So there's a lot of content growth. There's a lot of diversification within those end markets. And then even within IoT, within smart mobile, again, we're seeing content growth. We're seeing areas where we're taking share of new applications. And those are also beneficiaries of that US sourcing dynamic that we talked about earlier. All of this to say, you know, we see a pretty strong, you know, secular demand growth going into the next couple of years. We do that at a time where we have a very advantaged footprint, right? We finished some significant expansions in the last couple of years.

Of the markets that we are serving. We we see the data center Market, the CID market for us continue to to deliver strong growth. Uh, Neil's mentioned a couple of those ramps that are really from a standing start moving into the hundreds of millions of dollars. Uh, you know, growth rates have sort of 2x year on year. Uh, and we see really at the early Innings of that. So there are some secular drivers there, that that are compelling. We see a continued really strong story and Automotive, you know, as we grow into new applications, you know. Again, we more than doubled Automotive sensing uh, in 2025 over 2024 and that's a new category. A lot of the people think of us as an MCU player, um, but actually our car content is growing and and diversifying into new areas like sensing including radar including Imaging, uh, but also areas like battery management and other applications. So, there's a lot of content growth, there's a lot of diversification within those, uh, end markets, and then even within um iot within smart mobile, again we're seeing content growth, we're seeing areas where we're taking share of new applications and those are also beneficiaries of that us sourcing Dynamic that we talked about earlier all of this to say

Tim Breen: So we're sitting with available capacity, able to ramp quickly globally. And then for the areas we will invest, we benefit from a significant level of support. And in the US alone, you know, in the big beautiful bill, you know, increasing the ITC from 25% to 35% on top of our chips support, which, as we mentioned, we're already, you know, engaging with and receiving, and state-level incentives, we're talking that more than 50% of our CAPEX to be supported by those government programs, which gives us a very good confidence at driving scale in a very capital-efficient way. And so it's a bit early to talk about the actual CAPEX numbers for next year. There are pockets we see really good demand. We will definitely invest behind those. But I think the macro story is great footprint, well positioned for that growth.

You know, we see a pretty strong, you know, secular demand growth going into the next couple of years. We do that at a time where we have a very advantaged footprint, right? We finished some significant expansions in the last couple of years, so we're sitting with available capacity able to ramp quickly uh globally. Um, and then for the areas, we will invest, we benefit from significant level of support and in the us alone, you know, in the big, beautiful bill, you know, increasing the ITC from 25% to 35% on top of our chips, uh, support which

Tim Breen: And when the investments do come, they're going to come with a lot of support for efficiency given those government programs.

Niels Anderskouv: And maybe if I can just add a couple of things from a technical standpoint. We've spent the last few years on building, you know, a very capital-efficient Australia around tool seamless across the factories, which enable us to be capital-efficient as we move out and expand on that front. So I think, you know, as we look at some of these initiatives we've put in place over the last few years, we expect to continue to be very capital-efficient and we expect to stay within the model that we laid out earlier.

As we mentioned, we're already, you know, engaging with and and receiving and state level incentives. We're talking that more than 50% of our capex, uh, to be supported by those governments, uh, programs which gives us a very good confidence in driving scale, uh, in a very Capital efficient way. And so, it's a bit early to book about the actual capex number for next year. Uh, there are Pockets, we see really good demand. We will definitely invest behind those, but I think the macro story is great footprint, well, positioned for that growth and when the Investments do come, they're going to come with a lot of support for uh, for efficiency given those government programs.

And maybe if I can just add a couple of things from a tactical standpoint. Um, we, we spend the last few years on, on building, you know, a very Capital efficient, uh, Australia around tool saying there's a factories which enable us, to be, uh, to be Capital efficient as as we move out and, and, and expand on that front. Um,

So I think you know, but as we look at uh some of these initiatives, we put in place over the last few years, we we expect to continue to be very Capital efficient and we expect to to stay uh to stay within the model that be laid out. Um

earlier.

