Its unprofitable streak that lasted almost four years ended after it announced a first-quarter net profit of $1.9 million, compared with a net loss of $82.2 million in the same period last year. Chartered earlier said in a preliminary earnings forecast that its losses would be contained from $3 million to $11 million instead of higher losses. The latest results were near the top end of its recent forecast that revenue would increase 23 percent to 25 percent to around $225 million to $229 million, respectively.

Revenues grew 120 percent to $228.4 million from $103.8 million in the year-ago quarter. George Thomas, Chartered's chief financial officer, said in a statement that the company expects second quarter sales to grow about 10 percent based on robust sales in the communications sector, particularly in the mobile phone area. "The net profit took advantage of gains of $3 million on a technology license deal and $2.8 million from an intellectual property licensing agreement. These were then partially offset by a charge of $3.1 million restructuring of a plant," Thomas said.

Overall plant utilization rose from 71 per cent last year to 81 percent in its first quarter, and will reach 91 percent in the current quarter as its Fab 1 is taken out of production.

Chartered CEO Chia Song Hwee said it would spend up to $1.2 billion on its newest wafer fabrication plant this year and next. He added that $400 million dollars will be spent this year and as much as $800 million in 2005 on construction of the company's Fab 7, which will start pilot-production of 300-mm engineering wafers in the third quarter.

The investments are aimed at ramping up production to as many as 10,000 wafers a month by the end of 2005 to enable its most advanced factory to break even.

Chartered has started moving equipment into the new plant, which has a capacity to produce up to 30,000 300-mm wafers a month.

By: DocMemory
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