Semiconductor capacity expansion needs trillions of dollars in investment - GlobalFoundries CEO
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GlobalFoundries CEO Thomas Caulfield said Thursday that the semiconductor sector will require "trillions of dollars" of investment to reach a point where it can meet global demand.
Speaking to CNBC, the head of GlobalFoundries (NASDAQ:GFS) also predicted that the computer chip industry will double in size over the next eight to 10 years.
Caulfield added that this rapid expansion will happen "independent of some of the macro issues we're seeing right now," such as supply chain bottlenecks. The GFS CEO believes these problems will "settle down" eventually.
As part of the build-out of additional production in the industry, Caulfield reported that GlobalFoundries (GFS) is expanding manufacturing capacity in the U.S., Singapore and Germany, which will allow the company to increase its output by 60% from its 2020 mark to the level it expects in 2024.
While the company already has orders to match its total production capacity for the next two years, Caulfield acknowledged that there has been some softening of demand in parts of the technology space, such as PCs and low-end handsets. He noted that GFS has low exposure to these markets.
Caulfield stressed that demand for chips already outstripped supply by about 20%, which creates a "shock absorber" if the desire for the firm's products dips.
"If we do see some softening, it allows us to better meet the demand our customers have placed on us," he said.
GFS came public last year and has seen bumpy trading early in its career on Wall Street. Shares reached a high of $79.49 in late March but have since lost significant ground. The stock is now trading below $46, hovering near its lowest close as a public company.
The recent slide in GFS is part of a general downturn in the semiconductor sector, as the tech industry has been hit hard during the selling that has shaken Wall Street in 2022. So far this year, NVIDIA (NVDA) and AMD (AMD) have dropped more than 40%. Intel (INTC) has shown a year-to-date retreat of about 30%.

For more on GFS's place in the current market, see why Seeking Alpha contributor Chetan Woodun says the company is "profiting from the supply crunch" in chips.