Chartered Reports Results for Third Quarter 2008 (Revenue up 28%)

Recent Highlights

  • Chartered, IBM, Samsung and ARM announced they will develop a comprehensive 32nm and 28nm Systems-on-a-Chip design platform based on high-k metal-gate technology from the IBM-led joint development alliance. Under this multi-year collaboration, ARM will develop and license a design platform of physical intellectual property including logic, memory and interface products for the Common Platform technology alliance of IBM, Chartered and Samsung for distribution to their customers.

Review and Outlook

The negative macroeconomic environment that has been prevailing for several months and the resulting difficult market conditions are finally impacting the foundry industry. We started to see orders declining from the middle of August, followed by some customer requests to reschedule deliveries forward. The weakness is expected to deepen into the fourth quarter, and current uncertainties in the market place make it difficult to predict with accuracy how the quarter will turn out. Based on current outlook, we are guiding for Chartered revenues to be down approximately 21 percent sequentially and revenues including Chartereds share of SMP to be down approximately 22 percent sequentially in the fourth quarter. In line with the demand outlook, we are also reducing our capital expenditure for 2008 to $650 million, which is $100 million lower than the amount we had earlier anticipated, said Thomas.

The outlook for fourth quarter 2008 is as follows:

3Q 2008 4Q 2008 Guidance
Actual Midpoint and range Sequential change
Revenues $463.7M

$368M, +/- $6M


Down 19% to down 22%
Revenues including Chartereds share of SMP $487.2M $379M, +/- $7M Down 21% to down 24%
ASP (b) $878 $897, +/- $20 Flat to up 4%
ASP including Chartereds share of SMP (b) $873 $895, +/- $25 Flat to up 5%
Utilization 85% 63%, +/- 3% -
Gross profit $65.6M $31M, +/- $6M -
Net income (loss) ($24.4M) ($57M), +/- $5M -
Basic earnings (loss) per ADS (c) ($0.11) ($0.23), +/- $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 fourth quarter 2008.

CEO Closing Comments

As we face contracting demand in the foundry industry coupled with the unfavorable macroeconomic environment and turmoil in the financial markets, we have laid out three near-term priorities for the company to focus on. These are lowering our breakeven utilization level; positioning for early phase of demand recovery; and preserving our cash and liquidity position, said Chia Song Hwee, president & CEO of Chartered.

We are targeting to bring down our breakeven utilization operationally to approximately 75 percent, a reduction of more than 10 percentage points from current levels, by fourth quarter of 2009 by optimizing product mix, improving productivity and reducing our cost base. Out of these three factors, product mix optimization is the single largest lever for lowering the breakeven utilization rate. While we work towards achieving the breakeven utilization target, we need to recognize that there are external variables including technology and product mix associated with market demand, trend for selling prices, prices for commodities and currency exchange that could hinder our progress.

On the business front, we are taking all necessary actions to position Chartered to benefit from the early demand recovery phase of the industry by targeting potentially high-growth products and applications and ensuring that our technology offerings and intellectual property enablement are well aligned.

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