GlobalFoundries: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Nov. 4, 2026, GlobalFoundries (NASDAQ:GFS) reported record non-IFRS (financial metrics excluding non-cash items) gross margins of 31.4% from ramping differentiated technologies in high-growth applications. The chipmaker's shifting manufacturing capacity away from lower-margin mobile devices toward optical data center connectivity and custom automotive silicon. Three things management said on the call stand out.

1. Optical Networking Acceleration Is Driving a $1 Billion Revenue Run Rate Ahead of Schedule

Data center demand for silicon photonics -- using light instead of electricity to transfer data -- isn't slowing down as artificial intelligence workloads scale. Management expects to exit 2027 at an annualized $1 billion revenue run rate in silicon photonics, pulling that milestone forward by an entire year.

To support the ramping demand for optical networking in 2028 and beyond, we plan to approximately triple our silicon photonics capacity over the course of next year.
-- Tim Breen, Chief Executive Officer

2. Capital-Light Government and Customer Partnerships Fund Factory Expansion

GlobalFoundries isn't funding its next growth phase alone. It's securing customer prepayments and government grants to scale manufacturing. A landmark partnership for its Malta, New York site uses fee structures and cost reimbursements to generate wafer profits comparable to self-funded plants without heavy upfront capital expenditures, or capex, which are funds spent on physical equipment.

The unique and innovative partnership structure allows GF to expand capacity faster without investing capital, with an economic model that is accretive to our long-range plans.
-- Tim Breen, Chief Executive Officer

3. Diversification Away From Mobile Devices Is Elevating Gross Margins

A deliberate pivot toward communications infrastructure, automotive chips, and internet of things (connected smart devices) hardware is insulating results from smartphone market volatility. Generating most sales outside mobile handsets helped the business deliver record gross margins while expanding average selling prices.

For the first time in our history, more than two-thirds of our Q3 revenue came from outside smart mobile devices, a record for GF and further evidence of our increasingly diversified and margin-accretive mix.
-- Sam Franklin, Executive Vice President and Chief Financial Officer

Looking Ahead

Optical networking demand and custom automotive chip adoption are accelerating across high-margin applications. GlobalFoundries relies on its flexible manufacturing footprint, proprietary silicon photonics, and government-backed funding structure to capture market share while tracking pricing discipline and mix optimization.

Our revenue mix continues to shift toward differentiated high-value technologies and services, while our government and customer partnerships are enabling us to make capital-efficient investments to scale and accelerate key technologies with favorable economics.
-- Sam Franklin, Executive Vice President and Chief Financial Officer

Expanding custom chip design wins positions the fab operator to capture higher value per wafer as edge computing and physical artificial intelligence scale.

We are scaling differentiated technologies into high-growth AI markets and driving meaningful customer value with our capabilities in IP, software, and custom silicon. We are transforming GF into a more diversified, more durable, and more profitable business, propelled by the defining megatrends of our time.
-- Tim Breen, Chief Executive Officer

The Motley Fool has positions in and recommends Globalfoundries. The Motley Fool has a disclosure policy.