We Are Live: Talking Qualcomm, Intel, Nokia, Kyndryl, Cisco, Lattice & GlobalFoundries – The Six Five Webcast
On this week’s episode of The Six Five, hosts Daniel Newman and Patrick Moorhead get together to discuss:
- Qualcomm X75 and X35 Modem Announcements
- Intel Xeon Workstation Chip Announcement
- Nokia & Kyndryl Tie-Up
- Cisco Earnings
- Lattice Earnings
- GlobalFoundries Earnings
For a deeper look into each topic, please click on the links above. Be sure to subscribe to The Six Five Webcast so you never miss an episode.
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Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.
Patrick Moorhead: Hi, this is Pat Moorhead and we are here for another Six Five podcast, my favorite thing to do during the week, although I do do other podcasts. I think, Dan, you and I did I think six or seven this week already in Miami. How you doing buddy?
Daniel Newman: Hey, good morning. It’s great to be back. Six Five is live because it’s Friday and we do this live. If you’re watching it live, thanks for tuning in. If you’re not watching it live. Well, thanks for watching it later. Yeah, we did six. I think I did like 12 or 13 this week.
Patrick Moorhead: That’s crazy. That’s great.
Daniel Newman: A banger week. By the way, I like your new background. I like that. What is that super tall skyscraper behind you? I’m trying to map this out.
Patrick Moorhead: That was the new Meta building that’s no longer the Meta building that they’re subleasing, but it’s going to be the tallest building in Austin. I think it’s 60 some stories. I’m in my son’s room, you can see gaming chair ready to go. But thought I’d flex on the view a little bit. I mean, I got to show off something. You’re living downtown. I mean you’ve got increased crime, homeless, I mean, but it is beautiful at times.
Hey, if it’s the first time you’ve been on the Six Five, first of all, I’ll ask like where have you been living under a rock? No, we cover six topics, five to 10 minutes each. A lot of tech analysis and a little bit of news sprinkled in there. We do talk about publicly traded companies as well, and in fact we’re talking about three companies’ earnings this week. But don’t take any of this as investment advice. Go for a professional. Let’s jump in, audience. We have an amazing week of topics. We’re talking Intel Xeon workstations. We’re talking Qualcomm modem announcements. Nokia and Kyndryl are tying up, strategic alliance for wireless. We have Cisco earnings, Lattice earnings, and GlobalFoundries earnings. Let’s jump in. Let’s hit the Qualcomm X75 and X35. I am calling your number, Daniel Newman.
Daniel Newman: Yeah. Qualcomm has had a very, very successful run of unquestionably leading at the premium tier. However, one of the opportunity areas, or you could call it a challenge if you want to be more frank about it for the company, has been playing and competing in that sort of mid-range space, competing along the likes of, say, media tech. Though, Qualcomm said…well, they didn’t just say. This week, they basically made some announcements of its newest X seven series, 75, and goes along with its X72 5G modem RF system, basically focused on 5G millimeter wave sub six includes the satellite feature, which is pretty cool. I did a pod with the GM, Durga Melodi on that particular topic. But incorporating a lot of those kind of advanced features, it’s got not only 5G advanced, but it’s got the tensor accelerator for 5G. It’s got the AI processing power.
And in the end what it really came down to was Qualcomm wanted to come out with a product that says, “Hey, across the line, its massive line of partnerships of the US, the global OEMs across China,” it says, “We want to be able to make sure that Qualcomm modems and Qualcomm systems are inside all or as many of the different designs as possible,” and so for the company, I fundamentally believe this was a, we want to clearly define that we have the top premium tier and now we’re going to go for the rest of it. This isn’t a new series. They’ve had a seven series. It just hasn’t necessarily been feature-rich enough to displace some of the media tech based devices in that mid-range tier. I think that’s really what they’re coming after here. Stronger performance, a lot of weight here going into AI.
