Published June 13, 2009

Chartered more upbeat on Q2 revenue

Chipmaker raises sales forecast and also expects quarter's losses to be lower than earlier projected

By WINSTON CHAI

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CHARTERED Semiconductor Manufacturing has turned more upbeat on its current second quarter performance outlook.

In an update of its guidance yesterday, the chipmaker now expects Q2 sales of between US$338 million and US$348 million - up from its April 24 guidance of US$321 million to US$333 million and up to almost 43 per cent higher than its Q1 revenue of US$244 million.

In line with the brighter sales outlook, the company expects its Q2 loss to narrow to about US$45 million to US$53 million - an improvement of almost US$10 million from its initial US$54 million to US$64 million forecast and substantially lower than its Q1 US$98.8 million loss.

'Compared with our expectation in April, we are seeing incremental improvement in our business, mainly coming from our mature technologies. Therefore, we are revising our revenue guidance upward,' said Chartered CFO George Thomas.

Chartered shares climbed 1.3 per cent to close at $2.36 yesterday on news of the envisioned upswing. The company's share price has risen almost 84 per cent this year.

'Compared with our expectation in April, we are seeing incremental improvement in our business, mainly coming from our mature technologies.' Chartered CFO George Thomas

In particular, there was a sharp spike earlier this month on speculation that Temasek Holdings was in talks to divest its 62.33 per cent stake in Chartered to Abu Dhabi-based Advanced Technology Investment Company in a deal reportedly worth US$2.45 billion.

Signs of recovery in the beleaguered semiconductor sector have again put the industry under the analyst spotlight, with major players such as TSMC, UMC and Chartered all reporting signs of an upswing.

With the recent resurgence among chip companies, market research firm Gartner now expects global semiconductor sales to fall 22.4 per cent this year to US$198 billion. This is an improvement from its previous forecast of a 24.1 per cent decline.

The Semiconductor Industry Association expects chip sales to drop 21 per cent in 2009 to US$195.6 billion. However, it expects a rebound next year, with revenue growing 6.5 per cent.

DMG Research technical analyst James Lim said: 'We continue to subscribe to the view that the technology industry most likely bottomed out in Q1 2009 and that any recovery in the electronics sector should therefore be first felt in the semiconductor space, given that semiconductors are regarded as the front-runner of the whole technology cycle.'