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GlobalFoundries Slips in Debut After $2.6 Billion IPO

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(Bloomberg) -- GlobalFoundries Inc., backed by Mubadala Investment Co., fluctuated in its trading debut, ending its first day as a public company down 1.3%.

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The chipmaker’s shares began trading in New York Thursday at $47, the price in its initial public offering. The shares, which first fell as much as 5.3% and then rebounded up to 2.1%, closed at $46.40, giving the company a market value of almost $25 billion.

The company and Mubadala sold 55 million shares Wednesday at the top of the $42 to $47 marketed range, raising $2.6 billion.

That made the listing the third biggest on a U.S. exchange this year, topped only by South Korean e-commerce firm Coupang Inc.’s $4.55 billion IPO and Chinese ride-hailing company DiDi Global Inc.’s $4.44 billion raise, according to data compiled by Bloomberg. That doesn’t include blank-check and similar companies.

GlobalFoundries had planned to sell 33 million shares while Abu Dhabi’s Mubadala was to sell 22 million shares, according to its filings with the U.S. Securities and Exchange Commission.. That mix was modified, according to a statement, with the company selling 2.75 million fewer shares than planned and Mubadala making up the difference. Mubadala was to control about 89% of the company’s shares after the IPO.

Koch, Qualcomm

Funds managed by BlackRock Inc., Columbia Management Investment Advisers, Fidelity Management, an affiliate of Koch Industries Inc. and Qualcomm Inc. also had indicated interest buying a combined $1.05 billion of the shares in the offering as cornerstone investors, the filings show.

Silver Lake separately had agreed to purchase $75 million of stock in a concurrent private placement at the IPO price.

The chipmaker decided to go public because access to public markets will be one of the tools it uses to help fund future investment in manufacturing capacity. GlobalFoundries is struggling to add enough output to keep up with customer demand, Chief Executive Officer Tom Caulfield said in an interview.

“2022 is going to be a difficult year where we are not going to get our customers everything they want,” he said. “GF is in the position where for the better part of the next couple of years we have to go create capacity for our customers.”

GlobalFoundries was created by purchasing the manufacturing operations of Advanced Micro Devices Inc. in 2009 and later combining it with Singapore’s Chartered Semiconductor. Mubadala was planning for the business to be valued in a listing at around $30 billion, Bloomberg News reported in July.

Chip Shortage

A global shortage has heightened the focus on the semiconductor industry. A surge in demand for electronics during coronavirus pandemic lockdowns and insufficient supply have made chip factories more valuable to the economy.

For the first half of the year, GlobalFoundries had a net loss of $301 million on revenue of about $3 billion, compared with a loss of $534 million on $2.7 billion in revenue a year earlier, according to the filings.

Contract chipmakers like GlobalFoundries fabricate semiconductors for large technology companies such as Apple Inc. and Amazon.com Inc. Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. currently dominate the market, and Intel Corp. has ambitions to become a bigger force in that area too.

GlobalFoundries previously gave up on the kind of leading-edge production that would match the capabilities of Taiwan Semiconductor or Samsung. Instead, it’s serving the market for less advanced chips, which are increasingly critical to carmakers and other industries.

The IPO was led by Morgan Stanley, Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc. and Credit Suisse Group AG. The company’s shares are trading on the Nasdaq under the symbol GFS.

(Updates with closing share price in second paragraph)

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