Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 5, 2026 · Beat 7 of last 7 quarters
GLOBALFOUNDRIES Inc. reported Q2 FY2026 revenue of $1.79B, a beat of 1.2% against consensus, and EPS of $0.46, a beat of 6.3%.
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GlobalFoundries' Q2 results show the optical networking layer of the AI infrastructure buildout accelerating faster than previously expected, with comms infrastructure and data center revenue up 62% year-over-year and full-year growth guidance raised to 50%–60%. The company's silicon photonics and silicon germanium platforms are directly tied to the bandwidth, signal integrity, and power efficiency requirements of next-generation AI systems, and management's capacity expansion within existing fabs suggests it can scale relatively quickly to meet demand. The $300M U.S. government award for silicon photonics and the expected $375M quantum grant also signal policy support for domestic advanced manufacturing capacity relevant to AI infrastructure.
GlobalFoundries reported Q2 FY2026 revenue of $1.786B, up 9% sequentially and 6% year-over-year, with non-IFRS gross margin of 29.9% and operating margin of 16.7%, both at or above the high end of guidance. Communications infrastructure and data center revenue grew 62% year-over-year, driven by silicon photonics and silicon germanium, and the company secured 7 new optical networking design wins in the quarter. Automotive revenue declined 13% sequentially and 10% year-over-year on customer-led shipment timing, while smart mobile devices rose 15% sequentially but fell 6% year-over-year. The company closed the acquisition of the Synopsys ARC processor IP business in June and the acquihire of the custom power team from Photon Technologies in July, and paid its first-ever quarterly dividend of $0.12 per share on July 14, 2026. Management also announced a $300M letter of intent with the U.S. Department of Commerce for silicon photonics development and referenced an expected $375M grant for quantum manufacturing capacity.
Management raised full-year 2026 communications infrastructure and data center revenue growth guidance to 50%–60% year-over-year, up from prior expectations of high 30s percentage growth, citing accelerating customer demand for silicon photonics and silicon germanium. They also raised home and industrial IoT growth guidance to 10%–15% from mid-single digits, while now expecting smart mobile devices to decline by a low teens percentage year-over-year due to memory pricing and associated shortages. For Q3 2026, the company guided revenue to $1.885B ±$25M, gross margin to approximately 30.5% ±100 bps, operating margin to 16.7% ±170 bps, and diluted EPS to $0.51 ±$0.05. Management said it expects full-year 2026 gross margin of about 30%, achieving its prior exit-rate target well before year-end, and reiterated its long-term model of 30%-plus annual growth in comms infrastructure and data center into 2027 and beyond. The company implemented pricing increases across several technology corridors that will be reflected in revenue commencing in 2027, and expects second-half 2026 quarterly operating expenses consistent with Q3 guidance as it accelerates R&D investments in AI data center, physical AI, quantum computing, and advanced packaging. CapEx for 2026 is expected at the higher end of the 15%–20% range, and full-year adjusted free cash flow margin is expected at approximately 10%.
“Given the accelerating demand outlook from our customers, we now expect to achieve full year 2026 revenue growth in the range of 50% to 60% for our communications infrastructure and data center end market, up from our prior expectations of high 30s percentage year-over-year growth, which we believe is an early indication of the long-term growth opportunities ahead for GF in this end market.”
on Raised CID Guidance
“Demand for SiGe remains strong, and we are oversubscribed throughout 2027. We are actively expanding capacity in our Vermont facility to support this demand.”
on SiGe Capacity
“Just to give you a sense, if we think of our long-term plan, just take for Photonics, we could 10x our photonics capacity within our current 4 walls plan on a global basis. And so we have a lot of flexibility about when we do that based on the demand and the partnerships we have with customers.”
on Photonics Capacity Expansion
Can you help us with the timing and magnitude of the comms data center capacity expansion, and how does the $300 million CHIPS Act grant for silicon photonics help defray net CapEx?
Tim Breen said demand is strengthening across data center applications, particularly optical networking, and GF will add capacity within its existing fab footprint, which allows relatively quick ramping. He said confidence in bringing that capacity online and driving factory-level productivity improvements contributed to raising the full-year CID outlook. On the $300M award, he said it supports continuous PIC innovation, new materials like barium titanate and thin film lithium niobate, and packaging for near and co-packaged optics, accelerating innovation in the U.S.
What changed in the last three months that materially raised the silicon photonics outlook, and how do your PIC solutions compare to competing foundries?
Tim Breen said customer meetings consistently focus on doing more and going faster, and GF validates demand throughout the ecosystem including with hyperscalers. He said the company will increase investments in photonics capacity and that factories are being challenged to produce more wafers weekly, with strong conviction that growth targets for end of 2028 and through 2030 are on track or potentially ahead.
Based on design wins, how do you see comms infrastructure and data center growth into calendar 2027, and how should we think about incremental gross margins from mix, pricing, and utilization?
Sam Franklin said the long-term model of 30%-plus year-over-year growth into 2027 and beyond still stands, with the 'plus' tied to stronger demand and capacity expansion. On margins, he said mix remains the single biggest driver and is still in early innings, with CapEx at the higher end of the 15%–20% range, about 10 points of utilization headroom, and continued structural cost improvements supporting the path to a 40% exit run rate in the 2028 timeframe.