Chipmakers post glowing financials, raise spending plans

February 3, 2004 – Following impressive earnings announcements by Intel, IBM, and Micron, other global chipmakers and foundries are reporting strong quarterly financial results — and in a show of support for the industry’s recovery, most are planning to significantly boost capital spending this year.

Fourth-quarter revenues at Advanced Micro Devices Inc. (AMD), Sunnyvale, CA, were $1.2 billion, resulting in a $43 million profit; in 4Q02 the company posted $686 million in revenues and an $855 million net loss. For the year, AMD reported revenues of $3.5 billion and a net loss of $274 million, compared with 2002 revenues of $2.7 billion and a net loss of $1.3 billion. AMD’s capital spending budget for 2004 is estimated at $1.5 billion, more than double the $650 million the company spent in 2003.

Texas Instruments Inc., Dallas, TX, posted 4Q03 revenue of $2.77 billion, up 9% sequentially and 29% from a year ago. Net income was $512 million, up 14.5% sequentially and compared with a $567 million net loss in 4Q02. Semiconductor revenue was $2.45 billion, up 16% sequentially and 34% year-on-year; earnings were $433 million compared with $264 million in 3Q03 and $81 million in 4Q02. Orders were up 56% from 4Q02 to $2.74 billion, with a book-to-bill ratio of 1.12. For 2003, semiconductor revenues rose 20% to $8.36 billion, with a nearly threefold jump in profits to $969 million. TI pegged 2004 capital expenditures atabout $1.1 billion, with R&D expenses of $2.0 billion and depreciation of $1.4 billion. For 1Q04, the company is projecting overall revenues of $2.72 billion (for semiconductors, $2.4-$2.6 billion) and earnings of 16¢-22¢/share.

France’s STMicroelectronics NV reported a 17.8% year-on-year boost in 4Q03 revenues to $2.11 billion, but a $144 million profit was down 11% from a year ago due to a weak US dollar. For the year, the company reported earnings of $253 million on revenues of $7.24 million, compared with 2002 earnings of $429 million on revenues of $6.32 million. The company has set its 2004 capex budget at $1.6 billion, up from $1.2 billion in 2003 and $995 million in 2002; 4Q03 capex was $406 million, up 55% sequentially and 80% year-on-year. STMicro also announced plans to transfer 60% of its 6-in. wafer production from Europe and the US to Singapore, a move that will save around $120 million annually, and is key to the company’s goal of achieving gross margins of 40% by the end of 2004, according to CEO Pasquale Pistorio. He predicted 1Q04 results will be roughly flat with 4Q, followed by strong revenue growth in 2Q04 due to stabilizing chip prices.

Taiwan’s biggest foundry TSMC reported 4Q03 revenues of $1.7 billion, an increase of 5% sequentially and 40% year-on-year. Earnings of $471 million were up 5.5% sequentially and more than fivefold from a year ago. For 2003, TSMC reported a profit of $1.37 billion on revenues of $5.9 billion, yearly gains of 25% and 122% respectively. The company estimated 2004 capex at around $2.0 billion, up from $1.1 billion a year ago, with two-thirds of that to be invested in 300mm production tools — TSMC predicts its 300mm capacity will jump 130% from 2003 levels. The company expects earnings in the typically slow 1Q period will be “at least as good” as 4Q. TSMC chairman Morris Chang added that continued growth in shipments will keep utilization rates at or slightly above 100% through most of 2004.

Chartered Semiconductor Manufacturing Ltd. reported 4Q03 revenues of $182.8 million, up 33% sequentially and 69% year-on-year, with a net loss of $43.2 million compared with $108.8 million in 4Q02. For the year, revenues were up 23% to $551.9 million, with a net loss nearly halved to $284.8 million. 4Q shipments of 200mm wafers rose 30.5% sequentially and 91% year-on-year, and 45% for the twelve-month period. Capacity utilization was 71%, compared with 39% in 4Q02 and 59% in 3Q03. 2004 capex has been set at $700 million, up from $221 million in 2003 — and will be “significantly higher” in the first half of the year, according to the company, for projects including ramping its Fab 6 facility to full capacity and installing a 300mm line in Fab 7. CFO George Thomas predicts a net profit in 1Q04, but admits that “we still have more work to do” to reduce the company’s breakeven point. — James Montgomery, News Editor


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