Of course, Pat, you talk a little bit at times about Skyworks and Qorvo, but one thing that Qualcomm has done extremely well is their 5G RF modem and systems. This is something that I believe they’re really leaning into as they’re sort of selling this story, is effectively you’re getting near ultra premium experiences, and they’re enabling them for the tier down. And so Pat, while I’d love to kind of ramble on about it, for me, it’s a pretty straightforward shot of news here. It’s a good move for the company. There’s a lot of markets share there, especially outside of the USA, where there’s a lot more sales of these mid, mid-range, and lower tier smart devices from companies like Samsung, OPPO, Xiaomi, and others. I think this will be a successful product for Qualcomm to continue to expand its market share.
Patrick Moorhead: Yeah, I mean, this is essentially Qualcomm flexing, particularly on the modem side, essentially saying, “Hey, no one can match us on modem.” If you need the best, you have to take Qualcomm. Qualcomm has made an incredible business about that. Couple quick features. Obviously it supports release 16, release 17, but it’s also ready for 5G advanced, which is revision 18.
Some pretty cool use cases are doing an AI on the modem RF combination leveraging tensor acceleration, which is pretty cool. The other thing is the first converge millimeter wave subs transceiver architecture, essentially means one chip for that. That means lower PCBs, typically means lower power and less hassle for the ODMs and OEMs. I can’t help but to think, Apple, how do you compete with this? Apple’s been working on a 5G modem for I think four years, going on five years. Where is this thing? You would’ve expected it to pop up in at least the iPad because it’s a little bit easier on devices that don’t have voice. You have to deal with less complexity. But where is this thing? Here we have 5G advanced coming up. Are Apple’s modems going to have this special feature and support for release 18? I have no idea.
In the X35, just kind of caboose-ing on you, called NR Light, which is red cap, which is in release 17, and how it goes into these IOT use cases that require lower power, and quite frankly, don’t all require a millimeter wave. Millimeter wave is important in elements like the industrial IOT when it comes to performance and latency. But when you think about, let’s say, 50,000 sensors on a pipeline, it’s not necessarily about having the lowest latency. It’s about having the lowest power with a sufficient amount of performance.
As for folks like Qorvo and Skyworks, I think in particular Skyworks has shown its ability to work and solve problems, particularly for Apple related to its RF working with Qualcomm’s subsystem. I’m interested to see what the company aligns on the RF side with the new X75.
Daniel Newman: That’s a good call out too, by the way, on the X35. I missed that, but the company’s leaning big time into the IOT space and so having those specific solutions deserve their own call.
Patrick Moorhead: Yeah, totally. Hey, let’s move to the next chip chippery. Intel announced a new workstation chip. And I guess the first thing I’ll say is get a little context is workstations are used for design. They’re used by programmers. A lot of 3D magic that you see pretty much everywhere is driven by a workstation. Workstation market also has certified software, right? Let’s say like DeSo or something like that, that it’s not like a PC market, where everything isn’t expected to run. These are so intertwined into the hardware that they have to be certified.
I think the big news here is this was the latest version of Xeon getting integrated into the workstation line. Every company has choices. Processor companies have choices on how they can attack the market, and Intel really has a dual-pronged approach, which is hit it with a Xeon type of architecture for the highest performance, the highest bandwidth, and then hit it with core architecture more likely on workloads that aren’t certified and don’t need the massive amount of IO, RDEM, ECC memory, and things like that.
I think the biggest differentiator about these new platforms is really IO. I mean, and a gigantic amount of L3 cache, which really helps to get optimal performance for those highest performance workloads. I think in this case less on core count because quite frankly I think AMD, and for that matter, Ampere, will bring more cores, but I think this is about IO and bandwidth. What I’m super interested to see is how some of Intel’s integrated AI features like AMX and bfloat16 by a deep learning boost get used by ISVs out there. Because this is an area, as we both know, whether it’s on chip or off chip AI, as long as it’s integrated into the…closely coupled into the processor can really do some great stuff.
