SAN JOSE, Calif. ATI Technologies Inc. has reduced its forecast for the quarter by a wide margin, reportedly due to ongoing product delays for its next-generation R520 graphics chip line.
ATI (Markham, Ontario) now expects revenues for the fourth quarter to be in the range of $465-to-$480 million, compared to the expected range of $550-to-$580 million provided on June 23.
Gross margin percentage for the quarter is expected to be in the single digit range, which includes an inventory writedown that is expected to be approximately $60-to-$70 million.
ATI's desktop product line missed both in units and average selling prices for the retail and add-in-board channels, the company said. Amid delays with its new graphics chip, ATI recently said that sales were $530 million in the third quarter, up 8 percent over the like period a year ago. Net loss was $0.4 million, or breakeven, as compared with net income of $49 million, or $0.19 per share, in the third quarter last year.
The company is reportedly late with its new graphics chip, dubbed the R520. The chip was supposed to be out sometime in June. In contrast, rival Nvidia Corp. has begun shipping its next-generation graphics chip. (see June 23 story).
The R520 is a 24-stage pipeline chip that operates at 700-MHz. ATI is also readying entry-level and mid-range chips, dubbed the RV515 and RV530, respectively.
These chips, which are being made on a foundry basis by Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), are slated for introduction in September or October, according to a report from Pacific Crest Securities Inc. (Portland, Ore.).
"This has clearly been a challenging and disappointing quarter for ATI and we are committed to resolving our operational issues," said David Orton, president and chief executive of ATI, in a statement. "Despite our short term difficulties, we are optimistic about the future. We continue to gain traction in our integrated and consumer businesses. We are also confident that our upcoming desktop product launch will allow us to reclaim top-to-bottom technology leadership in discrete graphics."