Chartered said its wafer fab capacity utilization rate dropped to 31% in the second quarter, compared to 61% in the first quarter of this year and 107% in Q4 of 2000.

The world's third largest pure-play silicon foundry company announced its decision to delay the 300-mm fab while releasing sharply lower results, including a net loss of $107.6 million for the second quarter. Chartered's revenues sequentially dropped 62.9% in the quarter to $100.7 million, compared to $271.4 million in Q1 this year.

With its fab utilization rate falling to less than one-third of its current installed capacity, Chartered said it has decided to cut capital spending plans in 2001 to $700 million from a previous estimate of $1 billion. Earlier this year, Chartered had cut its original 2001 capital-spending budget by 20% to about $1.2 billion.

"We saw weakness in every segment and, compared to the first quarter, the largest revenue decline was in the communications segment," said Barry Waite, president and CEO of Chartered.

Chartered's 300-mm Fab 7 was scheduled to start production in the middle of 2002 after plans for the facility were changed from 200-mm wafers to the larger diameter substrates (see Jan. 29 story). Chartered officials have estimated that the total budget for Fab 7 would be more than $3 billion when the plant is fully equipped.

The Singapore foundry company said it has made "solid progress" in developing 300-mm technologies and tool sets, with over three-fourths of the necessary process modules completed. According to Chartered, this development work will enable it to accelerate the re-launch of Fab 7 should the market recovery more quickly than expected.

In the second quarter, Chartered shipped 87,800 eight-inch equivalent processed wafers, a decline of 61.2% from 226,200 in the same period last year. Wafer shipments were sequentially down 47.3% from 166,400 in the first quarter of 2001, said the company.

Average selling prices (ASPs) for processed foundry wafers fell 4.4% to $1,147 in the second quarter from $1,200 in the same period last year, said the Singapore company. ASPs dropped 7.6% from $1,242 in Q1 of this year.

Chartered's decision to push back the start of its 300-mm fab could be another blow to semiconductor capital equipment suppliers, which are desperately needing tool orders in current downturn. Earlier this week at Semicon West in San Francisco, Applied Materials Inc. officials said they were beginning to worry that a new phase in the downturn could undermine the 300-mm fab movement (see July 16 story).

But some believe the foundry slump has nearly reached the bottom. The average fab utilization rates was about 48% in the second quarter, according to analyst James Hines, who tracks the segment at Dataquest Inc. Hines believes that rate could slip slightly lower to 46% in the third quarter, but he said the foundry business has reached the bottom of the slump (see July 17 story).

During a presentation at Semicon West, Hines told industry executives that it could take a year before the foundry business completely recovers. Even at the end of 2002, average foundry capacity utilization rates are not likely to be above 80%, he said.

--J. Robert Lineback reporting from San Francisco