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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (6792)	8/15/2003 8:04:29 AM
From: Proud_Infidel	Respond to of 25522

Singapore's Chartered May Delay Fab 7; Eases Funding Fear Friday August 15, 3:41 am ET SINGAPORE -(Dow Jones)- Chartered Semiconductor Manufacturing Ltd. may delay commercial production at its US$3 billion 300-millimeter silicon wafer factory again, sparking hopes the world's third largest contract chipmaker won't need to raise funds for the costly factory anytime soon, analysts said. The chipmaker, about 60.5% owned by the government's Singapore Technologies Ltd. , said in a regular U.S. Securities and Exchange Commission (News - Websites) filing this week it was "reassessing market demand" for 90 nanometer production technology on larger 300 millimeter wafers. Nanometers, or billionths of a meter, measure the width of circuits etched on chips. Chips with more detailed circuitry carry higher margins than mature technologies and make more powerful chips. The planned state-of-the art Fab 7 factory, earmarked for making chips on dinner plate-sized 300mm wafers, was originally scheduled to start production in the third quarter of this year. But Chartered last November decided to put back the start of pilot production by a year, to the third quarter of 2004. The SEC filing, which also said the startup of Fab 7 will be "timed to meet market demand", underscored concerns among some analysts that the chipmaker could delay the startup of Fab 7 again. However, analysts also said a deferment in fund-raising to pay for the plant could be a relief for investors, who want to see a solid turnaround in the lossmaking company before committing more cash. Chartered has been unprofitable for the past ten quarters, and has spent about US$250 million on Fab 7 so far. "It (a delay) means Chartered won't be so stretched (financially)," said Chuan Yang Lim, an analyst at Standard & Poor's Equity Research. "It could also be an excuse for Chartered not to spend money where they don't have a competitive edge." Chartered has raised US$1.13 billion in funds over the past two years but hasn't raised funds so far this year. The chipmaker pulled in US$633 million through a rights offer in September 2002 and US$500 million through a convertible bond issue in March 2001. The rights offer was massively undersubscribed despite a huge discount, as shareholders were irked that it occurred soon after the chipmaker said it had no intention of issuing shares. Analysts also said the comments in the filing about the possible delay came as no surprise, because the chipmaker has been making remarks this year during earnings briefings that demand would be the main deciding factor on when the facility would actually open. "It really depends on how the industry develops in terms of demand next year," said Jatin Doktor, a technology analyst at GK Goh Stockbrokers. The timing of commercial production has always been "fluid", he said. Chartered was able to defer costly spending on Fab 7 last year because an agreement with International Business Machines Corp. (NYSE:IBM - News) allowed Chartered to make use of IBM's 300-millimeter factory in the U.S. for any 90-nanometer chip orders. Chartered underlined the significance of the IBM deal again in the SEC filing. "The joint development and manufacturing agreement with IBM affords the company additional flexibility in setting the timing for initial production," Chartered said. Analysts say they see no real need to start up the Fab 7 next year given expectations that 90 nanometer manufacturing technology isn't likely to be mainstream until 2005 or later - a view consistent with Taiwan Semiconductor Manufacturing Co , the world's biggest chip foundry. TSMC is in the preliminary stages of manufacturing chips at 90 nanometers and has some customers designing chip products for the technology - but no such chips are commercially available yet, according to a spokesman from TSMC. In April, Chartered's President and Chief Executive Chia Song Hwee said his company was talking to about 20 existing and prospective customers about the possibility of using next-generation 90-nanometer technology, although he didn't say whether or not it would result in any firm orders. Currently, the most advanced stage of technology that Chartered makes chips commercially is at 130 nanometers, which contributed 6% of the second quarter's US$127.6 million revenue.