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Form 6-K GLOBALFOUNDRIES Inc. For: Mar 31

June 13, 2022 4:38 PM EDT

Management Discussion and Analysis

Forward-looking Statements

This document includes “forward-looking statements” that reflect our current expectations and views of future events. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995 and include but are not limited to, statements regarding our financial outlook, future guidance, product development, business strategy and plans, and market trends, opportunities and positioning. These statements are based on current expectations, assumptions, estimates, forecasts, projections and limited information available at the time they are made. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” “shall,” "outlook," "on track," and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are subject to a broad variety of risks and uncertainties, both known and unknown. Any inaccuracy in our assumptions and estimates could affect the realization of the expectations or forecasts in these forward-looking statements. For example, our business could be impacted by the COVID-19 pandemic and supply chain disruptions due to the Russia/Ukraine conflict and actions taken in response to such events; the market for our products may develop more slowly than expected or than it has in the past; our operating results may fluctuate more than expected; there may be significant fluctuations in our results of operations and cash flows related to our revenue recognition or otherwise; a network or data security incident that allows unauthorized access to our network or data or our customers’ data could damage our reputation; we could experience interruptions or performance problems associated with our technology, including a service outage; and global economic conditions could deteriorate. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results or outcomes to differ materially from those contained in any forward-looking statements we may make. Moreover, we operate in a competitive and rapidly changing market, and new risks may emerge from time to time. You should not rely upon forward-looking statements as predictions of future events. These statements are based on our historical performance and on our current plans, estimates and projections in light of information currently available to us, and therefore you should not place undue reliance on them.

Although we believe that the expectations reflected in our statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will be achieved or occur. Moreover, neither we, nor any other person, assumes responsibility for the accuracy and completeness of these statements. Recipients are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date such statements are made and should not be construed as statements of fact. Except to the extent required by federal securities laws, we undertake no obligation to update any information or any forward-looking statements as a result of new information, subsequent events, or any other circumstances after the date hereof, or to reflect the occurrence of unanticipated events. For a discussion of potential risks and uncertainties, please refer to the risk factors and cautionary statements in GLOBALFOUNDRIES’ Annual Report on Form 20-F for the year ended December 31, 2021, current reports on Form 6-K and other reports filed with the Securities and Exchange Commission (the “SEC”). Copies of our SEC filings are available on our Investor Relations website, investors.gf.com, or from the SEC website, www.sec.gov.
Overview
GLOBALFOUNDRIES Inc. (“We,” “GF,” or the “Company”) is one of the world’s leading semiconductor foundries. We manufacture complex, feature-rich integrated circuits(“ICs”) that enable billions of electronic devices that are pervasive throughout nearly every sector of the global economy. With our specialized foundry manufacturing processes, a library consisting of thousands of IP titles, and differentiated transistor and device technology, we serve a broad range of customers, including the global leaders in IC design, and provide optimized solutions for the function, performance and power requirements of critical applications driving key secular growth end markets.




The combination of our highly-differentiated technology and our scaled manufacturing footprint enables us to attract a large share of single-sourced products and long-term supply agreements, providing a high degree of revenue visibility and significant operating leverage, resulting in improved financial performance and bottom line growth. As of March 31, 2022, the aggregate lifetime revenue commitment reflected by these agreements amounted to $21 billion, including more than $10 billion during the period from 2022 through 2023 and more than $3.5 billion in advanced payments and capacity reservation fees. These agreements include binding, multi-year, reciprocal annual (and, in some cases, quarterly) minimum purchase and supply commitments with wafer pricing and associated mechanics outlined for the contract term. Through an intense focus on collaboration, we have built deep strategic partnerships with a broad base of more than 200 customers as of March 31, 2022, many of whom are the global leaders in their field.

Net Revenue

We generate the majority of our revenue from volume production and sales of semiconductor wafers, which are priced on a per-wafer basis for the applicable design. We also generate revenue from pre-fabrication services such as rendering of non-recurring engineering (“NRE”) services, mask production and post-fabrication services such as bump, test, and packaging. Pricing is typically agreed prior to production and then updated based on subsequent period negotiations.

