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

To: rhering who wrote (7768)	10/28/2003 9:23:01 AM
From: Proud_Infidel	Respond to of 25522

UPDATE - STMicro sees 18-20 pct global chip mkt growth in 2004 Tuesday October 28, 7:30 am ET By Jennifer Tan (Adds quotes in paragraph 10, share prices in paras 6-7) SINGAPORE, Oct 28 (Reuters) - Europe's biggest chipmaker, STMicroelectronics (Paris:STM.PA - News), said on Tuesday it expects the global chip market to grow by 18 to 20 percent in 2004 as chip demand rebounds from a three-year slump. The Franco-Italian chipmaker last week posted a third-quarter loss after charges to cover plant closures, as a strong euro and falling semiconductor prices hurt results globally. But the Geneva-based company, which has forecast fourth-quarter revenues to increase by between seven percent and 13 percent from a year earlier, said it agreed with analysts' forecasts for 18 to 20 percent growth in the chip market. "We share this view that growth next year will be double-digit," Chief Executive Pasquale Pistorio told reporters at a briefing. He was in Singapore for an enterprise and technology conference. "Given expectations of economic recovery in the United States, Japan and Europe, and a strong environment in Asia-Pacific, we think those conditions will bring about sustained growth in the semiconductor industry," Pistorio said. By 1215 GMT, STMicro's shares were up 1.76 pecent at 22.55 euros. In Tapei on Tuesday, the world's largest contract microchip maker TSMC (Taiwan:2330.TW - News) posted its best quarterly profit since the tech downturn began in 2001, helping send shares in Dutch semiconductor equipment maker ASML (Amsterdam:ASML.AS - News; NasdaqNM:ASML - News) up some seven percent. The rare quarterly loss by STMicro, the world's fourth-largest chipmaker, fuelled concern that European technology earnings may not live up to buoyant expectations priced into the sector. CEO Pistorio said he expected the chip industry to post moderate growth of 10-12 percent in the longer term, but STMicroelectronics was expected to outperform the industry. "We anticipate that we will be able to continue to grow at a similar compound growth rate of the past in the medium term," he said. When asked what that rate is, he added: "Fourteen percent a year compounded, that's what we have been growing at." CHINA PLANT BY 2005 Pistorio said he did not expect any new restructuring charges for the fourth quarter. "There is no question that Q4 will be profitable," he said. STMicroelectronics posted a third-quarter net loss of $49.1 million or six cents per diluted share, compared with a profit of $131.2 million or 15 cents a share a year earlier. Excluding charges and closure-related costs, third-quarter net income was $101.4 million or 11 cents a diluted share. STMicro's restructuring plan calls for 60 percent of its older six-inch wafer production to move to either more efficient eight-inch production capacity or to its more cost-effective six-inch plant in Singapore. Pistorio repeated the company would return to a gross margin of at least 40 percent in 2004, after achieving 35.1 percent in the third quarter and forecasting 36-37 percent in the fourth quarter. "Next year, with the recovery, we will return to above the 40 percent level, but that is not our target -- we want to do more than that," he said. STMicro also plans to set up a factory in China by 2005, either through its own investments or partnerships, he said, adding that the plant would probably make eight-inch wafers using 0.13-micron process technologies. STMicro already has a chip assembly factory in Shenzhen, and marketing and design centres in Shanghai and Beijing. Pistorio said he would urge the board to continue to raise the firm's dividend payout for shareholders, and expects STMicro to resume its return on equity (ROE) of 20 percent -- which it achieved between 1997 and 2000 -- once the industry stabilises.