GlobalFoundries posts record gross margin as optical networking takes center stage

GlobalFoundries just had its best margin quarter on record, and the reason isn’t phones. The contract chipmaker reported a non-IFRS gross margin of 31.4% for the third quarter of 2026, up 540 basis points from a year earlier.

The driver is light, more or less. Demand for optical networking components inside AI data centers is reshaping what GlobalFoundries builds and how much it earns doing it.

The numbers behind the quarter

GlobalFoundries released its Q3 2026 results on November 4, 2026. Revenue came in at $1.899 billion.

That figure represents a 6% gain over the prior quarter and a 13% increase year-over-year.

The standout segment was communications infrastructure and data center. Revenue there climbed 81% year-over-year and now makes up approximately 17% of total company revenue.

That growth traces back to optical networking. Specifically, GlobalFoundries is seeing heavy demand for silicon photonics and silicon germanium, or SiGe, technologies used in AI-focused data centers.

Why silicon photonics matters

Silicon photonics builds the components that move data using light directly onto silicon chips. That lets data travel between servers and racks faster and more efficiently, which matters a great deal when thousands of AI processors need to share information at once.

SiGe is a related specialty material. It blends silicon with germanium to handle high-speed signals, the kind of work that shows up in networking gear and transceivers.

GlobalFoundries has leaned hard into this niche. The company says it now has more than 50 silicon photonics customers, including seven of the top 10 optical transceiver suppliers.

It also has a partnership with Marvell for SiGe capacity at its Vermont facility.

The company raised its silicon photonics revenue outlook to $500 million for 2026. It also expects that business to hit an annualized run rate of approximately $1 billion by the end of 2027.

That $1 billion target now lands a year ahead of the company’s prior estimate.

Goodbye, smartphones. Hello, data centers and cars

The strategic shift is deliberate. GlobalFoundries is reallocating manufacturing capacity away from lower-margin mobile device chips.

That freed-up capacity is heading toward two areas: optical data center connectivity and custom automotive silicon.

CEO Tim Breen pointed to the company’s strong momentum in AI applications and its targeted end markets as key reasons for the results.

The outlook for Q4

Management expects the momentum to continue. For the fourth quarter of 2026, GlobalFoundries is guiding to revenue of around $2.0 billion.

It projects a non-IFRS gross margin of around 31.5%.