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300-mm fab drives Chartered's Q3

Posted by iMark - 2005-10-23

SINGAPORE — Chartered Semiconductor Manufacturing Pte. Ltd. President and CEO Chia Song Hwee credited much of the firm's revenue growth in the third quarter to a ramp in 90-nm production at its new 300-mm fab, but admitted continuation of the plant’s strong output was by no means guaranteed.

In a conference call on the firm's third quarter results Oct. 21, Chia said 90-nm revenues at Chartered's 300-mm fab, which began commercial shipments in June, increased by over $70 million sequentially, marking the "first time in our history that we've been able to achieve such a ramp in any of our new fabs."

The 300-mm plant is called Fab 7. The company's revenues climbed 49.5 percent in the third quarter to $290.1 million, though it posted a net loss of $34.5 million.

Much of this growth came from the consumer sector — particularly the development of chips for Microsoft's next-generation Xbox game console. Chartered is "sparing no effort" in reaching the break-even point on the Fab 7 facility, with plans to introduce new products and services to its clients by the end of the year, Chia added.

"We are concurrently working on multiple products and hope to get these into production as soon as possible," he said. "The initial product ramp that we have [for] the consumer game console business has the possibility of adjustment on the wafer rate going into the first quarter [of 2006].”

The new offerings Chartered will concentrate on include network processors, which have already moved into small-volume production, and baseband, which will start shipping in the first or second quarter of 2006.

The firm should also start producing processors for Advanced Micro Devices Inc. (AMD) in the later part of the second quarter of 2006, Chia added.

But he said the company did not have "firm visibility" from the end customer on its game console chip production, making a continuation of the initial ramp "very much dependent on the sell-through."

"On paper we plan to get to 15,000 [300-mm wafers per month] by the middle or third quarter of 2006, but all this will depend on demand," he said. "If the demand continues to be strong we could go up to 18,000 or 19,000 by the end of 2006."

Chartered is already running equipment utilization "to the fullest" at the Fab 7 plant, Chia added.

Analysts said the company's results were a pleasant surprise, and that Fab 7 would likely continue to drive future performance. "Results were better than we expected," said Dharmo Soejanto, an electronics industry analyst at Kim Eng Securities. "Seems to indicate that Fab 7 is ramping up quite nicely."

"We expect the company to dip into the red in the first quarter of 2006 as demand drops with the seasonal slowdown, but this should be offset by profit in the second half as new customers such as AMD come in," Soejanto added. "Barring any unforeseen circumstances, this should translate into a full-year profit in [financial year] 2006 for Chartered."

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