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Temasek sells Chartered to Abu Dhabi

with 2 comments

Recent news reports that Temasek Holdings is selling Chartered Semiconductor to Abu Dhabi for S$2.5bn. Judging from company reports Chartered appears pretty battered. It’s continually declining share price forced it to undergo a reverse 1:10 stock split on May 21st to prevent its stock price from falling below $1 over the forseeable long term.

According to the report Abu Dhabi paid only 2 cents higher than Chartered’s last closing stock price per share on Sept 4. Was Temasek so desperate to sell Chartered it wasn’t willing to drive a hard bargain?

I can’t be certain but it seems that Temasek didn’t lose money on this and may instead have made a profit by underwriting Chartered’s rights issue back in March this year. Indeed Google Finance shows that Chartered Semiconductor’s share price has risen three-fold from its March lows this year:

Chrt stock price

It’s rather ironic that Temasek is preparing to sell Chartered just as the company announced that it was upgrading its revenue forecast for 2009 due to improving economic and financial conditions:

Chartered today also raised its third-quarter forecasts for revenue and earnings. Sales will range from S$405 million to S$415 million, up from a forecast of S$382 million to S$394 million, according to a statement. The company now anticipates the result will range from a net loss of S$8 million to breakeven, an improvement from a loss of S$27 million to S$17 million.  Chartered’s reported losses in the past four quarters.

So goes Chartered Semiconductor, no longer a Temasek-owned company.


Written by defennder

September 8, 2009 at 1:29 AM

2 Responses

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  1. I owned Chartered shares before from 2004 to 2005 and held on to it for about a year before selling. I have friends who have worked and still work there.

    Chartered rarely makes money and basically lags behind most of its competitors (TSMC, UMC) in its technology. When it loses money, it loses a lot of money and has to rely on routine capital injection from Temasek. To be fair, when it makes money, it also makes quite a bit of money but overall, the reds outnumber the blacks.

    Technology-wise, it has only one 300mm wafer fabrication facility (its other facilities use 200mm wafers). Most of its competitors in Taiwan have largely upgraded to 300mm wafer technology. If not for the IBM technology transfer a couple of years back, it would have fell further behind.

    Temasek held onto and subsidized Chartered for so long because it was deemed a strategic asset for Singapore and necessary to anchor the microelectronic industry in Singapore.

    My guess is that Temasek believes that CHRT can now survive on its own with the backing of Abu Dhabi and that they will not shut down their facilities in Singapore.


    September 8, 2009 at 4:55 AM

  2. That’s very interesting and informative Fox. Sorry I haven’t had much time to reply to comments posted here. There’s certainly quite a bit of stuff you’ve written which I was hitherto unaware of.


    December 16, 2009 at 10:57 PM

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