Daniel Newman: You hit a lot of it, Pat. TI guess there’s two things Intel’s competing with. Intel’s competing with the other names you mentioned, the AMDs and Amperes, but they’re also competing with themselves, and by themselves, it’s like every generation needs to show meaningful improvements and be driving reasons to their customers to upgrade their workstations. You know? Right now you’re battling cycles, you’re battling companies that are slowing down their purchasing cycles. You’re battling companies that are hiring less people, less programmers, less developers. Having said that, a lot of those key functions and companies continue to be important, despite other maybe lesser important, and roles that are harder to define being minimized and bigger companies. So developers still have a big role to play. I think I, it’s worth double clicking on what you said about the accelerator strategy because that is a big part of the AI story. You know?
You’re seeing a continuum of AI on chip to AI through software and Intel’s really leaning into software here. Seeing how that actually drives better performance from the workstations is going to be something that the market’s going to want to keep its eye on. Of course, its users. As workstations aren’t quite gaming, but there is a bit of a cult of these kinds of devices where you want the people using them to swear by them and to become my workstation is better than your workstation types. It’s just what’s going on. You know?
The specs look promising. The biggest thing I noticed though is the significant generation to generation improvement, which is what the company’s really touting. Not to say they’re not going to want to compete with AMD and others, but the real guesstimate for me is that people who are already running on Intel workstations will carry over and be looking for their next Intel workstation. Not sure if there’s enough here to get the brand switch to drive a switch from one brand to another. Of course, that’s what all the companies are doing is fighting for market share.
The last thing of course, when I say competing with itself, it’s got an aggressive timeline here, Pat. It’s saying pre-order February 15th and availability beginning in March. I promise you everybody in the world is going to be looking to see if those things start shipping in March cause that’s what Intel’s up against. But promising incremental improvements here.
Patrick Moorhead: Yeah. You know? AMD has done a really good job with its Thread Ripper Pro and that’s what this aligns with. And Thread Ripper Pro is based on a server part as well. And in fact, when I was at AMD, we came out with the first server-based workstation part called the Athlon FX and it’s kind of been a staple the whole time. But hey, let’s move from chip, chip, chippery into some news that I think is coming out right before Mobile World Congress and that is a tie-up between Nokia and Kyndryl. What is a carrier equipment company and a service provider up to here?
Daniel Newman: Yeah, so we’ll link the press release in the bottom, because you know you and I, we try to not be so much news, try to be a lot of analysis. But yeah, it is a good question. Why would a large IT infrastructure service provider and a state-of-the-art leader as Nokia calls itself in networking technology at a three-year extension and expansion. So this is not a new tie-up. This is an expansion to an existing tie-up to basically focus on delivering the 5G and LTE private wireless experiences in industry 4.0 to their customers worldwide. And so interestingly enough, Kyndryl often doesn’t get enough credit, because we sometimes give them a bit of a hard time as the company that was slowing the growth of IBM. But the company did serve a very important purpose and they do some very specialized kinds of systems integration and service providers.
We all know that there are these applications, Pat, for, gosh…last two or three years we’ve been talking private LTE. We’ve been talking about whether that’s shipyards or large manufacturing warehouses and big metal buildings and high rises that having private networks and advanced LTE available is going to be critical, especially when you have large systems, robotics, manufacturing lines, plants, large distributions, and logistics centers. And so having the technology, the core technology, coupled with the companies that know how to design service and in implement is going to be critical.
Kyndryl has a big footprint. You know? This isn’t a new alliance by the way. It was actually, I believe it was announced around MWC last year, so it’s not something that’s been out for a long time, but they’ve got track record here, Pat. They’ve got a hundred engagements that they’re doing with enterprises around the world. They’re doing implementations in 24 countries and they have been able to start to give some customer references, which is always important in terms of how they’re helping to solve these private wireless challenges.
