MILPITAS, Calif.—(BUSINESS WIRE)—July 26, 2007—
Chartered Semiconductor Manufacturing
(Nasdaq:
CHRT)(SGX-ST:CHARTERED), one of the world's top dedicated
semiconductor foundries, today announced its results for second
quarter 2007.
"In second quarter 2007, we saw shipment growth of approximately
17 percent, driven by strength in 0.13-micron and above technologies,
which more than offset the lower 90-nanometer (nm) shipments to the
computer sector. With strength coming mainly from more mature
technologies which command relatively lower prices, this shipment
growth translated to revenues that were essentially flat at the
Chartered level and up 2.2 percent including our share of SMP,
compared to the previous quarter. Revenues from 0.13-micron and below
technologies, including those from 65nm, accounted for 50 percent of
our total business revenues. Revenues from 65nm alone, including both
SOI and bulk technologies, were six percent of our total business base
revenues. We ended the quarter with a net loss of around $25 million
which was higher than our previous guidance as a result of additional
tax expense that had to be recognized in the quarter," said George
Thomas, senior vice president and CFO of Chartered.
Summary of Second Quarter 2007 Performance
-- Revenues were $324.3 million in second quarter 2007, down 11.1
percent from $364.8 million in second quarter 2006. Revenues
including Chartered's share of SMP were $353.0 million, down
10.3 percent from $393.7 million in the year-ago quarter,
primarily due to weakness in the consumer sector, partially
offset by strength in the communications and computer sectors.
Sequentially, revenues were up 0.2 percent compared to $323.8
million in first quarter 2007. Revenues including Chartered's
share of SMP were up 2.2 percent from $345.3 million in first
quarter 2007, primarily due to strength in the communications
and consumer sectors, significantly offset by weakness in the
computer sector.
-- Gross profit was $59.9 million, or 18.5 percent of revenues,
down from a gross profit of $88.5 million, or 24.2 percent of
revenues in the year-ago quarter, primarily due to lower
revenues resulting from a less favorable product mix arising
from lower shipments of 90nm products which have higher fixed
costs. Gross profit was also affected to a lesser extent by
lower selling prices, partially offset by higher shipments
from 0.13-micron and above technologies. Gross profit was down
16.5 percent sequentially from $71.7 million, or 22.2 percent
of revenues in first quarter 2007, primarily due to a less
favorable product mix arising from lower shipments of 90nm
products which have higher fixed costs, partially offset by
higher shipments from 0.13-micron and above technologies.
-- Other revenue primarily relates to rental income from SMP (Fab
5) and was $5.6 million compared to $5.3 million in the
year-ago quarter.
-- Research and development (R&D) expenses were $38.5 million, an
increase of 1.7 percent from the year-ago quarter, primarily
due to higher development activities related to the advanced
45nm technology node and higher activities related to
development of design kits and intellectual property solutions
for advanced technologies. Compared to the previous quarter,
R&D expenses were up 2.5 percent, primarily due to lower
reimbursement of expenses related to grants.
-- Sales and marketing expenses were $13.4 million, up 11.9
percent compared to $11.9 million in the year-ago quarter,
primarily due to higher expenses related to Electronic Design
Automation (EDA) offerings. Compared to the previous quarter,
sales and marketing expenses were down 6.2 percent from $14.2
million, primarily due to lower financial support for
pre-contract customer design validation activities and lower
expenses related to EDA offerings.
-- General and administrative (G&A) expenses were $9.7 million,
essentially flat compared to the year-ago quarter.
-- Equity in income of Chartered's minority-owned joint-venture
fab, SMP (Fab 5), was $10.2 million compared to $7.9 million
in the year-ago quarter, primarily due to lower cost per wafer
resulting from lower depreciation and higher production
volumes over which fixed costs are allocated. Compared to the
previous quarter, equity in income of SMP was up 67.5 percent
from $6.1 million, primarily due to higher revenues resulting
from higher shipments and lower cost per wafer resulting from
higher production volumes over which fixed costs are
allocated.
-- Net interest expense was $8.7 million, compared to $10.4
million in the year-ago quarter, primarily due to higher
interest capitalization associated with the ramp of Fab 7,
partially offset by lower interest income arising from lower
principal balances. Compared to the previous quarter, net
interest expense was up 7.7 percent due to lower interest
income arising from lower principal balances.
-- The financial position of Chartered's consolidated joint
venture fab, Chartered Silicon Partners (CSP or Fab 6),
continued to be in a shareholders' deficit in second quarter
2007, and therefore none of the loss of $3.9 million in the
second quarter was allocated to the minority interest. At the
end of second quarter 2007, CSP's shareholders' deficit was
$432.4 million.
-- Net loss was $24.7 million, or negative 7.6 percent of
revenues, compared to a net income of $12.9 million, or 3.5
percent of revenues in the year-ago quarter and a net income
of $6.3 million or 2 percent of revenues in the previous
quarter. Net loss was higher than previous guidance primarily
due to a higher than expected tax expense, resulting from a
higher effective tax rate (ETR). The higher ETR used in second
quarter 2007 was mainly due to forecast losses, arising
primarily from the leading-edge technologies, which were not
deductible against taxable income. These forecast
non-deductible losses were higher than what was expected for
the year in first quarter 2007. The tax expense in second
quarter 2007 also included a cumulative adjustment to bring
first quarter 2007 tax expense level up to reflect the revised
ETR. ETR is calculated as a percentage of the forecast tax
expense for the year over the forecast profit before tax for
the same period and is the methodology used under US GAAP to
account for tax expense in interim periods.