Chartered Semiconductor Manufacturing Ltd (特許), whose chips power the Xbox 360, reported better-than-expected first-quarter profit on the back of demand for the Microsoft Corp game console.
First-quarter net income was US$25.3 million, or US$0.09 per American depositary share, in the three months ended March 31, compared with a loss of US$84.5 million a year earlier, the Singapore-based firm said yesterday. The profit beat analysts' estimates, driving the stock as much as 6.3 percent higher.
Global sales of consumer electronics may rise to a record this year, boosting demand for custom made chips from Chartered and its larger rivals, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and United Microelectronics Corp (UMC, 聯電). Chartered said it won a new order from Microsoft, whose Xbox 360 sales received a boost from Sony Corp's delayed release of the competing PlayStation 3.
"The outlook for chipmakers is turning out to be pretty good," said Simon Chao (趙永宏), who helps manage US$1.4 billion at President Investment Trust Corp (統ㄧ投信) in Taipei. "Consumer electronics looks strong."
Chartered forecasts a second-quarter profit of US$11 million to US$21 million, or US$0.03 to US$0.07 an American depositary share.
Sales may be in the range of US$359 million to US$367 million, compared with US$194 million a year earlier.
Chartered plans to spend US$1 billion to expand production at its newest factory, Fab 7, after output rises to 18,000 wafers a month, expected by the end of the year, CEO Chia Song Hwee (謝松輝) said in an interview. The company previously said it would invest US$2.7 billion to US$3 billion in Fab 7, which has a monthly capacity of 30,000 wafers.
Chartered is the first among the four chipmakers to report earnings. UMC is scheduled to post earnings on Wednesday, TSMC on Thursday and Shanghai-based Semiconductor Manufacturing International Ltd (中芯) on Friday.
Earlier yesterday, Chartered said it won a Microsoft order to make chips that power the Xbox 360, using 65-nanometer technology.
Microsoft is a "top notch customer," Chia said, adding that "AMD [Advanced Micro Devices Inc] certainly has the potential to be one."
AMD, the world's second-largest computer chipmaker, is snatching market share from industry leader Intel Corp. Chia said Chartered is "on schedule" to begin mass production of chips for AMD in June.
"We are encouraged by Chartered's steady ramp" in chip production for the Xbox 360 and AMD, Merrill Lynch & Co analyst Daniel Heyler wrote in a report dated April 19. Chartered is Heyler's top pick among the four Asian chipmakers.
Consumer products accounted for 45 percent of Chartered's sales in the first quarter, up from 27 percent a year earlier. Sales from communication products contributed 34 percent, down from 37 percent. Computer products made up 19 percent of revenue, compared with 31 percent a year ago.
The company improved its factory utilization rate to 82 percent in the first quarter, from 59 percent a year ago.
Chartered expects to use 81 percent to 85 percent of its production lines in the second quarter.
Chia reiterated Chartered's plan to lower its breakeven utilization rate to 65 percent, from 75 percent currently.
Its average selling price per wafer rose to US$1,089 in the quarter from US$996 a year earlier. Chartered forecasts prices to be in the range of US$1,045 to US$1,085 in the second quarter.