Benzinga | Nov 8, 2021 07:20AM EST

Why Are GlobalFoundries Shares Trading Lower Today?

* The Pentagon plans to place up to $2 billion in rush orders by early March for customized semiconductors used in weapons like the B-2 bomber before the shut down of production line, Bloomberg reports.

* Globalfoundries Inc (NASDAQ:GFS) sold the factory in Fishkill, New York, that produced the specialized chips used in GPS-dependent systems to ON Semiconductor Corp (NASDAQ:ON). The new owner will not make any more of them.

* The Defense Department is confronting its looming supply crunch amid a global chip crisis used in consumer items from mobile phones to autonomous vehicles, markets where GlobalFoundries is expanding its production.

* The Pentagon would place an initial $885 million by December 15 with U.S. contractors. The Pentagon would have to place the remainder of the $2 billion in orders by March 3, the report added.

* "For certain programs and technologies, we are meeting the DoD's needs by manufacturing large volumes of chips sufficient for the lifetime of the program," GlobalFoundries said.

* "In other instances, we are partnering with the DoD to extend the lifecycle of certain technologies manufactured at Fab 10 by transitioning the manufacturing of their chips to other GF Fabs."

* Price Action: GFS shares traded lower by 4.49% to $60.77 in the premarket session on the last check Monday.