Analyst: Thank you.

Operator: Thank you. And our next question comes from the line of C.J. Meese from Cantor Fitzgerald. Your question, please.

Thank you.

Analyst: Yeah, good morning. Good afternoon. Thank you for taking the question. I guess first question, you know, implicitly with the vision for growth in '25, you know, you're calling for revenues up 8% or more into the December quarter. So curious, with the benefit of greater non-wafer revenues there, can you kind of quantify what the uplift to gross margins looks like, you know, particularly when we reflect, you know, the lower ASP kind of impact from smart mobile?

Thank you. And our next question comes from the line of CJ muse from Cantor, Fitzgerald your question, please.

John Hollister: Yeah, C.J.'s John. You know, the ASP dynamic plays with utilization as well. So those can, you know, somewhat offset each other, really, in terms of the actual gross margin outcome of some of those decisions. And as Tim and Niels indicated, it's important from a share gain perspective to maintain our momentum in that opportunity. As far as the fourth quarter and where the gross margin can head, you know, we'll see how the quarter progresses here, but I do anticipate a significant improvement from third quarter to fourth quarter in gross margin, driven by the factors I talked about earlier with stronger product mix. We've got some of the non-wafer revenue coming through, as well as some additional improvement in both depreciation and utilization.

Good morning, good afternoon. Thank you for taking the question. Um I guess first question, you know implicitly with the the the vision for growth in 25, you know you're calling for revenues up 8% or more into the December quarter. So curious with the benefit of Greater non wafer revenues there can, can you kind of quantify what the uplift to gross margins? Looks like, you know, particularly when we reflect, you know, the lower ASP kind of uh impact from from smart mobile.

Analyst: Perfect. And then, you know, maybe just to follow on to that, you know, I think a quarter ago you talked about hope for exiting the year with a 30% gross margin. So curious, you know, what are the moving parts in your mind today for how we should be thinking about 2026 gross margins? And as part of that, you know, based on kind of the design wins you had today, how are you thinking about the growth rate for smart mobile next year? Thanks so much.

Yeah, CJ's John um, you know the uh the the ASP Dynamic plays with utilization as well. So uh, those can you know somewhat offset each other really in terms of uh the actual gross margin outcome of of some of those decisions. And as Tim Mills indicated, it's important from, a, a share gain perspective to, to maintain, uh, to maintain our momentum in those, in, in that opportunity, um, as far as the, uh, fourth quarter and where the gross margin can have, you know, we'll, we'll see how the quarter progresses here, but I do anticipate a significant Improvement, uh, from third quarter to fourth quarter in, in gross margin, uh, driven by the factors I talked about earlier with stronger products mix. We've got uh, some of the non wafer Revenue coming through as well as some uh additional Improvement in both depreciation and utilization.

Perfect. And then, you know, maybe just to follow on to that, you know, I think a quarter ago you talked about.

John Hollister: Yeah, I'll take the first part, C.J. So, you know, all the drivers that we just talked about remain intact. You know, we've got, you know, growth in high-margin businesses like our comms infrastructure and data center with silicon photonics and satellite communications. These are robust opportunities for us showing strong growth, as well as improved factory utilization, our ongoing cost improvements, and relatively efficient, you know, capital profile that's allowing us to leverage the installed base of wafer fabrication capacity that we have with a relatively light CAPEX.

Hopefully hope for exiting the year with a 30% gross margin. So curious, you know what, what are your, what are the moving Parts in in in your mind today for, for how we should be thinking about 2026, gross margins? Uh, and as part of that, um, you know, based on kind of the design wins you had today. How are, how are you thinking about growth rate for smart mobile next year? Thanks so much.

