Well may be I am right after all
Chartered Semiconductor May Report
First-Quarter Loss as Chip Sales Slide
By Linus Chua
Singapore, April 19 (Bloomberg) -- Chartered Semiconductor
Manufacturing Ltd., the No. 3 maker of chips to other's designs, will
probably report a first-quarter loss as its customers ordered fewer
chips amid a slowing economy worldwide.
Chartered is likely to report it lost $33 million, or 24 cents for every
American depositary receipt, in the three months ended March, from
a profit of $37.8 million, or 29 cents, a year ago, according to the
average estimate of six analysts surveyed by Bloomberg. Estimates
ranged from a loss of 22.4 cents to 25 cents. The results are
expected after U.S. markets close today.
The Singapore-based company said two months ago it expected a
first-quarter loss of between 22 cents and 24 cents, citing weak
economic performance and slack demand. Analysts say Chartered
will struggle to recover from its first quarterly loss in six quarters as
conditions are unlikely to soon improve.
``We are looking at a recovery nearer to the end of the third quarter
-- the second quarter will be worse than the first,'' said Chua Wee
Thia, an analyst at Vickers Ballas Investment Research Pte. in
Singapore, who rates the stock ``neutral.'' ``The overall industry
hasn't picked up.''
Chartered's biggest customers are suffering from weaker orders for
their products. Analysts, in turn, are expecting them to slash orders
from Chartered.
Customers
Chartered's five biggest customers by sales -- Ericsson AB,
Broadcom Corp., Conexant Systems Inc., Agilent Technologies Inc.
and STMicroelectronics NV -- have this year either revised their
sales or profit estimates, or fired workers.
``We still have a long way to go,'' said Bhavin Shah, an analyst at
Credit Suisse First Boston in Hong Kong. ``Foundries will continue
to see lower wafer shipments and as a result, lower utilization.''
Chartered's utilization, or how efficiently it uses its production
equipment, stands at about 40 percent, analysts estimate. That
means more than half its equipment isn't being used. The company
also said in February first quarter sales would fall 35 percent from
the fourth quarter to $207 million.
The company, which is building a $3.5 billion plant in Singapore, is
also expected to cut its planned $1.5 billion in spending this year.
Analysts estimate a cut of between $300 million and $400 million.
Technology
Less spending may hurt plans for the new plant, which will make
300-millimeter, or 12-inch, wafers instead of the eight-inch standard.
Chips are cut out of wafers, and are used to power electronics
devices such as cell phones. Larger wafers mean more chips can
be cut, making the chipmaking process more efficient.
Any delay in spending will also widen the gap between Chartered
and its two biggest rivals, Taiwan Semiconductor Manufacturing Co.
and United Microelectronics Corp. in Taiwan. The two Taiwanese
companies are expected to be profitable.
``What bothers me about Chartered is it's behind TSMC and UMC
in terms of technology, most particularly in its migration to 300-
millimeter,'' said Russell Tan, an analyst at Net Research Asia in
Singapore. ``They're one-and-a-half years behind.''
Chartered's shares traded in Singapore rose as much as 11
percent today to S$4.82. Chartered's American depositary receipts,
which are traded in the U.S., are blocks of 10 shares each.
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