Sunday January 11, 2009

Chartered Semiconductor earnings alert adds to Singapore recession woes

This article belongs to the Singapore recession watch story arc.

ft.com :

Chartered Semiconductor exemplifies the problems facing Singapore's ailing electronics sector after warning that it will suffer its biggest loss in nearly 4 years when it reports its results for 2008 Q4. The problem child of Temasek Holdings, the Singapore state investment company, Chartered is the world's third-largest foundry chipmaker. Electronics is Singapore biggest industrial sector, employing 119,000 workers, including 5,125 at Chartered Semiconductor, and accounting for 40% of the city-state's non-oil exports. However, its position is declining amid falling exports and growing job losses. Chartered Semiconductor already has cut overtime and reduced wages and spending.

Even before the latest woes, Chartered Semiconductor was Temasek's worst performing corporate asset because of its plunging market value, in spite of producing chips for popular consumer items such as Microsoft's Xbox 360 game player. There is speculation that Temasek Holdings, which owns 59.4% of the company, could sell Chartered Semiconductor or merge it with a rival, such as UMC, which is also struggling. Some analysts believe it may decide to delist Chartered by taking it private. Singapore's electronics exports fell by 17% in Nov 2008, the 20th month of decline.

- Chartered's problems started a long time ago, before most people noticed any slowdown in the Singapore economy, and certainly long before it was made public that, yes, indeed Singapore is now in a recession. In fact it was even before Singapore's stagflation phase. So if you want a good leading indicator of the Singapore economy, you need not look much further than Chartered Semiconductor. It's the nature of the semiconductor business - boom times come quickly, and on the flipside, the bust, well, that has seemed to come even quicker, hasn't it? With the global economic collapse going on and factories closing left and right, we wouldn't expect this thing to turn around any time soon. Anyone who tells you otherwise is at best an optimist and at worst an economist.

See also :

1. Junk bonds : Chartered Semiconductor debt rating lowered to junk By Fitch
2. Chartered Semiconductor salary cut - all employees pay reduced by 5-10% on economic slowdown
3. Chartered Semiconductor forces block leave, stops bus services, mulls 4-day working week
4. Singapore economy falling into technical recession as exports fall
5. Singapore GDP contracted 6.8% annualized in Q3 2008, heads deeper into recession

(2009-01-11 11:16:00 SGT) [Biz] Permalink

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