Chartered Semiconductor Manufacturing Ltd. said it expects its semiconductor wafer plants to run at about 85% of capacity in 2001, down from 102% in 2000, as the company and the entire electronics industry adjust to slowing demand from the global economy.
Capacity utilization during the current quarter is expected to be even lower, according to the Singapore-based foundry, which witnessed surging demand for wafers from the communications sector in the last two years only to experience a sudden drop in the final days of 2000.
After beefing up in 2000, Chartered said it is placing itself on a slim-fast diet and will reduce its capacity. Capital expenditures will drop 20% from previously-announced levels to $1.2 billion, although still higher than the $911 million spent in 2000. The company revised plans for its proposed fab 7 and now expects to bring it online as a 300mm plant by mid-2002.
"The full year is dependent on economic trends and the general health of the semiconductor industry, both of which are quite difficult to forecast at this stage," Chartered said in a released statement. "In line with the lower near-term growth outlook, the company has re-profiled its capacity plans downward and is working with vendors accordingly."
Chartered said its plants will now run in the "low to mid 70s" in the first quarter while revenue will decline as much as 20% from the fourth quarter of 2000. The company said its income for the quarter will also decline dramatically as gross margin drop 10% to 12% from the fourth quarter.
Like other semiconductor companies, Chartered benefited from strong demand for communications ICs in 2000, which helped to boost its revenue for the year by 63%, to $1.1 billion, from $694.3 million in 1999. Reversing its loss in 1999, Chartered posted net income of $244.8 million, or 18 cents a share, versus a net loss of $32.6 million, or 3 cents a share, in 1999.
The company's performance began to show strains during the fourth quarter, according to Chartered. While fourth quarter revenue strengthened on a year-over-year basis to $318.7 million from $216.2 million, the pace of growth began to slide during the final weeks of the three-month period.
"Capacity increased approximately 44% from fourth quarter 1999 to fourth quarter 2000, however, demand slowed during the fourth quarter particularly in the communications segment," the company said.