Growth uh, as well as improved Factory utilization, our ongoing uh cost improvements and relatively efficient, you know, Capital uh profile. That's allowing us to Leverage The installed base of uh, of uh, wafer fabrication. The capacity that we have with the relatively light capex,

Tim Breen: Maybe, C.J., just on the mobile trajectory again, a bit early to call, you know, very specifically, but again, all those growth drivers we've talked about for mobile, both that are for the market, but also idiosyncratically to GF, I think are very, very much intact. And so, you know, we continue to see reasons for the market to grow overall, especially the premium handset, new form factors, new devices. There definitely are some refresh cycle dynamics that at some point, you know, we'll play through. And so we're bullish on that. You know, Niels also talked about things like smart glasses as long-term drivers, new form factors. Hard to call how quickly. I think that's still a when, not an if, though, in terms of penetration. So we're quite bullish on overall market growth, especially taking a multi-year view.

Tim Breen: But I think we're even more bullish on our own execution in that space with taking more share. We talked about areas like haptics, display, imaging, power management, you know, all critical features in the smart mobile device sector, including our strong base in connectivity, which still is a challenge, right? You know, getting more and more bands in less and less space isn't easy. And that's an area we've historically had strength and continue to innovate. So I think we're actually bullish longer term on the category as an end market.

Maybe uh maybe CJ just on the mobile trajectory again. A bit a bit early to call, you know, very specifically. But again all those growth drivers, we've talked about for mobile both that are for the market but also idiosyncratic to GF. I think are very, very much intact and so we, you know, we continue to see reasons for the market to grow. Overall, especially the premium handset, new form factors new devices. They're definitely awesome, refresh cycle dynamics that at some point. You know, we'll, we'll play through. And so, we're bullish on that, you know. Neil's also talked about things like smart glasses as long-term, drivers new form, factors hard to call how quickly I think that's still a, when not an if though, in terms of penetration. So we're quite bullish on overall market growth, especially taking a multi-year, uh, view. But I think we're even more bullish on our own execution. In that space with taking more share, we talked about areas like haptics display Imaging, power management, you know, all critical features, uh, in the, uh, in, in this smart, mobile device sector, including our strong base in connectivity, which still is a challenge, right? You know, getting more and more bands in less and less space. It isn't easy. In that scenario we've, we've historically had

Analyst: Very helpful. Thank you.

Strength and continue to innovate. So I think we're actually bullish a longer term on the on the category as a as an End Market.

Operator: Thank you. And our next question comes from the line of Vivek Arya from Bank of America Securities. Your question, please.

Well, thank you.

Analyst: Thank you for taking my question. For my first one, just a few Q4 clarifications. What is the percentage of sales contribution from non-wafer revenue? How much is the tailwind from lower depreciation? And I thought I heard you endorse the 30% gross margin exit rate from Q4, but I just wanted to double-check that. So basically, non-wafer revenue contribution, tailwind from lower depreciation, and are you comfortable with the 30% gross margin exit rate from Q4?

Thank you, and our next question comes from the line of VC Aria from Bank of America Securities. Your question, please.

John Hollister: Yeah, Vivek's John. So on the non-wafer revenue, typically that's running roughly 10% of our revenue. We expect it to be up from that in the fourth quarter, a couple of points, you know, call it 12%, 13% of the mix in the fourth quarter. And if you look at the three factors I described of product mix, the non-wafer revenue, as well as the combined effect of depreciation and utilization, you can roughly think of more or less a point each there of contribution. So whether we get all the way to 30%, we'll see, but I think we can make a lot of progress toward that goal in the fourth quarter.

Uh, thank you for taking my questions from my first 1. Uh, just a few, uh, Q4 clarifications. Um, what is the percentage of sales contribution from non wafer Revenue. Um, how much is the Tailwind from, uh, lower depreciation and I thought I heard you endorse the 30% gross, margin exit rate, uh, from Q4. But but I just wanted to, you know, double check that. So basically non wafer Revenue contribution tails in from lower depreciation and are you comfortable with the 30% gross margin, exit rate, uh, from Q4

Yeah, I believe this is John. So, um, on the non wafer Revenue, typically that's running roughly, 10% of our Revenue. We expect it to be up from that in the fourth quarter, a couple of points. Uh, you know, call it 12 13%, uh, of of the mix and fourth quarter. And if you look at the, the 3 factors I described of um, uh product, mix the non-weight for Revenue, as well as the combined effect of, uh, depreciation and utilization, you can roughly think of a, a more or less a point each there of contribution. So, uh, whether we get all the way to 30%, we'll see, but I think we can get, uh, we can make a lot of progress.

