Chartered Semiconductor Manu-facturing Ltd, the third-largest made-to-order chipmaker, said it expects second-quarter sales to increase 40 percent from the first quarter, exceeding its earlier forecast of 25 percent.
The net loss for the quarter is expected to be US$0.76 to US$0.77 per American depositary share, compared with an earlier forecast of US$0.82 to US$0.84, the company said in a statement.
Chartered's clients include Broadcom Corp and Ricoh Co.
An increase in orders that began in late March has continued into this quarter, particularly among communications and computer chip companies, Chief Financial Officer Chia Song-Hwee said on a conference call. What remains unclear is if Chartered's customers are actually seeing strong demand for their products or if they are merely replacing diminished inventory, said Scott Randall, an analyst for SoundView Technology Group.
"The strong results say more about favorable inventory dynamics as opposed to significant changes in the end market," said Randall, who rates the shares a "buy" and doesn't own them.
Chartered Semi's shares rose as much as US$0.12, or 2.8 percent, to US$4.34 in morning trading. The shares have fallen 12 percent this year.
The company's sales, which reached a low of US$76.1 million in the fourth quarter, are on the rebound after the chip industry's worst year ever last year.
"We are in the early stages of an upturn," said Terence Wong, an analyst with JM Sassoon & Co. The improved forecast "is not altogether surprising."
Chartered Semi said it moved up its mid-quarter update originally scheduled for June 4 because of the strength of orders from companies that make chips for computer peripherals and networking equipment.
"We continue to see growing optimism," interim Chief Executive Jim Norling said. "I don't think we're just seeing inventory replenishment here, we're seeing something a bit beyond that."
Average selling prices should increase about 5 percent, and the company expects to use close to 40 percent of its chipmaking equipment, compared with a previous forecast of usage in the mid-30s, Chia said. Still, he was unwilling to commit to a timeframe for breaking even, which will require the use of about 70 percent of the company's equipment.
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