We recognize a vast majority of our revenue upon shipment of finished wafers to our customers.

Cost of Revenue

Cost of revenue consists primarily of material expenses, depreciation and amortization, employee-related expenses, facility costs and costs of fixed assets, including maintenance and spare parts. Costs related to NRE services are also included within the cost of revenue.

Material expenses primarily include the costs of raw wafers, test wafers, photomasks, resists, process gases, process chemicals, other operating supplies and external service costs for wafer manufacturing. Depreciation and amortization charges primarily include the depreciation of clean room production equipment. We depreciate equipment on a straight-line basis over a two- to ten-year period and buildings on a straight-line basis over up to 26 years (or the remaining lease term of related land on which the buildings are erected, if shorter).

Operating Expenses

Our operating expenses consist of R&D and selling, general and administrative expenses. Personnel costs are the most significant component of our operating expenses and consist of salaries, benefits, bonuses, share-based compensation, and commissions.

Research and Development (“R&D”)

Our R&D efforts are focused on developing highly-differentiated process technologies and solutions. As part of our strategic repositioning, we shifted our R&D efforts to focus on technologies where we can deliver a highly-differentiated solution and discontinued our R&D-intensive single-digit node program. Our R&D expense includes personnel costs, materials costs, software license and intellectual property expenses, facility costs, supplies, professional and consulting fees, and depreciation on equipment used in R&D activities. Our development roadmap includes new platform investments, platform features and extensions, and investments in emerging technology capabilities and solutions. We expense R&D costs as incurred. We believe that continued investment in our technology portfolio is important for our future growth and acquisition of new customers. We expect our R&D expense as a percentage of revenue to moderately decline over time as revenue increases.

Selling, General and Administrative (“SG&A”)

SG&A expenses consist primarily of personnel-related costs, including sales commissions to independent sales representatives and professional fees, including the costs of accounting, audit, legal, regulatory and tax compliance. Additionally, costs related to advertising, trade shows, corporate marketing and allocated overhead costs are also included in SG&A expenses.




We expect our SG&A expenses as a percentage of net revenue to decrease over time as revenue increases. We anticipate that we will incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company.

Finance Expenses, net

Finance expenses consists primarily of interest on borrowings, amortization of debt issuance costs under our term loans, revolving credit facility, finance leases and the other credit facilities we maintain with various financial institutions, net of income related to financing activities.

Share of Profit from Joint Ventures

Share of profit from joint ventures relates to our portion of profit and loss in investments that we do not consolidate (See Note 14 in our audited consolidated financial statements included in the Company's Annual Report, Form 20-F for the year ended December 31, 2021).

Other Income (Expense), net

Other income (expense), net consists of one-time gains and losses and other miscellaneous income and expense items unrelated to our core operations.

Income Tax Benefit (Expense)

Income tax expense consists primarily of income taxes in certain foreign jurisdictions in which we conduct business, which mainly include Germany, Singapore and U.S. federal and state income taxes.

The following discussion covers items for and a comparison between the three months ended March 31, 2021 and 2022.

A. Results of Operations
The following table sets forth our consolidated statements of operations data for the periods indicated

Three Months Ended
March 31
Trailing 12 Months
March 31

202120222021-2022
Net revenue$1,418 $1,940 $7,107 
Cost of revenue$1,319 $1,471 $5,724 
Gross profit$99 $469 $1,383 
Research and development expenses$103 $128 $503 
Selling, general and administrative expenses$91 $116 $620 
Operating expenses$194 $244 $1,123 
Profit (loss) from operations$(95)$225 $260 
Finance expenses, net$(28)$(28)$(108)
Share of profit of joint ventures and associates$$$
Other income (expense), net$$$(9)
Profit (loss) before income taxes$(116)$207 $147 
Income tax expense$(11)$(29)$(96)
Net income (loss) for the period$(127)$178 $51 
Attributable to:
Shareholders of GLOBALFOUNDRIES INC.$(126)$179 $55 
Non-controlling interest$(1)$(1)$(4)
Net income (loss) for the period$(127)$178 $51 









