Chartered Execs Remain Hopeful, Stick To '07 Financial Plan - InformationWeek
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Chartered Execs Remain Hopeful, Stick To '07 Financial Plan

Despite an "unexpected"' slump in the electronics sector, executives at Chartered Semiconductor hold fast and refuse to downgrade company forecasts for the year.

SINGAPORE — Despite the fallout from unexpectedly soft consumer sentiment in recent months, executives at foundry Chartered Semiconductor are sticking to their spending plans, confident of a surge in demand next year.

In a July 20 conference Call, Chartered president and CEO Chia Song Hwee said the company had no plans to trim its planned capital expenditures for falling short of analysts' guidance in the second quarter. He is optimistic for 2007.

"We expect to have additional 90nm and 65nm production for customers who are already in the pipeline, and we are getting very encouraging early results and feedback for multiple new 65nm customers," he said.

"We have to be prepared for a lot of new engagements where we're expected to ramp up production in 2007," he said, though he added that the foundry could "moderate" the installation of new equipment.

Chia said many factors were behind the current industry slowdown, including the delay in the launch of Microsoft's Windows Vista operating system and waning demand for video game devices and mobile phones, as well as persistently high oil prices and the conflict in the Middle East.

"Some of our customers are cautious about their existing inventory situation while others are holding back the usual inventory bill for the seasonal sales in the second half of the year," he added.

Chia admitted that the "unpleasant change" in the near-term outlook for the electronics sector was largely unexpected.

"Like many others in the industry we did not anticipate the inventory concerns and the slowing demand," he said.

Disappointed with Chartered's recent performance, many analysts have downgraded their forecasts for the company.

Tan Ai Teng, an analyst for Singapore-based brokerage Kim Eng Securities, said in a July 21 report that the firm's second quarter results were "significantly below" expectations and that a much-touted move to ship 90nm chips for AMD ahead of schedule "did not provide any additional boost" to its earnings.

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