Global security and aerospace company Lockheed Martin (NYSE:LMT), and chipmaker GlobalFoundries, have announced a strategic partnership for procuring a domestic semiconductor supply for defense systems. Global chip shortages, which dent production levels, have led to supply chain disruptions, thereby pushing defense companies to undertake such steps.
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With manufacturing facilities in New York and Vermont, GlobalFoundries has U.S. government authorization to produce secure chips used in sensitive mission systems.
“This isn’t just about Lockheed purchasing chips from Global. It’s about two of the biggest companies in New York working together to spur innovation,” U.S. Senate Majority Leader Chuck Schumer stated.
A Dive into the Collab
The collaboration plans to undertake manufacturing across a range of advanced and next-generation chips, enabling LMT to take advantage of GlobalFoundries’ technology for increasing anti-fragility in microelectronics systems and supply chains.
Both companies will also seek external funding opportunities, technology development, and U.S. government collaboration. A chiplet ecosystem is also in the development pipeline; that ecosystem will stack and stitch multiple chips together for rapid and affordable production.
Under the U.S. government’s CHIPS and Science Act, which targets bringing semiconductor manufacturing back to the U.S., government subsidies of $52 billion will be granted for semiconductor production. Also, an investment tax credit for manufacturing plants estimated at $24 billion is included in the Act.
Is Lockheed Martin a Safe Stock?
Of the 11 top analysts covering the stock, eight analysts rate it a Hold while two give it a Sell and one has a Buy rating. The average analyst price target stands at $489.8, implying a 6.5% upside potential.
On June 11, Jefferies Analyst Sheila Kahyaoglu maintained her Hold rating on the stock with a price target of $525. The analyst states that the company management seems confident as it has reached a strong baseline with a positive growth outlook. The company estimates free cash flow per share to expand and margins are seen in the 11% range.
In early June, Bernstein Analyst Douglas Harned maintained his Hold rating on the stock with a $496 price target.