Comparison of Three Months Ended March 31, 2022 and 2021

Net Revenue

Three Months Ended
March 31
20212022Change% Change
(in millions)
Net revenue$1,418 $1,940 $522 36.8 %

Net revenue increased by $522 million, or 36.8%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was primarily a result of higher wafer shipment volumes and average selling prices (“ASP”). For the three months ended March 31, 2022, wafer shipments were 625 thousand (300mm equivalent), a 14% increase from the prior year period. ASP per wafer increased 19% year over year, driven by ramping long-term customer agreements with better pricing, and improved product mix.


Cost of Revenue
Three Months Ended
March 31
20212022Change% Change
(in millions)
Cost of revenue$1,319 $1,471 $152 11.5 %
Gross margin 7.0 %24.2 %+1720bps

Cost of revenue increased by $152 million, or 11.5%, for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The increase in cost of revenue was driven by costs associated with a 14% increase in wafer shipments. The associated gross margin improvement for the three months ended March 31, 2022 was driven by 70% higher ASPs and 30% improved product mix and better fixed cost absorption.


Research and Development Expenses
Three Months Ended
March 31
20212022ChangeChange %
(in millions)
Research and development expenses$103 $128 $25 24.3 %
As a % of revenue7.3 %6.6 %

Research and development expenses increased $25 million or 24.3%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The period-over-period change was driven by increased employee annual incentive plan costs and share-based compensation of $15 million, and investments in developing new features.





Selling, General and Administrative Expenses
Three Months Ended
March 31
20212022ChangeChange %
(in millions)
Selling, general and administrative expenses$91 $116 $25 27.5 %
As a % of revenue6.4 %6.0 %

Selling, general and administrative expenses increased by $25 million, or 27.5%, for the three months ended March 31, 2022, compared to the three months ended March 31, 2022. The increase was primarily attributable to share-based compensation, which increased $26 million.


Share of profit of joint ventures
Three Months Ended
March 31
20212022ChangeChange %
(in millions)
Share of profit of joint ventures$$$— — %

Share of profit of joint ventures remained flat at $1 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.


Other Income, net
Three Months Ended
March 31
20212022ChangeChange %
(in millions)
Other income, net$$$50.0 %

Other income, net increased by $3 million, or 50.0%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was primarily driven by gains on tool sales.













Income tax expense
Three Months Ended
March 31
20212022ChangeChange %
(in millions)
Income tax expense$(11)$(29)$(18)NM

Income tax expense increased by $18 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily due to higher mix of income in jurisdictions with higher tax rates and additional withholding tax accrued in the United States.
B. Liquidity and Capital Resources

We have financed operations primarily through cash generated from our business operations, including prepayments under long term agreements, debt and government funding. As of December 31, 2021 and March 31, 2022, our principal source of liquidity was our cash balance of $2,939 million and $3,264 million, respectively. As of December 31, 2021 and March 31, 2022, we had an undrawn revolving credit facility of $1,000 million. In addition to our available revolvers, which were undrawn as of December 31, 2021, and March 31, 2022, we had $2,013 million and $2,111 million of debt outstanding as of December 31, 2021 and March 31, 2022, respectively, which was primarily comprised of multiple term loans in various currencies. Our future capital requirements will depend on many factors, including the rate of sales growth, capital expenditures for new facilities and potential acquisitions of companies or technologies. We may enter into acquisitions or strategic arrangements in the future which also could require us to seek additional equity or debt financing. As of March 31, 2022, we believe that our existing cash, cash equivalents, investments, credit under our revolving credit facility, and expected cash generated from operations are sufficient to meet our short-term and long-term capital requirements.
Cash Flows
The following table shows a summary of our cash flows for the periods presented:
Three Months Ended
March 31
20212022
(in millions)
Net cash provided by operating activities$148 $845 
Net cash used in investing activities(257)(639)
Net cash (used in) provided by financing activities(162)118 
Effect of exchange rate changes on cash and cash equivalents
$(2)$
Net increase (decrease) in cash and cash equivalents$(273)$325 



