SINGAPORE Temasek Holdings, the investment arm of the Singapore government, may divest itself of Chartered Semiconductor Manufacturing Ltd. and its sister company, ST Assembly and Test Services, thereby abandoning the wafer production business. "Temasek is carrying out a review before providing feedback on whether the government should exit the business," said S. Dhanabalan, chairman of Temasek Holdings.
News of the investment firm's reassessment of its holdings followed Chartered's reporting of its sixth consecutive quarterly loss, $51.5 million for the second quarter ended June 30. The Singapore foundry's numbers were otherwise encouraging, with revenue rising 51 percent sequentially to $127.5 million and utilization inching upward to 42 percent. Chartered said it expects second-half utilization to improve to 80 percent for 0.18-micron technology. The break-even point is considered to be 70 percent utilization.
Meanwhile, Chartered is also looking to sell its first wafer fab, which has been in operation since 1989, to an overseas buyer. So far Philips Semiconductors, Infineon Technologies and STMicroelectronics have expressed interest, managers said. The price tag is around $227 million.
Searching for growth
Temasek, which works with Singapore's Economic Development Board, is helping the government in its search for new technology growth markets and for a way to maintain Singapore's status as a telecommunications and routing hub. With overcapacity plaguing the global semiconductor industry, Temasek is now looking for new opportunities in telecom and biotechnology.
Temasek holds shares in companies worth an estimated $42 billion in market capitalization on the Singapore Stock Exchange. It regularly reinvests in core technologies seen as necessary for Singapore's survival as an Asian technology center.
"Temasek would do well to diversify into the bio-sciences field and tap that in the later years as an equal if not better performer than the electronics sector," said Steven Taylor, a technology consultant with Axiom Consulting in Hong Kong.
However, electronics "is still considered a cash cow, employing a sizable work force" in Singapore, Taylor said. "Electronics exports account for about 75 percent of Singapore's non-oil domestic exports and nearly 40 percent of its overall output." Analysts said Singapore's high-tech manufacturing sector may have peaked in June as a percentage of all production, at 18.9 percent.
Chartered's six wafer fabs employ about 4,000 workers, and rely on a cluster of businesses including power, chemical and equipment suppliers to support the chip operations. Chia Song Hwee, Chartered's chief executive officer and president, said the foundry company is assessing technology licensing and joint development as a way to improve its global competitiveness.
Chia said the technology gap with Taiwanese rivals is shrinking. "Unlike three years ago, when Chartered's technology lagged that of Taiwan by two and a half to three years in the 0.25-micron node, Chartered's 0.18-micron [process] is now only three to four quarters behind" that of Taiwan-based foundries, he said.