Bookmark & Share
LOSS-MAKING chipmaker Chartered Semiconductor Manufacturing expects to staunch the flow of red ink by the end of the year.
For the second quarter ended June 30, Chartered lost US$39.4 million (S$57 million), reversing a profit of US$43.4 million in the same period last year.
Still, the results were better than what many had expected, including the company itself, which announced that it expected to make a loss of about US$49 million just last month.
While it remains in the red, this was still a substantial improvement over the prior quarter when it posted a staggering US$98.8 million loss, said Chartered's chief financial officer George Thomas.
Its results in the latest quarter were boosted by a tax benefit of US$8.8 million as well as lower sales and marketing expenses.
Revenue was US$349 million, down 23.7 per cent. Utilisation, a measure of how heavily used its plants are, was 60 per cent, down from 88 per cent last year but up from 38 per cent in the first quarter of this year.
The firm expects 'healthy sequential growth' in the current quarter, primarily due to more orders from customers in the communications and computer-related industries, said Mr Thomas.
Revenue should rise by about 11 per cent to between US$382 million and US$394 million, cutting losses to between US$17 million and US$27 million.
Chartered chief executive Chia Song Hwee was upbeat on the rest of the year.
'While there are mixed signals in the marketplace and the global economy is, at best, in a stabilisation phase, it is encouraging to see double-digit shipment growth into the third quarter, following the roughly 60 per cent shipment growth we saw in the second quarter,' he said.
Chartered, he added, expects to be able to hit the critical 75 per cent utilisation level - which will allow it to break even - by the end of the year.
In the light of the upturn, Chartered is also raising its annual capital expenditure from the US$375 million it originally budgeted to US$500 million, to raise the production capability of its most sophisticated plant by next March.
While the recovery is uncertain as yet, the plant makes products such as three-in-one chips for devices like mobile phones - products which offer good long-term growth prospects unlike at older plants, said Mr Chia.
So while there may be risks from short-term fluctuations in demand, this upgraded plant will help Chartered in the long run, he added.
Research firm DMG & Partners Securities was also upbeat on Chartered's future.
'(While) we do not expect Chartered to turn profitable in these two years, several of Chartered's major customers have reported results that exceeded analysts' estimates and have also issued positive guidance,' said DMG analyst James Lim.
'Given the improving outlook for most of its major customers, we believe that Chartered would be positively impacted,' said Mr Lim, who had a 'buy' recommendation on Chartered with a target price of $2.77.
Chartered shares closed at $2.23 yesterday, down 4 cents.
Key figures
Search Property News