Analyst: All right. And for my follow-up, automotive, it has been a very strong area for you, but auto production has not been that great. I understand the content aspect of it. But what is the risk that we find that your auto customers have taken on excess inventory? Like, what is your visibility, Tim, into the deployment of all these wafers into a product? Just because, you know, there's this big gap between, you know, your growth versus auto production. Thank you.

Progress toward that goal in in the fourth quarter.

Tim Breen: Yeah, it's a great question, Vivek. I'll give that a little bit of color. You know, we obviously spend a lot of time, and as you can see from our end harassments, not just with the founder of semiconductor companies, IDM, serving the automotive sector, but also the tier ones, you know, our partnerships with Continental, with Bosch. We've talked about those in the past. We spend a lot of time with them. We even spend a lot of time with the OEM. So I think we have a pretty good, you know, handle. I think it endorses a few key trends, and you named them. The content growth really is extraordinarily important and secular and continuing because the nature of the product is changing, right? A car is no longer a mechanical device.

All right, and from my, um, follow-up Automotive. Um, it has been a very strong area for you but Auto production has not been that that great. I I understand that the content aspect of it, but what is the risk that we find that your auto customers have taken on excess inventory? Like what, what is your visibility timing into the deployment of all these wafers in into a product? Just because, you know, there's this big gap, um between um you know, your growth versus uh Auto production. Thank you.

Yeah, it's a great question.

a bit of of color, you know, we also spend a lot of time and as you can see, from our

Tim Breen: A car is a super complex electronic engine with a lot of the features being dependent on semiconductors in many different domains. So I think, again, first step is, are the secular trends fully intact? I think the answer is absolutely. And then you try to understand the inventory dynamics across the chain, and that's where it's a bit more complex. And actually, what we hear, as I mentioned, that the inventories further down the chain of semiconductors, not in general of cars, but of semiconductors, are actually pretty low at the tier one level in particular. And again, it may, you know, move through the system in different lums, but I think the overall chain is actually lighter than it could be. And that actually could lead you to believe there could be upsides on demand as those inventories get restocked.

It's not just with, um, that's how the semiconductor companies and IDM serving the automotive sector, but also the tier 1's. You know, our Partnerships with Continental with boss. We've talked about those in the past. We spent a lot of time with them, we even spent a lot of time with the OEM so I think we have a pretty good, you know, handle. I think it endorses a few key trends and you named them. Uh, the content growth really is extraordinarily important, and secular and continuing, um, because the, the nature of the product is changing, right? A a car is no longer a mechanical device. A car is a super complex electronic, uh, engine with a lot of the features being dependent on on, on semiconductors, in many different. Um, domains. So I think, again, first step is are the secular Trends fully fully intact. I think the answer is absolutely, and then you try to understand the inventory Dynamics across the chain and that's where it's a bit more complex. And actually, what we hear, as I mentioned that the

Tim Breen: Obviously, rates and pace of restocking are always a difficult thing to call. But we continue to be very strongly supportive of the sector.

Niels Anderskouv: So maybe just add a little bit to that. You know, so we, since we're in public, we have consistently outgrown the automotive market and gained share. And a lot of that has been done based on a very strong automotive micro-travel solution that has enabled us to outgrow the market. On top of that, you know, if you look at the design wins we've had over the last few years, there's been a lot more in automotive power, battery management systems, smart sensors, and of course, driver assist overall. So that momentum building on top, you know, we're starting to see, you know, what I would call substantial growth, specifically in smart sensors, already happening here in 2025. And we expect that to continue as we move forward. So these are technologies like, of course, 22 FDX.