Operating Activities

Net cash provided by operating activities for the three months ended March 31, 2022 was $845 million, compared to $148 million for the three months ended March 31, 2021, reflecting a $697 million increase. The increase was primarily related to net income of $178 million, $408 million of depreciation and amortization of intangible assets and $53 million of share-based compensation expense. Favorable changes in working capital of $189 million included an increase in trade and other payables of $237 million, which was driven principally by customer prepayments for future wafer shipments. This increase was partially offset by a $64 million increase in inventories.
Investing Activities

Net cash used in investing activities was $639 million for the three months ended March 31, 2022, an increase of $382 million from a use of $257 million for the three months ended March 31, 2021. The period-over-period change was primarily attributable to capital expenditures of $643 million, an increase of $341 million from the prior period, principally associated with activities to expand capacity within certain of our fabrication facilities.
Financing Activities

Net cash provided by financing activities was $118 million for the three months ended March 31, 2022, compared to a use of $162 million for the three months ended March 31, 2021, a $280 million increase in cash provided by financing activities compared to the prior year. This increase was primarily due to $214 million of proceeds from borrowings, partially offset by the shareholder loan and debt repayments compared to the prior year.


BUSINESS UPDATE
Some of the information contained in this business update includes forward-looking statements that involve risks and uncertainties. You should review the sections titled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” in our Annual Report on Form 20-F, filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2022 and the other documents we file with the SEC for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following business update. As used in this business update, all references to “we,” “us,” “our,” the “Company” and “GF” are to GlobalFoundries Inc. and its consolidated subsidiaries.

For the year 2021, our top ten customers, based on wafer shipment volume, included some of the largest semiconductor companies in the world: Advanced Micro Devices, Inc., Cirrus Logic, Inc., Infineon Technologies AG, MediaTek Inc., NXP Semiconductors N.V., pSemi Corporation, Qorvo, Inc., Qualcomm Inc., Samsung Electronics Co., Ltd., and Skyworks Solutions, Inc. A key measure of our position as a strategic partner to our customers is the mix of our wafer shipment volume attributable to single-sourced business, which represented approximately 62% of wafer shipment volume in 2021, up from 47% in 2018. We define single-sourced products as those that we believe can only be manufactured with our technology and cannot be manufactured elsewhere without significant customer redesigns. Approximately 85% of our design wins in 2021 were for single-sourced business, up from 69% in 2018.
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Foundries Are the Bedrock of the Technology Ecosystem
Semiconductor manufacturing is now a critical part of the electronics value chain by providing the foundation for innovation by fabless semiconductor design companies and OEMs, enabling broad-ranging products addressing almost every commercial sector. As a result, access to manufacturing has become a supply chain, economic and, ultimately, a national security concern.
According to Gartner, the global electronics market generated approximately $2.2 trillion in annual revenue in 2021. Of that, the global semiconductor market represented $595 billion and the foundry market, excluding memory, represented approximately 96 billion. As a result of this increasing relevance, regions around the world are competing to increase domestic semiconductor manufacturing. According to Gartner, the overall semiconductor and foundry markets are expected to grow at 5.8% CAGR and 7.9% CAGR, respectively, from 2021 to 2026.
    


 
 
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There are currently only five foundries of significant scale: GF, Samsung, SMIC, TSMC and UMC. Collectively, these five foundries accounted for 85% of worldwide foundry revenue in 2021, with SMIC, TSMC and UMC accounting for approximately 70% of foundry revenue in 2021, according to an April 2022 Gartner Semiconductor Foundry Worldwide Market Share report. More importantly, Gartner estimates that approximately 74% of foundry wafer fab capacity in 2021 was located in Taiwan or China. These trends have not only created trade imbalances and disputes, but have also exposed global supply chains to significant risks, including geopolitical risks.

