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Chartered racks up more losses

Third place * Chartered Semiconductor says capacity utilization may hit 35 percent in the second quarter. TSMC and UMC expect to use about two-thirds of their capacity. * Because Chartered is behind TSMC and UMC in terms of technology, analysts are worried the Singapore company will lower prices to compete, thus hurting its earnings.

Chartered Semiconductor Manufacturing Ltd (特許), the world's third-biggest maker of chips for other companies, said its first-quarter loss widened less than expected and forecast sales will recover this year.

The loss was US$128.4 million, or US$0.93 an American depositary share, compared with US$30.9 million, or US$0.22, a year ago. Sales fell to US$84.4 million from US$206.7 million, the company said. The results exceeded the company's March forecast.

While Chartered Semiconductor has lost money five quarters in a row, first-quarter sales rose from the fourth quarter, indicating that business may be picking up. It was the first quarter-to-quarter sales increase in more than a year.

"It's definitely an improvement," said Simon Koh, who helps manage US$600 million in Asia outside Japan for Commerzbank Asset Management Asia Ltd, which owns Chartered shares.

The company's outlook has improved "significantly," Chief Executive Officer Barry Waite said on a conference call, adding that sales growth is seen at a "healthy rate."

Fourth-quarter sales should be double those of the first quarter, he predicted.

"What we are seeing is the beginning of a classic semiconductor recovery and one that has potential to be quite strong," Waite said.

In the first quarter, Chartered Semiconductor benefited from increasing demand from makers of chips for TV set-top boxes and DVD players, Chief Financial Officer Chia Song Hwee said in an interview.

Chartered Semiconductor said it plans to use about 35 percent of its manufacturing capacity in the second quarter, compared with 28 percent in the first quarter.

Investors remain concerned that Chartered Semiconductor trails Taiwanese rivals Taiwan Semiconductor Manufacturing Co (台積電) and United Microelectronics Corp (聯電), Koh said.

The Taiwanese companies have said they plan to use two-thirds of manufacturing capacity in the second quarter. Chartered may have to cut prices to compete, Koh said.

"It can ramp up the sales but I'm more cautious about whether it can ramp up the average selling price -- they're behind TSMC and UMC in technology so there are concerns they will compete on price," he said.

In the first quarter, the average selling price for Chartered Semiconductor's chip wafers fell 2 percent to US$1,034 compared with the fourth quarter.

The company forecast a second-quarter average price increase of about 5 percent compared with the first quarter.

Chartered Semiconductor was expected to lose US$0.97 a share on revenue of US$78.9 million, according to the average of five estimates from analysts surveyed by Bloomberg News.
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