Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (42805)	2/28/2001 9:23:53 AM
From: Proud_Infidel	Read Replies (1) \| Respond to of 70976

Chartered won't cut key investments despite 'unprecedented' fall in foundry utilization To help fill fabs, Singapore chip maker 'back fills' with some commodity ICs, pushes ahead with 300-mm plans Semiconductor Business News (02/28/01 04:14 a.m. PST) Recent Articles SINGAPORE -- Faced with an unprecedented collapse in foundry market demand, Chartered Semiconductor Manufacturing Pte. Ltd. here is attempting to do everything possible to maintain its planned increase in capital spending and R&D this year, said company officials during a conference call with analysts today (Feb. 28). On late Tuesday afternoon--in the U.S.--Chartered warned that it now expects a 35% sequential decline in revenues during the current first quarter from $319 million in the final three months of 2000 (see Feb. 27 story). The world's third largest pure-play silicon foundry had earlier estimated a 15-to-20% drop in sales during Q1 of 2001. Chartered's wafer fab utilization rates have plunged to the low 60-percent range on average from what was 94% in the fourth quarter, but the company is not planning to reduce its $1.2 billion in capital spending in 2001 or $88 million in R&D--a 32% and 23% increase, respectively, from last year. "We will take near-term actions to further reduce cost but at the same time we will continue to invest very actively in capacity and our research and development which we believe will position us extremely well when strong growth resumes," said Barry Waite, president and CEO of Chartered. During today's conference call, Waite estimated that 40% of the planned $1.2 billion in capital spending will be used to equip Chartered's Fab 7 plant. That fab was originally scheduled to go online as a 200-mm facility in 2001 but was delayed to 2002 and upgraded to 12-inch diameter wafers last month. Chartered was preparing for a slowdown in foundry demand during the first half of 2001, and it had estimated that its fab utilization rates would dip to the mid-to-low 70 percent range in Q1, but it was surprised with the intensity of the falloff, Waite told analysts. To help buffer the company from the drop, Chartered has attempted to "back fill" its lines with some commodity ICs--mostly specialty SRAMs--which carry lower average selling prices than the foundry company's targeted applications in communications. The lower ASPs from the change in product mix and reduced fab volumes will push revenues lower and result in a loss in the first quarter, said Chartered officials. Waite said Chartered was not resorting to DRAM fabrication to fill its frontend lines during the downturn. Waite said his veteran staff has never seen a downturn like this one. In previous cycles, it has taken at least two quarters for revenues to drop 30%, he said. "We are seeing that now in one quarter," Waite added. But Chartered's top managers are hopeful that the severe slump will ease in the second half of 2001--partly because of historical trends. "We have history of the peak-to-valley here being the 9-to-25 month range," Waite told analysts in the global phone call. Waite said the peak in the boom cycle appeared to have occurred in June 2000. "We know it is going to turn and we must be there for our customers when it does turn so we can enable fabless companies to stay fabless and enable IDMs [integrated device manufacturers] to continue their outsourcing," said the Chartered chief executive officer. Waite said he was encouraged by the level of design tape-outs for 0.18-micron process technologies during the severe decline. "We are still seeing a lot of activity. In fact, we had 'alpha tape' presented to us for 0.13 micron," he said while fielding questions about leading-edge technologies. "Customers are interested in going forward." Chartered officials declined to give estimates for revenue or capacity utilization over the entire year, saying that the 2001 outlook remains extremely uncertain. The company expects to issue a new forecast in April. --J. Robert Lineback reporting from the U.S.