GlobalFoundries’ initial public offering (IPO) will do little to curb the global chip shortage or improve the foundry operator’s dismal financials, according to GlobalData.

“This IPO is essentially GlobalFoundries crying to Wall Street for help,” GlobalData Analyst Lil Read wrote in a research note. “The semiconductor manufacturer has been put in a precarious financial state despite the rampant chip shortage, which shows no sign of abating until at least 2023.”

Last week GlobalFoundries filed with the Securities and Exchange Commission (SEC) for an IPO on the Nasdaq under the ticker GFS.

The company didn’t disclose the number of ordinary shares or the price range of the proposed offering, but the IPO is expected to garner around $25 billion, according to an earlier Reuters report.

The announcement came after months of rumors surrounding the U.S. foundry operator’s fate. GlobalFoundries CEO Tom Caulfield teased the IPO in July, but rumors of a $30 billion takeover attempt by Intel cast doubt on those plans that same month.

At the time, analysts suggested the acquisition would jumpstart Intel’s newly-formed foundry business, while others suggested the rumors were an attempt to fan the operator’s valuation flames.

And, according to GlobalData, GlobalFoundries’ F-1 files with the SEC suggest it may have been the latter. “The company is hemorrhaging money, having lost nearly half a billion dollars during the first half of 2021,” the report reads.

What’s more, “GlobalFoundries doesn’t have the technological or financial muscle to go toe-to-toe with TSMC, Samsung, and Intel,” Read said.

According to Wayne Lam, senior director of research, Americas at CCS Insight, GlobalFoundries doesn’t have to compete with the leading-edge silicon manufacturers to be successful.

“The foundry has already said that they are going to cut back on a lot of the latest technology,” he said, alluding to GlobalFoundries' decision to discontinue the development of its 7-nanometer node. That decision ultimately drove AMD to TSMC in 2019.

But that still leaves a large market of customers that don’t need, or even want, cutting-edge process technology, Lam added. “More than half of global semiconductor output is on nodes that are bigger than 28 nanometers… There’s probably enough market for them to compete effectively, but my question is what happens when the Chinese start dumping chips at a lower price?”

China’s largest foundries have recently started ramping 28-nanometer processes and 14-nanometer nodes aren't far off, he said, adding that China has "huge economies of scale" that GlobalFoundries does not.

“From that perspective, [the IPO] may be a preemptive play to arm itself to compete more effectively,” Lam said.

However, even if GlobalFoundries can carve out a lucrative niche producing older chip designs, semiconductor manufacturing remains inherently expensive, while simultaneously low margin, explained Mike Orme, consulting analyst at GlobalData. “This is a major factor behind the chip shortage, with the headline case of the auto industry partially and spasmodically shuttered over the past year as a result.”

In response to the semiconductor shortage, GlobalFoundries' rivals have announced hundreds of billions of dollars in new spending to expand their operations.

TSMC alone announced $100 billion in new spending, Samsung will spend north of $150 billion, while Intel has announced $23 billion in spending since March with additional investments planned before the end of the year.

This poses a problem for GlobalFoundries, which plans to spend roughly $4.5 billion over the next two years to expand its operations, Orme explained. “This is chicken feed compared to what is needed to make any difference in global chip supplies.”