Chartered Reports Results for Second Quarter 2008

Review and Outlook

Between the second half of the year 2007 and the first half of the year 2008, we posted revenue growth of approximately 20 percent at the Chartered level and approximately 18 percent including our share of SMP revenues. If we exclude the Fab 3E revenues from the second quarter of 2008, this growth translates to approximately 14 percent and approximately 13 percent respectively, compared to the foundry industry which was roughly flat during the same period. After this significant growth, we are now seeing growth moderating into the third quarter, and we expect Chartered revenues and revenues including our share of SMP to grow approximately four percent and three percent respectively, said Thomas.

Despite the moderate overall revenue growth, we are seeing healthy momentum at the leading edge as we ramp our 65nm programs. Revenues from 65nm alone are expected to grow around 43 percent sequentially and represent approximately 18 percent of our total business base revenues. Revenues from 0.13-micron and below technologies, including those from 65nm, are expected to grow approximately 16 percent sequentially and account for approximately 55 percent of our total business base revenues. Growth in these technology nodes is expected to be partly offset by the decline in revenues from 0.18, 0.25 and 0.35-micron technology nodes. After comprehending an approximately six percent sequential increase in capacity, we expect utilization in the third quarter to be approximately 84 percent. Primarily due to the expected cost impact of approximately $11 million resulting from lower wafer starts during the quarter, higher depreciation of approximately $9 million due to Fab 7 ramp up, and the absence of non-operating gains which we had in previous quarters, we expect to post a net loss of approximately $29 million for the third quarter.

The outlook for third quarter 2008 is as follows:

 
  2Q 2008   3Q 2008 Guidance
    Actual   Midpoint and range   Sequential change

Revenues

 

$457.6M

 

$475M, +/- $6M

 

Up 2% to Up 5%

Revenues including Chartereds share of SMP   $482.5M   $497M, +/- $7M   Up 2% to Up 4%
ASP (b)   $864   $880, +/- $20   Flat to Up 4%
ASP including Chartered s share of SMP (b)   $860   $874, +/- $25   Down 1% to Up 5%
Utilization   88%   84%, +/- 3%   -
Gross profit   $69.9M   $50M, +/- $6M   -
Net income (loss)   $43.4M   ($29M), +/- $5M   -
Basic earnings (loss) per ADS (c)   $0.16   ($0.12), +/- $0.02   -
 

(b) Eight-inch equivalent wafers.

(c) Basic earnings (loss) per ADS is computed by deducting from net income or adding to net (loss) the accretion to redemption value of the convertible redeemable preference shares, projected to be approximately $2.5 million in third quarter 2008.


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