INTERVIEW: US Silicon Storage Expects Higher China Sales
Friday November 21, 4:16 am ET
biz.yahoo.com
SHANGHAI -(Dow Jones)- With half its sales already attributable to China, U.S.-based Silicon Storage Technology Inc. (NasdaqNM:SSTI - News) believes that the Chinese market will increasingly power its business, the company's top executive said Friday.
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Silicon Storage makes "flash" memory products used in consumer items like mobile phones and computers.
Bing Yeh, president and chief executive officer of the Sunnyvale, Calif. company, told Dow Jones Newswires that the global semiconductor market continues to take up industry capacity built up before the technology boom ended in 2001, and that China's growth is helping the company.
"This is just the beginning of the up-cycle," Yeh said.
He added that global semiconductor prices are rising, while excess capacity is slowly being squeezed out. "With that, this cycle has better times ahead," he said.
China, he said, is behind an important shift in the global semiconductor market. Technology suppliers such as Silicon Storage and chip foundries are moving closer to the industry's end users - manufacturers of consumer products, such as televisions.
Business in China accounts for about half the company's revenue now, with a third of sales directly attributable to the country. Yeh said China will continue to take market share in the semiconductor business from other markets, and could account for 60-70% of Silicon Storage revenue within the next three to four years.
He said a "flocking effect" of technology companies and component makers are following manufacturers of products such as mobile phones, televisions and computers, many of which use temporary "flash" memory systems. "Flash is going to be one of the huge selling products," as the move to China continues, he said.
Continued growth in China's economy is an important prerequisite to Yeh's confidence he said. "China's growth is tied up with the worldwide economy," he said.
Silicon Storage and Japan's Sanyo Electric Co. (6701.to) said Friday they would pool their efforts in China. Silicon Storage's temporary or "flash" memory technology is embedded in Sanyo semiconductor chips that are used in a variety of devices.
The companies put no value on the arrangement, which will partly utilize a new Sanyo facility in Suzhou, China and which marks a continuation of their 10-year partnership, the companies said.
The chips are manufactured at foundries in China operated by Grace Semiconductor Manufacturing Corp. and Shanghai Hua Hong NEC Electronic Co., a joint venture of Shanghai Hua Hong Group, NEC Corp. and Jazz Semiconductor Inc. Jazz Semiconductor was established by U.S. investment firm Carlyle Group L.P. .
Yeh said that perhaps as early as the third quarter of next year, its technology will also be in the China-made chips produced by a US$1 billion foundry being built near Shanghai by Tawain Semiconductor Manufacturing Co. ( TSM).
He said initial output of chips using its technology would be in a few thousand wafers per month from Taiwan Semiconductor, compared with about 10,000 a month at the company's Taiwan operations.
The Silicon Storage official said the Grace and Shanghai Hua Hong NEC foundry operation will also be important for its production base.
Silicon Storage announced earlier that it recorded a loss of $74.3 million for the first nine months of this year, wider than $7.4 million a year before, while revenues slumped to $199.8 million from $211.8 million.
Yeh declined to forecast bottom-line figures but said "I think we're on target" for revenue to rise 15-20% in the fourth quarter from the third quarter. He noted that the company's share price has bounced off earlier lows but remains under earlier highs.
In Nasdaq trading Thursday, the shares finished at $12.63, down 37 cents, or 2.85%. The stock hit a 52-week high earlier this month, at $14.25, but was as low as $2.21 in March.
-James T. Areddy; Dow Jones Newswires; (86) 1370 1700 594; james.areddy@dowjones.com
-Edited by Jessica Tan |
