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

To: Proud_Infidel who wrote (54258)	10/18/2001 10:17:22 AM
From: Proud_Infidel	Read Replies (1) \| Respond to of 70976

STMicro to close 6-inch fab in California, studies other actions European chip supplier expects sequentially flat results in Q4 Semiconductor Business News (10/18/01 08:59 a.m. EST) GENEVA--Expecting sequentially flat results in the current fourth-quarter period, STMicroelectronics today announced plans to shut down a 6-inch wafer fab in Rancho Bernardo, Calif. The company said it was considering additional plant closures and reviewing its overall strategy with respect to older 6-inch plants worldwide. News of the California plant closing came as STMicroelectronics reported an 11.8% sequential drop in revenues to $1.40 billion in the third quarter from $1.58 billion in Q2. Compared to a year ago, STMicroelectronics revenues were 31% lower than $2.04 billion in Q3 2000. ST's net income was $35.8 million in the just-ended quarter vs. $415.3 million in Q3 last year. "Global economic and political uncertainty have increased substantially in the past month, rendering industry and company-specific guidance that much more difficult to provide," said Pasquale Pistorio, president and chief executive officer of the European chip maker. "Based upon data available to us today, our understanding of general industry trends, and input from key customers, the current outlook is for ST's fourth quarter 2001 revenues and gross margin to approximate third quarter 2001 levels." ST posted a gross margin of 33% in Q3 compared to 38% in Q2. "Difficult business conditions persisted in the third quarter with several of our end markets being negatively affected by declining product demand exacerbated in certain areas by excess inventory conditions," Pistorio said. "As expected, gross margin was penalized by reduced revenue levels as well as by our program to decrease inventory levels even at the expense of fab utilization rates." Consequentially, the company is taking new action to lower its costs with the closing of the fab in Rancho Bernardo. Details were not immediately available about how many workers would lose their jobs by the closing. The company said it took a $23.3 million charge in the third quarter for the plant closing. In May, the company announced it was shutting down a wafer fab in Ottawa and cutting capital spending to $1.5 billion from $1.9 billion in response to the semiconductor downturn. That facility was acquired from Nortel Networks in 2000 as part of a six-year joint-development and supply agreement with the Canadian communications giant (see May 31 story). ST said future actions may include the sale and closure of other maturing fabs in addition to curtailment of wafer output from frontend lines.