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A Summary of

A Global Business Doesn't Mean Winners Around the Globe

by
Byrne Hobart
The Diff
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GlobalFoundries (chip manufacturer)…

  • Manufacturing location, ownership, and a focus on automotive chips means this company should be making bank.
  • But “the last six months…[saw]…an operating margin of -7%”
  • One problem is that chip makers are dependent on the “demand customers are expecting”
  • However, other main chip makers know their customers well enough to know demand better
  • The conditions in manufacturing locations can also affect talent retention and use
  • Globalization means that the number one companies have “higher scale” and less competition, which can make being a #2 company in this industry much less profitable.
  • GlobalFoundries IPO “pitch” is that it’s manufacturing locations are not “high-risk areas”
  • They will be able to get subsidies as the world moves away from oil/gas and China/Taiwan.
  • But the reality is…the high-risk areas are better at making chips

“Elsewhere”…

  • Amazon warehouses are “winning more tax breaks” to increase locations
  • The number of automotive chip orders is larger than expected demand. This may signal that some of the chip shortage, at this point in the cycle, is due to “over-ordering”
  • Turnover in retail has supplied real estate for new “15-minute grocery delivery startups” in New York
  • New government initiative has developed to “go after Federal contractors who get hacked and don’t disclose it”
  • Facebook has delayed its Instagram Kids project. This could let competitors get ahead, but also frustrate in-house talent and inspire defecting.
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