Chartered Semiconductor Manu-facturing Ltd (
The third-largest maker of custom-made chips is expected to report a loss of US$108.3 million, or US$0.78 for each American depositary receipt, from profit of US$58 million, or US$0.04 an ADR a year ago, based on the average estimates of five analysts surveyed by Bloomberg News. The results are expected after the US markets close today.
The wider loss will delay Singapore-based Chartered's recovery from a nine-month slump, hurting efforts to narrow the gap with bigger rivals Taiwan Semiconductor Manufacturing Co (台積電) and United Microelectronics Corp (聯電).
"For the third quarter, we have downgraded our forecast and we expect a sequential decline instead of a sequential improvement," said Warren Lau, an analyst at HSBC Securities in Singapore.
"We don't see any improvement in the communications sector and the outlook for its top six customers is negative."
Communications customers such as Ericsson AB, the largest maker of wireless networks, and Conexant Systems Inc, the world's leading manufacturer of chips for modems, are among Chartered's biggest clients.
These companies, which are facing declining sales, account for half of Chartered's revenue and have been cutting manufacturing orders. Conexant said last week it's paring 6 percent of its workforce.
With fewer orders, Chartered's second-quarter sales are expected to plunge 61 percent to US$106.9 million from US$271.4 million a year ago, based on the average estimate of the five analysts. The company said in May it expects a loss of between US$0.76 and US$0.78 an ADR, and sales to fall 48 percent from the first quarter's revenue of US$206.7 million.
Chartered's also expected to reduce investments to about US$650 million this year, analysts said, after paring the budget in April to US$1 billion from US$1.2 billion. The cut may delay plans to open a new US$3.5 billion plant in northern Singapore in 2002, analysts said.
Moving ahead, analysts say Chartered needs to plan future investments well enough to have the factory equipment to meet the next wave of orders without exhausting resources amid a weaker economic outlook.
"The key for them is to make sure they have enough funding to invest and compete," said Patrick Yau, an analyst at ABN Amro Asia Securities Pte in Singapore.
"If you can't expand, you can't keep up with the technology road map."
Chartered shares have lost about three-quarters of their value in the past year. United Microelectronics shares lost half their value while Taiwan Semiconductor shares fell 39 percent.
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