Thursday, February 13, 2003
Chartered Semiconductor Manufacturing Ltd. today outlined a cost cutting and growth strategy that centers on closing older fab lines to focus on leading-edge technologies, and securing a larger stake in China's emerging foundry market.
The Singapore chip manufacturer announced a plan to shut Fab 1, its only 6-in. wafer factory, and consolidate production into Fab 2 by March 2004.
"In order for us to have room to grow we have to resize capacity of older technologies," said Chia Song Hwee, president and chief executive of Chartered, in an interview. "We are reducing mature capacity in order to make room for growth in 0.18- and 0.13-micron."
Chartered will look to either sell the Fab 1 equipment to a foundry in China, or exchange it for an equity stake. Chia said the company is in discussions with potential partners, but declined to comment beyond that.
Chartered currently has a small stake in SMIC, a Chinese foundry company that is focusing on more advanced 8-in. wafer technologies.
Fab 1 used 0.5-micron and larger geometries. Closing Fab 1 will increase Chartered's advanced capacity to 46% of total from 39% reported in the fourth quarter of 2002. By the end of 2004, the company expects to have at least 50% of capacity at 0.18-micron and smaller process nodes.
The move is expected to result in annualized cost savings of $25 million. Chartered will take a one-time, pre-tax write-off of $18 million to $22 million associated with the closure and subsequent workforce reduction.
There is no change expected in Chartered's previously announced guidance for $275 million in capital expenditures in 2003.
By: DocMemory
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