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Chartered sees a rise in orders for communications chips

Summary

Chartered Semiconductor Manufacturing Ltd said it expects orders from Ericsson AB and other communications companies to rise, reversing a trend that led to its first quarterly loss in more than six quarters.

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SINGAPORE--Chartered Semiconductor Manufacturing Ltd said it expects orders from Ericsson AB and other communications companies to rise, reversing a trend that led to its first quarterly loss in more than six quarters.

The third-largest contract chipmaker extended this week its one-year technology partnership with Ericsson to make more advanced chips for mobile phones and cellular base stations. The move assures Singapore-based Chartered more orders when the largest maker of wireless networks introduces new technology.

"We're continuing the relationship with Ericsson and we're expecting additional output from the joint development," John Martin, Chartered's chief technology officer, said in an interview. "When new products become available, there will definitely be more orders."

Ericsson said its tie-up with Chartered is "unique," because it helps Chartered specialize in communications chips, giving it a lead over Taiwanese rivals such as Taiwan Semiconductor Manufacturing Co and United Microelectronics Corp.

Expected recovery
Chartered is betting on an expected recovery for cellular phones and other communications products in the next few years, Martin said. More than half of its US$1.1 billion revenue in 2000 came from communications companies such as Ericsson, one of its five biggest customers.

Still, a drop in orders pushed Chartered to a first-quarter loss of between US$0.22 and US$0.24 for each American depositary receipt, comprising 10 ordinary shares. The results are expected on April 20.

"We don't see a dramatic shift from the high focus on communications," Martin said.

Chartered shares, which have fallen 71 percent in the past year, recently fell 6 cents to S$3.98. Ericsson and competitors such as Motorola Inc., another Chartered customer, have lost two- thirds of their market value in the past year because of waning demand for cell phones.

That may change in the next few years, said Yngve Thulin, a spokesman for Ericsson Microelectronics, Ericsson's semiconductor arm. "We see orders in the long term," Thulin said. "And when the demand comes, it's important to have a reliable manufacturer."

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