They got Dow Chemical, which is a huge industrial company in the US, that actually did partner, building out their private network for audio services, video, real time stream processing. And so this is a sensible tie-up, Pat. One of the things to note, and I think it is really important is this really is a tie-up that focuses on industry. It is very industrially focused, meaning big companies have been talking about this industry four transition for years. Industry four requires a robust and reliable connectivity system. And traditional wifi networks, traditional mobile networks do not cut the mustard. Basically what Nokia…cut mustard? Is that even a thing?
Patrick Moorhead: I don’t know. You just invented it, so it’s a thing now.
Daniel Newman: Have you heard that before or did that come out of my childhood? Anyway, these particular tie-ups are really important to giving the robust and needed connectivity for these industrial environments to actually be able to execute on the promise of industry 4.0, which by the way, unlike private 5G and LTE, we’ve been talking about Industry 4.0 for like a decade. So this is not new. These is really tactical, functional, and how companies are going to move forward in these more industrial, hardened environments.
Patrick Moorhead: So I want to focus not on the it’s not new. What I appreciate most of all is they gave details about it. A lot of strategic alignments come out there and there’s absolutely no example. And what I appreciated was that the two companies talked about what they’re doing for Dow Chemical at a petrochemical processing plant in our beautiful state of Texas in Freeport. They’re essentially leveraging connectivity solutions from the two companies for worker safety, remote audio and video collab, and real time smart chemical facility procedures. That was the element of reality that I appreciated of this, first of all. And you know, this is also by the way, I think a nice mark. North American president of Nokia, Sean McCarthy, came in and it’s nice to see the increased outbound communication and the proof points and case studies that are going on. I’m sure he had a hand in this as well.
I had a chance last month to talk to Kyndryl chairman and CEO Martin Schroeder about what the company is doing and what his strategy is. And Kyndryl is definitely hitting in the right growth elements. There is a carrier telco transition that’s going on from fixed function, eight different architectures, to virtualized solutions out there, essentially converting themselves into mini hyper-scaler data centers. And then you add that to all the action on the edge where all the data is being created and where all the transactions are actually happening and the need to have a more intelligent network for the industrial IOT. I’m pretty excited about this tie-up and I’m going to be actually talking to both companies today to get even more information.
Hey, let’s move to earnings time. Dan, I know you love, love earnings, but man, Cisco. Pretty fricking rocking about how they did. First of all, I always like to net it out. Beat, beat, raise. Right? And it doesn’t get any better than that. And the great part about the beat…that the beats were in line with what it had done the previous three quarters. So it wasn’t some declining beat. Okay? And I do give credit for that. And you know what’s funny? During the pandemic, if you remember, Cisco CEO, Chuck Robbins, always talking about durable demand. Right? And that was the big question, is were people double ordering after the pandemic? Were they going to keep those orders in? And you know what? Here we go. I mean second-highest revenue quarter ever, record net income, record EPS, record cash. I was asked by a couple journalists and folks in investment industry, “Hey, do you think this forecast, this raise, is durable?” And all I have to do is look at that $32 billion in RPOs, which indicates to me a super heavy backlog.
This was really about networks. Okay? Networks were rocking it up 14% really driven by Catalyst 9K and 8K. Mass infrastructure was down a little bit. Collab was way down. By the way, collab being way down, totally get it right. People are going back to work. I wouldn’t expect it to be a barn burner. Tough comparisons as well to previous quarters when we were all locked inside.
I do want to talk a little bit about software though, right? Software revenue and software revenue subscriptions were both up double-digit, which I think too many people forget and lump in Cisco as just an infrastructure company. But when you look at the type of software they have, like security and observability, these are cutting edge capabilities that work in the hybrid multi-cloud. You know? I can’t shut up about fabrics in the hybrid multi-cloud, but that is the future. Whether it’s Cloudera for data fabric, Cisco, maybe for networking fabric, or maybe VMware for that. And then you’ve got the fabrics for application with the VMwares and the Red Hats. But the company has a good future and I love to see this durable demand. People are still buying, Dan. And we should all be pretty excited about that.
