MONTEREY, Calif. -- One of the largest makers of chips for companies like
says the chip business will turn around some time in the second half -- but exactly when is anyone's guess.
outlook isn't exactly surprising given that both Broadcom and PMC-Sierra have expressed a similar sentiment in recent weeks. But with the year's second half now only about seven weeks away, Chartered's comments do make clear that the much talked about turnaround probably won't happen until later in the year.
"I think there will be a pick up in the second half, but I have such poor visibility I don't know what month that will be in, or how significant it will be," Chartered CEO Barry Waite said during
Salomon Smith Barney's
semiconductor conference here Wednesday. Waite went on to say that he feels confident in a turnaround because of the low capacity utilization rates and the rate that he believes customers are burning up inventory.
Singapore-based Chartered runs so-called foundries, which are the factories that make the chips for chip companies that don't make their own chips. These are called fabless chip companies. For instance,
makes its own chips -- Broadcom doesn't. Up until recently, the stock market has awarded some fabless companies handsomely for the setup, which can give the chipmaker more flexibility when demand swings.
While Chartered's own customers may not have overwhelming inventories on hand, the customers of those companies -- large networking companies like
-- have been struggling to overcome a slowdown in telecommunications equipment spending that has left them with too much inventory. Cisco Tuesday
reported weak results and reported that it took a $2.2 billion inventory writedown in the most recent quarter. And there are some companies that supply the networkers that haven't managed their inventories as well as others. Both programmable logic device maker
and networking chip maker
have written down some of their inventory this year.
like Intel, plans to increase its capital spending this year. Chartered said it would spend $1 billion on new technology in 2001, up from $911 million in 2000. Intel plans to spend $7.5 billion. On that point, at least, Chartered knows how 2001 will turn out.