Evolution to Pervasive, Broadly Diversified End Markets
We define pervasive semiconductors as those manufactured on process technologies ≥12nm. According to Gartner, 12nm and above technologies represented 68% of total semiconductor foundry revenue in 2021. Gartner reported that foundry capex totaled $51 billion in 2021. We estimate that 35% of foundry capex was directed to capacity for the manufacturing of pervasive semiconductors. The pervasive semiconductor market is driving breakthrough innovation across broad applications such as longer battery life for mobile devices, always-on access to connected devices, high data throughput for work from home, streaming, gaming and AR/VR, powerful sensing for safe and comfortable autonomous driving and embedded memory for secure cryptographic credentials. Unlike processor-centric compute devices, pervasive semiconductor performance is driven more by circuit design, specialty materials and specialized manufacturing processes. Innovation in pervasive ICs is measured in terms of precision, accuracy, bandwidth, efficiency and sensitivity. When combined with greater breadth and diversity of customers and end markets, these factors tend to result in more stable demand and pricing for pervasive semiconductors than processor-centric compute semiconductors. Additionally, capital expenditure requirements are generally significantly lower for manufacturers of pervasive semiconductors.
    


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Our Business
Since our inception, we have grown through a combination of acquisitions, greenfield expansions and strategic partnerships. We were established in 2009 when a subsidiary of Mubadala acquired AMD’s manufacturing operations in Dresden, Germany, and a fab project site in Malta, New York. In 2010, we combined with Chartered Semiconductor Manufacturing, the third-largest foundry by revenue at the time, forming the basis for our Singapore manufacturing hub. In 2015, we acquired IBM’s Microelectronics division with manufacturing facilities in New York and Vermont, adding distinctive technology capabilities, including more than 2,000 IBM engineers. By 2017, we had successfully ramped our most advanced manufacturing site in Malta, New York. Through our organic and strategic growth initiatives, we increased manufacturing capacity and, as of March 31, 2022, had a global footprint with five manufacturing sites on three continents with approximately 14,600 employees, 68% of whom are engineers or technicians, and approximately 9,000 worldwide patents. In 2021, we shipped approximately 2.4 million 300mm equivalent semiconductor wafers. With this level of market presence and capability, our technologies are found across most semiconductor end markets in devices used on a daily basis.
    


 
 
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Resized and refocused cost structure

We have realigned our engineering, sales and marketing organizations toward higher-margin, higher-return products and opportunities to drive our improved bottom line. We have moved toward product offerings that require lower capital expenditure while still creating significant value. Additionally, we have focused on feature rich-solutions that help us better partner with our customers to create long-term relationships. Our pivot has begun to contribute to a higher gross profit, with a gross margin of 24.2% for the three months ended March 31, 2022, compared to 7.0% for the three-months ended March 31, 2021.

Scaled manufacturing capabilities

According to Gartner, in 2021, we were the fourth largest foundry in the world based on external sales. In 2021, we shipped approximately 2.4 million 300mm equivalent semiconductor wafers. We provide scaled manufacturing capabilities focused exclusively on the pervasive semiconductor market. We currently operate five manufacturing sites, with plans for future expansions and upgrades to deliver more output at all of our locations. We believe that our scaled global manufacturing footprint enables our customers to leverage the security of our fabs and ensure a trusted supply of critical semiconductors.

Our Market Opportunity

According to Gartner, the TAM for the overall semiconductor device market was $595 billion in 2021, while the TAM for the foundry market, excluding memory, was $96 billion. Of this total, we estimate that our SAM represented $65 billion, which included $27 billion for Smart Mobile Devices, $19 billion for Home and Industrial IoT, $13 billion for Communications Infrastructure & Datacenter, $5 billion for Automotive and $1 billion for Personal Computing opportunities. 