Daniel Newman: Yeah, I agree with you, Pat. I was worried. I’m not going to lie. I was worried heading into earnings on how the OEMs would do. We kind of keep hearing about the slowdown, we keep hearing about the recession, we keep hearing about how tech is going to get hammered. But then I remembered I’d already called this and I was like, “Wow, I’m really smart.” No. Well yes. But I already said what’s old is new. And I know that’s not popular, but I went on Market Watch six months ago. I called out exactly companies like Cisco, HPE, Dell…infrastructure, not PC.
Patrick Moorhead: Victory Lap. You know? We need a-
Daniel Newman: –parts of the business–
Patrick Moorhead: —button.
Daniel Newman: I said that, to be clear, because companies are going to be doubling down on existing infrastructure. They’re going to be sharpening it up. They’re going to be prepping it for utilization. They’re going to be increasing things like data transport, analytics tools. They’re going to be trying to maximize software investments. They want to implement AI tools. You can’t do it without a backbone. All this stuff requires data to be moved around. Guess what moves data around? You need networking.
Patrick Moorhead: Yes.
Daniel Newman: Guess who does networking? Cisco. And so sometimes you just got to kind of step back from the pundits and go…if you can’t discern the fact that a slowdown in PC sales and a slowdown in infrastructure are not interdependent, there is no dependency between these two things. While companies are going to be busy slowing down maybe subscriptions to SaaS services and maybe buying less PCs and not as many mobile devices, but they’re not going to be slowing down. It’s figuring out ways to implement the data that their companies have meaningfully to get better outputs.
Pat, you and I spent some time over at Cloudera this week talking to them, and one of the things I think that companies like Cisco are going to be really leaning into is the data layer, and even getting into more data tools. Cisco has already shown some of their ambition there. Big observability moves within the company, what they’re doing, ThousandEyes and AppD. Of course they almost bought Splunk. If it says something about where they’re directionally heading, and don’t get me wrong, that was very close to happening.
You look across the business and you go, it’s really, really healthy. You’ve called out the backlog. That was a great call. It was good to see, by the way, that if you’re kind of looking at the recessionary impacts, well, you know what? They’ve grown. They grew in every region, and in fact, in the US they grew the fastest. So that’s another good indicator. We are seeing strength across most of the business units. Probably the one thing that continues to worry me a little bit is the collaboration slowdown. Mostly it only worries me because Cisco’s collab never really saw the boost the others saw. It was always a more steady sort of process throughout the-
Patrick Moorhead: It is the market share leader though.
Daniel Newman: What’s that?
Patrick Moorhead: It is the market share leader for enterprise. Maybe the-
Daniel Newman: And people look at that, by the way. I want to be very clear, they have a huge collaboration business, but there is a big chunk of that that’s enterprise calling and contact center. What I’m saying is you’re kind of trying to weigh Teams, Zoom, and everyone’s doing a little different thing. It’s kind of like all the companies calling out their cloud market share, but putting different things into their cloud numbers.
The parts of the business, and I guess I’ll leave it here, besides networking, is I love Cisco as a security play. I absolutely love the company. I love security right now. I think this is an area that’s going to continue to grow and expand. Companies cannot look away from security. You can’t look away from networking because you can’t do any of the stuff with data. But you also need to secure your perimeters.
You need to secure your edges, you need to secure your devices, and you need to do it at the infrastructure level and then you’re going to need to do it all the way out. Cisco has a pretty significant portfolio to handle that. I also like their direction in software. It’s been steady, single digit, usually high single digit growth. But that part of the business was kind of criticized for a long time. Is there enough software and ARR opportunity? And those numbers have continued to steadily go up. So it’s a little bit of a love fest here, Pat. It’s a little bit of a love fest, but-
Patrick Moorhead: I mean you got to call it, man. I mean, I don’t feel bad because-
Daniel Newman: Cisco deserves it. They deserve it.
