The federal government is preparing to cash out a chunk of its stake in GlobalFoundries (GFS). A new filing shows Washington plans to sell as many as 9.9 million shares of the semiconductor firm, months after agreeing to take an equity position in the company.
For investors watching GFS stock, the move raises questions about what comes next, even as GlobalFoundries lands new government-backed deals in quantum computing and silicon photonics. Here is what the filing means, and why the government owned shares of GlobalFoundries stock in the first place.
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www.barchart.com Why the Government Owns GlobalFoundries Stock
The U.S. Department of Commerce has filed a registration statement to sell up to 9,907,399 ordinary shares of GlobalFoundries, according to a regulatory filing. The Commerce Department is listed as the selling shareholder, but it may also assign or transfer shares to third parties who would in turn become selling shareholders. The price and exact number of shares sold in any offering will reportedly be spelled out later. Notably, GlobalFoundries will not receive any proceeds from this sale.
The government's stake traces back to a deal announced in late July. Specifically, GlobalFoundries signed a letter of intent with the Commerce Department for a $300 million award to speed up research and development in silicon photonics, technology that moves data using light instead of electrical signals.
As part of the agreement, the Commerce Department received equity in GlobalFoundries representing about 1% ownership at the time, according to a statement. The idea, as Commerce Secretary Howard Lutnick put it, was to let "the American public […] share in GF's growth."
That equity stake sits inside a broader push by Washington to fund domestic chip manufacturing. The silicon photonics award followed the government's involvement through the CHIPS program, which has steered billions of dollars toward rebuilding chip production in the United States.
Even as the government moves to sell part of its stake, it has continued to back GlobalFoundries with fresh money elsewhere. On Sept. 8, GlobalFoundries announced that it had finalized a separate agreement with the Commerce Department's CHIPS Research and Development Office for up to $375 million to accelerate its Quantum Technology Solutions (QTS) business. The funding is tied to milestones and spread over five years.
Nicholas Sergeant, Vice President and Head of Quantum Technology Solutions at GlobalFoundries, stated that the award builds on growing engagement with customers and partners who rely on the company's research and manufacturing expertise to scale quantum-chip production.
The quantum award follows the same playbook as the photonics deal. Both aim to build manufacturing capacity for technologies considered critical to future artificial intelligence (AI) infrastructure and national security.
What GlobalFoundries' CEO Says About Growth
GlobalFoundries CEO Tim Breen has been laying out an aggressive growth plan built around AI data centers, so-called physical AI in robotics and industrial equipment, and what he calls resilient global supply chains.
Speaking at the Goldman Sachs Communacopia and Technology Conference on Sept. 8, Breen said the company is currently in a supply-constrained environment. In other words, customer demand already exceeds what GlobalFoundries can produce. Breen also pointed to government partnerships as a growth driver, noting that programs allowing the company to accelerate capital spending at strong recovery rates were not available in past investment cycles.
On the quantum business specifically, the CEO said the industry's bottleneck is not quantum science itself but high-volume manufacturing. He said GlobalFoundries brings advanced packaging and specialized chip-process capabilities that quantum computing companies need to scale from lab prototypes to commercial production.
What's Next for GFS Stock?
Overall, GlobalFoundries stock has a consensus “Moderate Buy” rating on Wall Street. Out of the 22 analysts covering GFS stock, 10 recommend a “Strong Buy” rating, two recommend a “Moderate Buy” rating, nine recommend a “Hold” rating, and one recommends a “Moderate Sell.” The average price target of $77.48 points to potential upside of 65% from current levels.
For now, the size and timing of the GFS share sale remain unclear. The filing only sets up the framework for a sale, and the terms will come later in prospectus supplements. Investors tracking GFS stock will likely watch two things going forward: How the government structures the actual sale, and whether GlobalFoundries continues landing new government-backed awards tied to its quantum and photonics roadmap.
www.barchart.com On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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