 
In order to better address and capture the pervasive semiconductor foundry market opportunity, we restructured our go-to-market organizations to better align with the growing opportunities in Smart Mobile Devices, Home and Industrial IoT, Communications Infrastructure & Datacenter, Automotive and Personal Computing. According to Gartner, smartphone semiconductor revenue in 2022 is expected to increase by approximately 15% from 2021, which is primarily attributable to the shift from 4G to 5G phones. Similarly, the use of semiconductors in automobiles is expected to dramatically increase from 2020 to 2030 as innovation in driver safety, electrical vehicles and infotainment applications increase. Gartner estimates that each vehicle had an average of $489 of semiconductors in 2020, and this will increase to $850 by 2025, and to $1,239 by 2030.
    



We have a large and growing market opportunity with an estimated SAM of $68 billion in 2021, which reflects the sum of all foundry revenues excluding memory and revenues from ≥12 nanometer (“nm”) wafers, as estimated by Gartner. Our SAM is supported by significant opportunities in our core markets of Smart Mobile Devices, Home and Industrial IoT, Communications Infrastructure & Datacenter, Automotive and Personal Computing. Our combination of highly-differentiated technology and large share of single-sourced products and long-term supply agreements provides a high degree of revenue visibility and significant operating leverage, resulting in improved financial performance and bottom line growth.
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Smart Mobile Devices

According to Gartner, the smart mobile devices semiconductor market, excluding memory, is expected to grow at 3.5% CAGR from 2021 to 2026. By 2026, semiconductor devices for mobile applications, such as phones, tablets and wearables, are expected to account for approximately 25% of total semiconductor demand, excluding memory. Within smart mobile devices, we expect particularly rapid growth in mobile devices connected to phones, such as smart watches (with an expected CAGR of 15% from 2021 to 2026, according to Gartner). Historically, handset unit volume growth drove demand, but today users’ desire for increased functionality, speed and performance is driving significant increases in semiconductor content per device. 5G implementation is driving the next wave of content growth as higher data rates and an increased number of bands require more RF circuits to amplify, transmit and receive signals. Our differentiation and expertise in RF technology positions us well in the smart mobile devices market as we help our customers deliver cellular, Wi-Fi, Bluetooth and other RF-based solutions. To date, we have shipped more than 80 billion RF chips into the smartphone market, and GF content is present in smart phone brands that cover 85% of the smartphone market, including many top models. In addition to RF technologies, we believe we are well-positioned to deliver audio, display, optical imaging and power solutions for the smart mobile devices market. As a foundry supplier, we produce more square inches of silicon in RF front-end, audio and NFC per smartphone than any other semiconductor manufacturer in the world. 

    


Home and Industrial IoT

According to Gartner, the home and industrial IoT semiconductor market is expected to grow at 6.4% CAGR, with industrial automation markets expected to grow at 12% CAGR from 2021 to 2026, excluding memory. Our Home and Industrial IoT opportunity consists of solutions for a wide variety of applications, including factory automation, test and measurement, smart city, healthcare, transportation, connected home and others. According to Gartner, IoT applications are expected to account for approximately 23% of total annual semiconductor demand in 2026, excluding memory. Our SoC, wireless, imaging, power and audio solutions are well-suited to deliver the functionality needed to drive the next generation of home, workplace and factory automation. We believe these secular trends will continue and accelerate as the era of the intelligent edge increases in importance and overall size relative to the global economy.

Communications Infrastructure & Datacenter

According to Gartner, the communications infrastructure & datacenter market is expected to grow at 6.9% CAGR, with wireless infrastructure and enterprise networking markets expected to grow at 8% CAGR, and 12% CAGR, respectively, from 2021 to 2026, excluding memory. Our Communications Infrastructure & Datacenter opportunity consists of solutions for wired and wireless network infrastructure, datacenter applications and satellite communications. Key growth drivers include 5G wireless infrastructure deployment and continued buildout of cloud computing capabilities. We believe we are well-positioned in RF, switching, optical, compute and storage solutions for these key end markets.