Patrick Moorhead: Yeah, exactly.
Daniel Newman: This time…sometimes we got to be tough love and this time it’s just straight up hugs and love. You know? The good stuff.
Patrick Moorhead: Yeah. Hey, let’s move to another success story here from an earnings point of view. And that is Lattice. Dan, what does Mr. Jim Anderson have to say here?
Daniel Newman: Pat, this is another slam dunk. Just a great, great, great result. Look, the company overall just had a tremendously strong year and not just a strong year in this quarter. They had a strong overall full year of performance, which they were able to announce with this particular set of earnings. Q4, they showed nice growth. I think it was, Pat, you said this in the last one. Beat, beat, raise. Beat, beat raise. This was a beat, beat, and a raise. You know? The company had growth in every area outside of its consumer business and it had some really strong growth in a number of its areas. I believe for Q4, 40% comms, it was down significantly there. They had IOT, automotive, manufacturing, all saw significant upside. As we’ve said over the last few quarters, Pat, the company’s probably going to have the most limitation in the consumer, but I was so…you got to be really positive about Lattice because that’s a really small percentage of its business.
You also have to be really excited about the company’s roadmap because the roadmap…with what they’re doing with Nexus, the next generation, and then heading into Avant is driving their business into the middle of the market. So they were kind of always at that entry point of the market and now they’re driving up market. And when I talk to their executives, and I think you and I both do each quarter around earnings time, the thing that comes to the attention is where do they get their growth from? You know? They had that kind of captive audience. Well, they saw their TAM jump from, was it three to 6 billion with the launch of Avant? You have a company now that’s growing in the mid 20 percentage against a tough macro. They’re taking market share, they’re launching new products, they’re diversifying into markets that essentially are more recession resistant than the consumer space. You know?
You got ORAN, you got Factory, you’ve got cybersecurity, you’ve got low power for edge and vision applications. I’m really liking the company. And the other thing, Pat, is…and again I’m doing some of the numbers on memory here, but they’re expanding margin, which means they’re doing all this while actually improving the profitability of the company. This goes 100% against all the macro and all the factors that we’re hearing from chip-makers. But the bottom line is, and I’ve used this quote a few times, they have a really captive market at the low end and they’re market taking up the stack. They’ve got strong commitments for their Avant line. I see their numbers, Pat, and I just like, there’s not very much to criticize here. And by the way, I’m okay with that.
Patrick Moorhead: Yeah, I’m talking about love fest, man.
Daniel Newman: Dude, I was scanning my notes trying to find what I’m not happy about because I know looking for…what did I not like about the result? And frankly, there isn’t much. I mean even their guide was incredibly bullish right now. So I mean, I don’t know what to say.
Patrick Moorhead: But listen, what I love is they show 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 quarters in most of their crawl charts. Revenue dollars, gross margin percent, operating profit percent, earnings per share, it’s all up. It is funny. I’d love to be able to criticize, find something on here, but it is tough. Dan, we always joke about you pretty much sucking the oxygen or one of us sucking the oxygen out of a conversation. You pretty much hit everything out there.
Daniel Newman: Sorry about that. I was goobering. And by the way, I did it all from memory.
Patrick Moorhead: Stock’s up 10%. Would you like your medal now or later?
