Chartered profit flat Q-Q, sales dip

April 27, 2007 – Singapore foundry Chartered Semiconductor Manufacturing says 1Q profits were up slightly to $5.3 million vs. 4Q06, but were well off year-ago earnings of $22.0 million. Revenues were off 4.5% Q-Q and 8.8% Y-Y to $323.8 million, attributed to excess inventory and seasonal declines, with softness in consumer segment and computer sectors offset by communications growth.

Gross profit margins slid to 22.1%, vs. 26.1% a year ago, mainly due to lower shipments and lower ASPs, though gross profits rose 5.7% thanks to lower cost/wafer from higher production levels.

Shipments rose 1% sequentially during 1Q07 to 299,200 wafers, though that represents a 6% decline from a year ago. Overall ASPs fell 5.6% to $1071/wafer, primarily due to lower shipments of 90nm wafers.

After two consecutive quarters representing the biggest slice of Chartered’s revenues, 90nm processes fell from 34% of sales in 4Q06 to 27% of sales in 1Q07, while 0.13-micron processes increased to 30% of sales.

Capacity utilization was flat from 4Q06 at 70% vs. 82% in 1Q06. Chartered projects overall capacity will rise 4.5% in 2Q07 to 483,000 wafers, almost entirely due to additions at Fab 2 (+8% to 153,800 wafers) and Fab 7 (+6.9% to 108,200 wafers).

Looking ahead to 2Q, Chartered projects revenues to be essentially flat ($323M +/- $6M), and profits evaporating even more to somewhere between $5M to breakeven. ASPs are seen sinking another 12%-16% (to $922 +/- $20). Wafer shipments are expected to rebound 15% sequentially, though, and utilization rates should climb back up to 74%-80%.

In a statement, Chia Song Hwee, president/CEO of Chartered, noted that 90nm shipments to the computer sector have slowed and will impact 2Q sales, but “barring any severe macroeconomic issues” foundry growth should return in 2H07 as industrywide excess inventories are depleted and seasonal demand kicks in. Chartered is “executing slightly ahead of our schedule at 65nm” with commercial shipments planned for 2Q, and sales from both SOI and bulk should be ~5% of revenues.


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