Niels Anderskouv: You've seen several announcements, you know, from the radar suppliers in the industry as almost becoming the de facto standard for radars. But we're also seeing 12LP, you know, firing its way into display controllers. We're even seeing 12LP plus AutoPro getting into next-generation radars. And then, of course, you know, the 130 BCD battery management systems is also a new leg of growth. So if you look at it from a trajection standpoint, while we have been outgrowing the market for the last several years, we actually expect, based on the solid design wind pipeline we've had in the last few years, to be able to continue to do that for the coming years in automotive.

And and gain share. And, and, and a lot of that has been done based on a on a very strong Automotive, Micro Control solution that has enabled us to outgrow the market, uh, on top of that, you know, if you look at the design means we've had over the last few years. There's been a lot more in automotive, power battery Management Systems, uh, smart sensors, and, of course, a driver assist or all, so that momentum building on top, you know, we're starting to see, um, you know, what I would call substantial growth specifically in smart sensors already happening here, in, in 2025, and, and we expect that to, uh, to continue as we move forward. So these are Technologies like of course 22. FTX you. You've seen several announcements, you know, from from the radar, um, suppliers in the industry as part almost becoming the the defective standard for for Raiders but we're also seeing 12 RP you know Finding its way into display controllers. Uh, we even seeing 12 LP Plus Auto Pro getting into next generation.

John Hollister: Jonathan, we'll just take one last question.

Raiders. And then, of course, you know, the 130 BCD and Battery Management Systems. Um, is also a new leg of of growth. So if you look at it from a trajectory standpoint, while we have been out growing uh, the market for the last uh, several years, we actually expect based on on the solid design in pipeline, we've had in the last few years, to be able to continue to do that. For for the company is not about it.

Operator: Certainly. And our final question then for today comes from the line of Kush Sanker from TD Cowan. Your question, please.

Jonathan, we'll just take one last question.

Analyst: Yeah, hi. Thanks for taking my question. I had two of them. One of the myths being, can you talk a little bit about how you're seeing the risk side demand between Asia and Western companies? And then I had a quick follow-up.

Certainly, and our final question then for today comes from the line of kush. Sanker from TD. Cowen your question, please?

Yeah. Hi thanks for taking my question. I have 2 of them 1 of the mids skiing. Can you talk a little bit about how you seeing the risk? 5, demand between Asia and Western companies, and then I had a quick follow-up.

Tim Breen: Yeah, so I think it's interesting. Obviously, the ecosystem is evolving. And if you look at it, there aren't, you know, a huge number of very scaled players in risk drive. And that's one of the feedback we get from the ecosystem that they actually want to see, you know, serious companies that they trust, like GF, backing the ecosystem. And so I think that's a trend that's going to increase demand because people can rely on risk drive solutions when they're backed by larger companies. You know, I've been around the world talking to customers about MIPS and testing their reactions. As I said, they're very positive. I'd say it's global, Kush, in terms of, you know, good reputation in Asia. You know, markets like Korea have very strong, very strong interest in MIPS, just to give you an anecdote. But we see it globally.

Tim Breen: We see it in Europe, given, again, the appetite to embrace, you know, open source ecosystem for those cores. And of course, in the US, where MIPS has historically been very strong, engaged with a number of customers. So I think it's a global phenomenon, obviously, but too early to call long-term trajectory of that mix. But there's strong demand across the board.

Analyst: Gotcha. Very helpful. And then a quick question on your China for China. As we disclose who the Chinese foundry are working with this and how to think about the margin profile of the business and any concerns on tech transfer or export controls, thank you.