Daniel Newman: No, I just lost my notes. So usually I have something in front of me. I had to do this all from-
Patrick Moorhead: Look at you. I’m very impressed. Yeah, I left my memory on the table when the internet was created in the browser, so I don’t remember any of this stuff. So, great 12. I mean, 12 quarters of greatness at least. They haven’t even hit Avant yet, which doubles their SAM, and they’ll have a lot of room. Dan, you and I, we research AI a lot at multiple places in the data center, but also in the edge. You know? Imagine when you can attach generative AI in the cloud, generative AI, or standard machine learning on the edge. I think it’s just going to be absolutely crazy. One of the things that Lattice has done is they’ve invested so much into certain software stacks, you know, talked about ORAN, talk about machine learning, and the industrial IOT. Heck, they’re in PCs now to improve the experience of the built-in camera into notebooks for companies like Lenovo.
Let’s move forward, I think we’ve squeezed this for about all we can. Let’s move on to the next chip earnings. And that is GlobalFoundries. You know how it is, Dan. I mean, they crushed it. Good guide, beat revenue by 1.38%. They beat expectations on EPS by almost 9%. Pretty giant showing here. Increased revenue by 23%. By the way, this is a great explanation. I explained this to the folks on CNBC Asia last night out of Singapore. I was talking about applied materials and it’s really easy to get sucked into, look at the memory market or storage market collapsing and saying, “Hey, the chip market’s down,” or looking at NVIDIA or Intel’s showing and feeling like that’s the entire market. That’s just not the case, right? We saw from Lattice, and I think what we’re seeing in certain areas, areas like communications and infrastructure. We talked about Kyndryl and Nokia. Automotive and the industrial IOT are all banging.
Yes, smartphones are down. PCs are down fricking big time. Right? But there are certain areas that keep on moving. Heck, all that Cisco networking gear, guess what? Full of chips. Global. Getting back to GlobalFoundries, they are a reflection of many of these growth markets. Where do they grow the most year over year? Big growth in communications and infrastructure. Automotive and industrial designs with smaller declines in what they call smart mobile devices. I was thinking, wait a second, why aren’t they getting hammered in smartphone? It’s not just smartphones. It’s smart devices. And what GlobalFoundries does is they do a lot of the RF that’s behind a communication system. And oh, by the way, that’s a market that didn’t go down like the smartphone market. People shouldn’t confuse smartphones with GlobalFoundries smart mobile devices.
Probably one of the biggest announcements of the quarter, Dan, I think you and I, we may have written about it. I know we tweeted about it, was a tie-up with GM. Car companies used to not have direct relationships with chip-makers or the foundries that they were fabbed in. I think we’ve seen car companies not able to ship a $75,000 car because you can’t get a $1 analog part. And these car companies are wising up. And the latest one is GM who did a long-term agreement to secure capacity in, hey, New York Fab, in upstate New York. First of a kind agreement, which brings some heat here to the US. Hey, good for the country, good for the economy, good for GlobalFoundries.
Daniel Newman: Yeah, it was a strong quarter pat and a very, very good news moment for GlobalFoundries to be able to make that announcement. Having had the chance to speak with them last week ahead of the news, I immediately said they’re, they’re really taking advantage. We did this show last week. Click into our last show if you want our full dive on the GM news. But I basically said it’s in this perfect moment, this perfect inflection for companies to really stand up and say, “Hey, we’re manufacturing here in the US.”
In terms of its earnings, 23% year-on-year, that’s very good. But maybe more importantly, record gross margin and record net income in a market environment that we are in right now, that matters maybe more than revenue. I think a lot of times, for companies that are more established companies, people are looking for, can they put off cash flow? So FCF is the word of the day, are you creating free cash flow? People care about that. You know? The company continues to be ambitious beyond what it’s doing. I believe it made an acquisition of a part of Renesas. Is that how you say it? Renesas on their non-volatile resistive RAM technology. And that’s going to help them in what they’re doing in IOT.
Patrick Moorhead: R-RAM, baby. That’s right.
