Chartered Semiconductor Manu-facturing Ltd (
The chips will be used in consumer products, the Singapore-based manufacturer said in an e-mail. Cirrus Logic is the largest maker of chips used in DVD players.
Chartered will also become a "preferred" manufacturer for specific chips for the Austin, Texas-based company.
The order may help Chartered, which recently suffered its biggest quarterly loss after going public two years ago as customers ordered fewer chips amid a weaker economic outlook.
Chartered also needs to fill orders in its plants, where only about 22 percent of equipment is being used.
"It's a positive sign that they're able to sign preferential agreements at this point in the cycle," said Jatin Doktor, an analyst at G.K. Goh Research Pte in Singapore.
"It may add strength in its relationship with the customer." Doktor said. He rates the stock a "trading buy" with a target price of US$4.80.
Chartered shares were unchanged at US$4.24.
The Cirrus Logic pact may help Chartered win more orders.
Previously, Chartered supplied chips to individual divisions within Cirrus Logic, while the new agreement gives it access to the entire company, said Michael Buehler-Garcia, Chartered's vice president of business development.
"This moves the relationship to a more long-term strategic level," he said in a phone interview from Chartered's Milpitas, California office. "The opportunity for Chartered to get share of mind across all the divisions are stronger."
However, Buehler-Garcia added that Chartered would still have to win each manufacturing order by merit.
The agreement isn't exclusive, he said, declining to disclose further details.
Making chips for consumer products is still a small part of Chartered's business after communications and computer customers.
Chips for consumer products made up 12 percent of Chartered's sales in the year ended September, the company said last month.
He declined to say if this order signified a turnaround for the company's business.
Chartered's shares have fallen 35 percent in the past year, almost the same as the Bloomberg Asia Pacific Semiconductors Index, which dropped 34 percent.
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