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2-week closure at Chartered wafer fab in S'pore

Slow demand has caused Chartered Semiconductor to stop work at one of its three wafer fabs for two weeks, starting next week. Workers will take leave.

SINGAPORE--Slow demand has caused Chartered Semiconductor to stop work at one of its three wafer fabs for two weeks, starting next week. Workers will take leave.

The plant to be affected is Fab 3 in Woodlands, which has a monthly capacity of 26,000 wafers, or about a fifth of Chartered's total capacity.

Last month, Chartered issued a profit warning, telling investors that second quarter revenues would fall by 48 percent, eclipsing its earlier forecast of a 25 percent drop. Factory utilization was expected to be in the low 30 percent range.

However, The Business Times believes that the outlook for Chartered, the No 3 producer of wafers, has become even bleaker since then, as the move to shut Fab 3 temporarily indicates that average factory utilization may have shrunk to as little as 20 percent.

In comparison, Q1 of 2000 saw capacity utilization of 104 percent, and the figure only slipped to 94 percent in Q4 of last year. In Q1 of 2001, the figure stood at 61 percent.

Chartered president and chief executive Barry Waite told staff that they would get no increments this July, when the company traditionally revises its salaries. However, the paper also understood that Chartered would not retrench any workers, although some staff are believed to have already quit to join Taiwanese wafer fab UMC, whose Singapore plant will begin operations next year.

Chartered, which lost US$31 million in Q1, is delaying the installation of some machines for Fab 6, which it owns jointly with Agilent Technologies and EDB Investments. The plant, which started operating last year, was supposed to hit a capacity of 35,000 wafers by this year.

The company told Reuters it would issue a statement on the plant closure "as soon as possible". Chartered's shares lost S$0.08 to close at S$4.64 yesterday.