Chartered <CSMF.SI> sinks on UMC-Conexant deal
9/4/01 8:57 PM
Source: Reuters
SINGAPORE, Sept 5 (Reuters) - Shares of Chartered Semiconductor Manufacturing Ltd tumbled nearly four percent on Wednesday after a Taiwanese rival signed a wafer-supply deal with its key customer Conexant Systems Inc.
The world's second largest microchip foundry, United Microelectronics Corp, said on Wednesday it had inked a five-year agreement to supply semiconductors to the U.S. based communications chip maker.
The agreement covers the latest 0.18-micron and below process technologies.
Chartered, the world's third largest contract manufacturer of microchips, ranks Conexant as one of its top five customers.
"Chartered sank about one percent at the open on the back of the news," said Marc Julienne, an institutional sales dealer with SG Securities.
At 0345 GMT, Chartered was down 3.72 percent or 18 cents to S$4.66, but off a day low of S$4.64, on a volume of over three million shares.
Pranab Kumar Sarmah, analyst at Daiwa Institute of Research, said Chartered's share price losses were limited by the fact that the market had got wind of the news as far back as June.
In June, market rumours had swirled that Chartered might lose Conexant as a customer to UMC.
Chartered's stock has performed more or less in line with the broader Straits Times Index in the last six months.
Analysts said the UMC-Conexant deal highlights the widening technology gap between Chartered and its Taiwanese rivals, which is negative for the company in the long term.
"UMC's Conexant deal cuts Chartered out of a certain proportion of the business as Chartered's 0.18-micron and below technologies are still not commercially available and full commercial production would only commence in the third quarter of 2002," said Gregory Yap, research manager at OCBC Investment Research. |