Daniel Newman: And then they also did get some funding. Not a big deal, but it was announced as part of their earnings release related to advanced innovation and production of Next Generation, GaN Chips, in Vermont. Another place that GlobalFoundries is manufacturing. So well-diversified set of revenues, Pat. I mean you look across end markets, they have six. They are heavily tied to smart mobile, but they are also one of those companies that is manufacturing those really hard. When you and I make references to those 38 cent chips that nobody could get that was stopping entire…I mean they’re part of that edge of the process process. You know? GlobalFoundries has a really important role to play and the company continues to show strong results, making the right partnerships, playing in the right market spaces, and doing well. Again, this week’s Lattice and GlobalFoundries, while semis have been a little bit under pressure, these companies seem to be…what did Jay-Z say? They’re brushing the dirt off their shoulder and they’re just getting on with it.
Patrick Moorhead: Good stuff, man. I thought I stole the oxygen. And…
Daniel Newman: How about cultural references, Pat?
Patrick Moorhead: Oh, I mean, listen, you’re a cultural dude. I mean you’ve got your-
Daniel Newman: A couple more episodes and I’m going to be Seth McFarland and this is going to be the Family Guy.
Patrick Moorhead: All right Dan. You’re a funny guy. Good show. Had a lot of fun. Literally my favorite hour of the week. Regardless of what happened, things that happened, actually pretty good week though. I mean, Miami was good. We did a sales kickoff at Cloudera, cranked out some videos, did some advisory work with the C team there. It was good. Good day. I don’t think we stepped. I didn’t actually see the beach once. That’s okay. We were on the couch.
Daniel Newman: Were we on the beach? I don’t even know. Were we near the beach?
Patrick Moorhead: I think we were. I think we were.
Daniel Newman: I think our room was looking at a parking lot.
Patrick Moorhead: Oh, oh. My room was definitely looking at a parking lot. But if you hover over on Google Maps, the hotel was actually on the beach. Anyways, Dan, fun stuff. What’s coming up? I mean, I am getting ready to pack to get on the road for Mobile World Congress. I will officially say it’s the least favorite show of mine, not because I don’t love Spain, but just because it’s so hard to get around, because ultimately somebody goes on strike, whether it’s the rail strike, taxi cabs, Uber? Nope. Bus. Yeah, sometimes they go on strike too. Getting in and out of there from the Fiera to the hotel. Now what I did, my cheat code is my hotel is a block away from the Fiera and we’re going to see how that works out. As long as I can get my ham and cheese and red wine, I’m going to be happy as a clam.
Daniel Newman: I look forward to seeing you there buddy. What are we doing? 19 videos and a whole lot of moving?
Patrick Moorhead: I think so. No, it’s great. Yeah, the Six Five is going to be there. Dan and Pat show. And I’m excited to do these. I mean, a lot of good customer videos and interviews that we’re going to be doing. That’s I’m the most excited about.
Daniel Newman: Well, I’m really looking forward to it too. And by the way, I think we have a summit coming up too.
Patrick Moorhead: We do. That little summit. Fourth annual summit coming up. Since you’re the memory guy. What day is it in June? Do you remember?
Daniel Newman: June seven to nine?
Patrick Moorhead: Yeah.
Daniel Newman: Like that. Is that right?
Patrick Moorhead: I think it is. Yeah. We’d love for you to tune in and if you are a technology vendor out there, we would love to have you. So yeah, June 8th. There we go. Thank you.
Daniel Newman: …email from Connor Kenyon from the beach.
Patrick Moorhead: I know, I know.
Daniel Newman: …a sales overlord.
Patrick Moorhead: Exactly.
Daniel Newman: And a beach front extraordinaire.
Patrick Moorhead: Yeah. Hey, so we want to thank everybody for tuning in. Hope you liked the show. If you have any complaints, you knew where to find Daniel. If you love the show, you knew where to find me on social, but we really do appreciate you. If you like what you heard or what you saw, or both, hit that subscribe button, we’d love to chat with you every week. So have a super week. Stay warm. We really appreciate you. Take care.
Daniel Newman is the Chief Analyst of Futurum Research and the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio