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Slow 65nm ramp drags down Chartered Semiconductor

By Sumner Lemon , IDG News Service , 07/27/2007
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A slower than expected ramp of 65-nanometer chip designs at Singapore's Chartered Semiconductor Manufacturing will drag down the company's earnings during the second half of the year, the contract chip maker's top executive warned Thursday.

"We are continuing to see weaker demand at the 90nm node from the computer sector and also slower than expected production ramp of 65nm designs," said Chia Song Hwee, Chartered's president and CEO, in a statement. He said the company was "disappointed" with the outlook for the second half of the year.

Chartered expects to break even during the third quarter, after posting a $27.1 million second-quarter loss on revenue of $324.3 million dollars.

Revenue from chips made using the 65nm process accounted for 6% of revenue during the period, coming in slightly higher than the company's earlier forecast of 5%. During the third quarter, that figure is expected to rise to 10% of revenue, Chartered said.

That tracks with earlier predictions that 65nm chips will account for a double-digit percentage of Chartered's revenue by year-end. But Chia's comments suggest the company expected to see greater demand for this process, which is the most advanced that Chartered offers.

Much of the demand for Chartered's 65nm process comes from Advanced Micro Devices (AMD), which contracts out some production to Chartered when its own plants are running at full capacity.

AMD's most advanced desktop processors are made using a 65nm process, but the production of a 65nm quad-core server chip, called Barcelona, has been delayed slightly. The company earlier said the chips would begin to ship during the middle of this year, but the chips are now set to begin shipping in August.

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