Yeah, so I think it's interesting. Uh, obviously the ecosystem is evolving and if you look at it, there aren't, you know, a huge number of very scale players, uh, in Risk 5. And that's 1 of the things that we get from the ecosystem that they actually want to see, you know, serious companies that they trust like GF uh, backing the ecosystem. And so I think that's a trend that's going to increase demand because people can rely on on risk 5 Solutions when they're backed by by larger companies. Um, you know, I've been around the world talking to customers about mips, uh, and and testing their reactions. As I said, they're very positive. I'd say it's, it's Global, uh, Crush in terms of, you know, good reputation in Asia, um, you know, markets like Korea are very strong, very strong interest in myths, just to give you an anecdote. Um, but we see it globally. We see it in Europe, uh, given again the the appetite to embrace, you know, open source ecosystem for, uh, for those cause, uh, and of course, in the US where MIT is historically, been very strong engaged with a number of customers. So I think it's a global phenomenon, obviously a bit too, too early to call long term, uh, trajectory of the of that mix. But, uh, there's strong demand across the board.

Tim Breen: Yeah, you know, the way we think about this is GF China, right? This is our commitment to support our customers from the China footprint in terms of quality, in terms of delivery. So, you know, our promise to them is everything you'd expect from GF, you will get from our manufacturing. And China will manage our partner. And as a result, we're not talking about identity as much as the offerings that we're going to be making available to our customers that we're now seeing all of that, you know, interest on. From a margin point of view, it's in line with corporate now and in the future. We don't see this as, you know, a concern there at all. And, you know, obviously, everyone talks about IP protection in China.

Uh gotcha, very helpful. I'm going to quick question on your China for China, have you discussed with the Chinese Foundry are working with this? And how do you think about the margin profile of the business and any concerns on Tech transfer or export controls? Thank you.

Tim Breen: Part of that went into us selecting the right partner, but also putting the right controls in place with how we manage our customers' designs. Our customers are part of that story as well, you know, auditing the end-to-end setup, and they're comfortable. And these are, you know, automotive-grade companies who take their IP very seriously. So I think, you know, we're going into this very eyes open, but also with clear plans in place to manage our partnership.

Yeah. You know, the way we think about this is GF China, right? This is our commitment to support our customers from the China, uh, footprint in terms of quality, in terms of delivery. So, you know, our promise to them, is everything. You'd expect from GF, you will get from, uh, from our Manufacturing in China, will manage our partner. And as a result, we're not talking about, uh, identity as much as the offerings that we're going to be making available to to our customers that we're now seeing all of that, uh, you know, interest on, um, from a margin point of view. It's, it's, it's in line with corporate. Uh, now, and in the future we don't see this as as, uh, you know, a concern there at all. And, you know, obviously, everyone talks about IP protection, in China, part of that went into us. So,

Analyst: Very helpful. Thank you.

Selecting the right partner but also putting the right controls in place with how we manage our customers designs. Our customers are part of that story, uh, as well, you know, auditing the end-to-end setup and they're comfortable and these are, you know, Automotive, great companies, who take their IP very seriously. So I think, you know, we're not, we're going into this very eyes open, but also with clear plans, in place to manage our partnership.

Very helpful. Thank you.

Operator: Thank you. This concludes the question and answer session. I'd like to turn the program back to management for any further remarks.

John Hollister: Thank you, Jonathan. Thank you, everyone, for joining us on the call today. We look forward to seeing many of you at the upcoming events that we announced at the beginning of the call. And we'll stay in touch and take many calls as we go through that. Thank you, everyone.

Thank you. This concludes the question and answer session. I'd like to turn the program back to management for any further remarks.

Thank you, Jonathan. Thank you everyone, for joining us on the call. Today, we look forward to seeing many of you at the upcoming events that we announced at the beginning of the call. And, uh, we'll stay in touch and and take many calls as we go through that. Thank you, everyone.

Operator: Thank you, ladies and gentlemen, for your participation at today's conference. This does conclude the program. You may now disconnect. Good day.

Thank you, ladies and gentlemen for your participation. In today's conference, this does conclude the program. You may now disconnect good day.

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