Although it predicts that it should be able to grab a 25% global market share this year, Silicon Integrated Systems (SiS) expressed reservations about the first-quarter business outlook, as buying sentiment has been clouded by the overall economic conditions.
Despite the unclear prospects, the company still plans to gradually increase its wafer capacity from the current 25,000 units to 35,000 units per month to greatly boost its P4 chipset shipments.
Tight capacity due to the construction of its own 8-inch fab and the necessary process for yield rate adjustment over the past few years put a drag on SiS’s sales. Although the chip manufacturer started producing P4 chipsets at its fab last year, it was not able to fully meet demand, given the still improving yield rate. As a result, the company decided to outsource part of its production to Toshiba and Chartered Semiconductor Manufacturing.
However, sources said that SiS’s contract-manufacturing orders to Toshiba are mostly for communications products. Given that Toshiba has been shifting production away from DRAM, it still needs some time to enhance its yield rate, so actual volume production is expected to start in the third quarter.
Currently, SiS’s discrete chipset contribute 70% of the company’s revenues, but the revenue ratio is expected to slide with increasing orders from the OEM market. In the company’s desktop chipset business, 75% of SiS’s shipments are for the clone market and only 25% for the OEM sector.
On January 25, SiS was granted approval to raise US$636 million by issuing GDRs (global depositary receipts) and convertible bonds. The company said that the capital raised from the GDR issuance will go towards purchasing equipment for expanding capacity at its 8-inch fab.
Article translated by Christy Lee and edited by Richard So
