GLOBALFOUNDRIES Q2 FY26 earnings call GFS

GLOBALFOUNDRIES launched Quantum Technology Solutions in May, a new dedicated team and capabilities aimed at enabling the quantum industry to transition from prototypes to high-volume production. The strategy is cubit-agnostic, supporting various modalities, and leverages existing platforms like FDX for cryogenic CMOS and advanced packaging. The company is working with 8 leading quantum computing players, including hyperscalers, and has already embarked on 4 new customer-specific engagements. This initiative is bolstered by an expected $375 million grant from the U.S. Department of Commerce to accelerate quantum manufacturing capacity in the U.S. Quantum-related revenue is expected from engineering engagements in the next 1-3 years, with manufacturing services revenue ramping towards the end of the decade as platforms move to volume production.

The company secured 7 new optical networking design wins in Q2, driven by strong demand for silicon photonics and silicon germanium platforms. Silicon photonics revenue is projected to more than double in 2026, with high-volume manufacturing of 200 gig per lane technology underway and 400-gig capability demonstrated. Significant customer interest is noted for the Scale platform, the industry's first OCI MSA compatible solution for near and co-packaged optics, with 7 active engagements and two tape-outs in Q2/Q3. A $300 million award from the U.S. Department of Commerce will further accelerate next-generation silicon photonics technologies, including advanced optical materials, modulated technologies, and packaging innovations.

GLOBALFOUNDRIES completed the acquisition of Synopsys ARC processor IP Solutions business in June, significantly expanding its serviceable addressable market and bolstering capabilities across RISC-V processor IP, software development tools, and custom silicon design. This acquisition brings over 150 patents, 300 existing customers, and 400 R&D engineers, enabling earlier engagement with customers on future architectures for physical AI. Additionally, the acqui-hire of Potion Technologies' custom power team in July strengthens the company's roadmap in Power Technologies, particularly integrated voltage regulators (IVR), to enable new power architectures for AI infrastructure that bring power conversion closer to the processor.

The company delivered a non-IFRS gross profit of $534 million, translating to a 29.9% gross margin in Q2, exceeding the high end of guidance and reaching the 30% target well before year-end. This expansion was driven by a richer mix of manufacturing and technology services revenue, structural improvements in manufacturing costs, and improved utilization (high 80s%). Management implemented pricing increases across several technology corridors in Q2, effective 2027, following constructive customer conversations. These adjustments reflect differentiated value, supply/demand dynamics, and inflationary absorption, with continued assessment of pricing for 2027.

GLOBALFOUNDRIES shipped approximately 625,000 300-millimeter equivalent wafers in Q2, up 8% sequentially and year-over-year. The company emphasized its flexible manufacturing footprint, which allows it to reallocate capacity to meet strong demand in areas like data center, offsetting softness in smart mobile devices due to memory shortages. This flexibility has enabled the company to capture upside and maintain strong design win momentum across various end markets, including defense and automotive.