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GlobalFoundries Projects Weak First Quarter Amid Tariff Concerns and Smartphone Market Weakness

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GlobalFoundries, the contract chipmaker based in Malta, New York, issued a bleak forecast for its first-quarter revenue and profit, citing the potential impact of U.S. President Donald Trump’s tariffs on automakers and a struggling smartphone market in 2025. Despite the outlook, the company’s shares reversed earlier losses, rising nearly 4% in morning trading.

For the first quarter, GlobalFoundries expects revenue to range between $1.55 billion and $1.60 billion, below the Wall Street estimate of $1.66 billion, according to data compiled by LSEG. The company also projects adjusted earnings per share to fall between 24 cents and 34 cents, with the midpoint of this range under analysts’ expectations of 32 cents per share.

The automotive sector, which is GlobalFoundries’ third-largest revenue contributor, is especially vulnerable to the effects of tariffs on steel and aluminum imports in the United States. In 2023, the company signed a long-term agreement with General Motors to produce chips exclusively for the carmaker at its Malta facility.

Additionally, GlobalFoundries is facing challenges in its largest segment, smartphones. The global smartphone market is expected to face a turbulent 2025, according to research firm Canalys, further adding pressure on the company’s performance.

For the fourth quarter, GlobalFoundries posted revenue of $1.83 billion, meeting analysts’ estimates. The company also reported a profit of 46 cents per share, excluding items, which was slightly above the expected 44 cents.

Earlier this month, the company announced the appointment of Tim Breen as its new CEO, succeeding Thomas Caulfield.

Texas Sues Allstate for Collecting Driver Data Without Consent

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The state of Texas has filed a lawsuit against Allstate, accusing the insurer of illegally tracking drivers through their cell phones without their consent. Texas Attorney General Ken Paxton claims that Allstate created “the world’s largest driving behavior database” by paying mobile app developers millions of dollars to secretly incorporate tracking software into apps. The lawsuit, filed in a Texas state court near Houston, alleges that Allstate used the data to justify raising car insurance premiums, denying coverage, and selling the data to other insurers.

The tracking software, developed by Allstate’s data analytics unit Arity, was integrated into widely used apps such as Fuel Rewards, GasBuddy, Life360, and the Allstate-owned Routely starting in 2015. The complaint further asserts that Allstate has also purchased location data directly from vehicle manufacturers, including Toyota, Lexus, Mazda, and Stellantis, to track the movements of policyholders more accurately.

The lawsuit alleges that Allstate’s actions violated Texas laws on data privacy, data brokers, and unfair and deceptive practices by insurers. Texas is seeking restitution, civil fines up to $10,000 per violation, and the destruction of illegally collected data. The state also contends that Allstate profited from this practice by increasing premiums and denying coverage based on the collected data.

This lawsuit follows a similar case filed last August against General Motors, accusing the company of collecting driver data from over 14 million vehicles and selling it to insurers and other businesses without drivers’ consent.

 

GM to Sell Stake in Battery Cell Plant to LG Energy Solution for $1 Billion

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General Motors (GM) has announced its decision to sell its stake in a $2.6 billion electric vehicle (EV) battery cell plant in Lansing, Michigan, to its joint venture partner, LG Energy Solution (LGES). The Detroit-based automaker expects to recoup approximately $1 billion from the sale, which is part of a nonbinding agreement between the two companies. This transaction is expected to be completed in the first quarter of 2024.

The Lansing facility, a 2.8 million-square-foot plant, is nearly finished and was initially planned to be the third battery cell production site for their joint venture, Ultium Cells LLC, following operational plants in Ohio and Tennessee. The plant was first announced in January 2022, and GM and LGES formed their partnership five years ago.

GM’s decision to sell its stake is driven by the need to adjust production to meet current EV market conditions, including slower-than-expected consumer demand and uncertainties surrounding federal incentives for EV manufacturing and sales in the U.S. under President-elect Donald Trump. However, GM emphasized that the sale would not affect its overall stake in the joint venture or its plans for a separate joint venture with LGES competitor Samsung SDI.

Paul Jacobson, GM’s Chief Financial Officer, expressed confidence that the deal would enable the automaker to continue growing in the EV market efficiently. He stated, “We believe we have the right cell and manufacturing capabilities in place to grow with the EV market in a capital efficient manner.” Jacobson added that the sale would also help LG Energy Solution meet growing demand by utilizing the nearly ready Lansing facility.

Following the sale, LGES will gain immediate access to the Lansing plant to begin installing equipment, as the facility prepares for operations, expected by the end of 2023. The plant currently employs around 100 people.

In addition to the sale, GM also revealed it is extending its 14-year battery technology partnership with LGES to develop prismatic cells, an emerging battery form factor. Prismatic cells, which are flat and rectangular, offer more efficient space utilization within battery modules and packs. GM highlighted that these cells could reduce the weight and cost of EVs while simplifying the manufacturing process.

Kurt Kelty, GM’s vice president of battery cell and pack, noted, “We’re focused on optimizing our battery technology by developing the right battery chemistries and form factors to improve EV performance, enhance safety, and reduce costs.” The expansion of GM’s battery technologies will also include prismatic cells in addition to its current Ultium pouch-style cells.