GlobalFoundries-Owned Chartered Semiconductor Posts Q3 Results

Earlier this month, we covered news that the Advanced Technology Investment Company (ATIC) issued a press release confirming that it had signed a definitive agreement to purchase Chartered Semiconductor. Chartered's business will be rolled into GlobalFoundries, with Doug Grose serving as CEO of the combined entities. Chartered released its financial report for the third quarter of 2009 this week and shed some light on what role the GlobalFoundries partner might play in the months and years ahead. Normally we run the numbers before examining other data, but since we've not written much about the company to date, we'll start with some additional information.

Unlike AMD or Intel, Chartered currently builds products on everything from modern 45nm technology to process nodes like 350nm, which hasn't been considered cutting-edge in nearly 15 years. The company offers a detailed breakdown of which processes account for a given percentage of revenue, as shown below. In its documentation, Chartered claims that each data point represents revenue "up to" a given node, ie, "Up to 90nm." The percentages given, however, are not inclusive. TSMC doesn't break out its production to the same level of detail, but states that 70 percent of its revenue is derived from 130nm technology or below; 30 percent from 150nm and above. Chartered's figures aren't far from that; 34 percent of the company's revenue is from 150nm technology or higher, but a full third of its sales are on the relatively aged 130nm process. Exact numbers for GlobalFoundries aren't available, either, but during the Q3 conference call executives remarked that the foundry shipped an equal mix of 45nm and 65nm products in the third quarter. GF expects to transition over entirely to 45nm in Q4 2009. At present, GlobalFoundries appears to be relatively well-positioned. Despite the fact that only Fab 1 Module 1 is currently fabbing processors for AMD, the company has stated that it has additional capacity on tap should AMD's shipments grow in Q4. Fab 1 Module 2 (Fab 30/38) is still in the process of being converted to 32nm bulk silicon and won't be shipping wafers for quite some time.

In theory, Chartered is capable of starting at least 148,000 wafers per month; 172,000 if we include Fab 5 SMP (Chartered has a minority share in this venture.) The company owns five fabs (six if we include Fab 5). GlobalFoundries, in contrast, owns both Module 1 (Fab 36, 300mm wafers, 45nm technology) and Module 2 (300mm wafers, ramping up 32nm bulk silicon). With Fab 2 still years away from completion, GlobalFoundries is limited in its ability to offer customers a variety of process technologies and price points. Chartered isn't nearly so constrained, and at least some of its own fabs could be modernized. At the very least, acquiring the company gave GlobalFoundries' production capability an enormous boost.

By The Numbers:

Chartered reported revenue of $415.2 million in Q3, up 16 percent from Q2, but down 10 percent year-on-year. The company posted a net quarterly loss of $4.7 million, but noted in its report that this includes transaction costs of $8.4 million related to the ATIC acquisition in early September. Chartered's fab capacity utilization rate was 75 percent in the third quarter compared to 60 percent in Q2, but again, was down 10 percent year-on-year. Results from the likes of AMD and Intel have painted a similar picture of quarterly sales; revenue recovered significantly compared to Q4, but was still off by 10-20 percent sequentially, depending on the company.

Despite its improved revenue in Q3, the company's net income was just $27 million, or 0.6 percent of total revenue. The new GlobalFoundries partner shipped just over 449,000 wafers in Q3, with an average selling price (ASP) of $879 per wafer in Q3, compared to $929 per wafer in Q2. Chartered doesn't appear to report its ASPs in terms of percent, probably because it produces across so many different nodes and multiple wafer sizes.

Chartered's leading-edge capacity and total capacity. The (1) states:  In thousands 8" equivalent wafers. Includes Chartered's share of minority-owned joint-venture SMP (Fab 5). From 2Q 2008 onwards, also includes capacity from eight-inch fab acquisition (Fab 3E).

Now that GlobalFoundries has itself not two, but seven fabrication plants—eight, if we include Fab 2—it'll be interesting to see what the foundry does with them. Despite its somewhat aged process technology and limited access to 300mm wafers, Chartered is currently capable of producing an estimated 641,400 wafers a quarter (200mm production-equivalent). That figure would jump substantially if the company modernized its production facilities, but ATIC has not yet released any information on how it might update or retire current facilities.