Friday, October 20, 2006
Chartered Semiconductor Manufacturing has swung back into the black for the third quarter with a net profit of US$24 million.
It was better than market forecasts - and a sharp turnaround from the US$34.5 million loss in the same period a year ago.
But the contract chipmaker warns that sales could come under pressure in the December quarter.
The company may have booked better-than-expected third quarter numbers but the chipmaker says that is due partly to two one-off gains.
And it stresses that it still needed to grow its margins.
Chia Song Hwee, President and CEO, Chartered Semiconductor, says: "If you were to exclude that, we're on the higher end of our guidance. We're not at the profit level that we're happy about. We still have a ways to go. We have not given any specific target on our net income but we do talk about our gross margins needing to be in the 35-percent range."
Chartered says the chip sector is heading into the seasonally strong fourth quarter amid relatively lower oil prices and healthy levels of interest rates.
But it notes that there remains excess inventory industry-wide so it is expecting earnings for the fourth quarter to come in lower than the previous three months.
Chartered is also bracing itself for a quiet first quarter next year.
Mr Chia adds: "We believe that inventory correction will continue. So that's the reason why we've guided a 5 percent decline of our business. All in, I still think that it's a pretty moderate decline relative to our historical performance. And the main reason is because we have new customers and new products ramping up.
"As you know, we're adding capacity to ramp up our new technology. So that's what I meant by. We have to cautiously manage our business so that we don't get too far ahead of ourselves and ended up with excess capacity as we're not right now looking at fully utilising our fabricator plant."
On the products side, the company says the personal computing space is poise for growth with strong demand for microprocessors and peripherals such as displays.
But it is seeing weak demand in the consumer space for video game consoles and MP3 players although set-top boxes are going strong.
In communications sector, demand for wireless LAN and cell phones are strong while those for land switches and routers are weak.
Chartered Semiconductor says it will push for growth through productivity gains within the company or through working with its global clients to produce new technologies.
By: DocMemory
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