Automotive
According to Gartner, the automotive semiconductor devices, ADAS applications, and EV/HEV applications markets are expected to grow at 11.5% CAGR, 22% CAGR and 24% CAGR, respectively, from 2021 to 2026, excluding memory. Many of the innovations underway in the automotive industry, such as electric and autonomous vehicles, advanced infotainment, connectivity and security, are driven by increased adoption of semiconductors in cars. Semiconductor content per vehicle is expected to increase dramatically in the coming years. Significant content increases are being driven primarily by mandates for reduced emissions, improved safety and electrification. Semiconductor devices are now an integral component of engines, batteries, dashboard displays, safety systems and infotainment. We are well-positioned in RF and wireless for connectivity and communication as well as automotive microcontrollers, power management, RADAR and LiDAR.
Personal Computing
According to Gartner, the personal computing market is expected to be nearly flat with a -0.6% CAGR from 2021 to 2026, excluding memory. Additionally, clamshell ultra-mobile devices are expected to grow at 2.4% CAGR within that same time period, excluding memory. By 2026, semiconductor devices for personal computing, such as laptops and desktops are expected to account for approximately 14% of total semiconductor demand, excluding memory. In 2020 and 2021, the volume of personal computing devices experienced strong growth, driven by work from home, remote learning and other trends related to the COVID-19 pandemic. We expect demand will continue to be sustained with the increasing use of compute in an increasing range of human activities (e.g., education and health), including in geographies that had limited access in the past.


    


Sales, Marketing and Customers
We are highly focused on helping our customers achieve success through close cooperation and collaboration. Our team of application engineers closely supports our customers to increase design productivity and optimize customer product performance and time-to-market.
The following is a summary of our significant long-term supply agreements:
 
Contract
Duration
(Years)
 
Revenue
Commitment
($ in
billions)
(1)
 
Technology
 
Core End Products
 
Customer 1        
2022-2025>$3.0
FinFET, CMOS, BCD CMOS, FDXTM, RF SOI
Various Mobile Products
     
Customer 2        
2022-2027>$2.5eNVM CMOS
NFC and UWB Secure Element, Secure Cards
     
Customer 3        
2022-2025>$1.5FinFET
Various Computing Products, Automotive Processors
     
Customer 4        
2022-2025>$1.5eNVM CMOS
Automotive MCU, Secure Cards
     
Customer 5        
2022-2025>$1.4RF SOI
Various Mobile Products
     
Customer 6        
2021-2025>$1.5FinFET, CMOS
High-End Image Sensor and DTV Processor
     
Customer 7        
2022-2026>$1.5BCD CMOS
Mobile Audio, Haptic and Power
     
Customer 8        
2022-2026>$1.0FinFET
Various Computing Products
     
Customer 9        
2022-2025>$1.0
CMOS, FDXTM
Various Mobile Products
     
Customer 10        
2022-2026>$1.0CMOS
Image Sensor Processors
     
Customer 11        
2022-2025>$0.5FinFET
Network and Connectivity Infrastructure Processors
     
Customer 12        
2022-2024>$0.5
RF SOI, SiGe, BCDLiteTM
Various Mobile Products
Customer 13        
2022-2025>$0.5SOI
Various Defense Products

 
(1)    Revenue commitment does not reflect any options customers may have to increase purchase orders pursuant to their agreements with us.

    


Manufacturing and Operations
In 2021, we shipped approximately 2.4 million 300mm equivalent semiconductor wafers. We currently operate five manufacturing sites in the following locations: Dresden, Germany; Singapore; Malta, New York; Burlington, Vermont; and East Fishkill, New York.

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Industry and Market Data
The Gartner contents described herein, (the “Gartner Content”) represent research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. (“Gartner”), and are not representations of fact. Gartner Content speaks as of its original publication date (and not as of the date hereof) and the opinions expressed in the Gartner Content are subject to change without notice.
    


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