Chartered Reports Fourth Quarter and Year 2005 Results

MILPITAS, Calif.—(BUSINESS WIRE)—Jan. 26, 2006— Chartered Semiconductor Manufacturing (Nasdaq: CHRT)(SGX-ST:CHARTERED):

-- Chartered revenues of $367.2 million in 4Q 2005, up 92.7 percent from 4Q 2004 and up 26.6 percent sequentially. Revenues including Chartered's share of SMP of $399.4 million, up 95.1 percent from 4Q 2004 and up 26.2 percent sequentially.

-- Net income of $26.5 million in 4Q 2005, compared to net loss of $26.8 million in 4Q 2004, and a net loss of $34.5 million in the previous quarter.

Chartered Semiconductor Manufacturing (Nasdaq: CHRT)(SGX-ST:CHARTERED), one of the world's top dedicated semiconductor foundries, today announced its results for fourth quarter and year ended December 31, 2005.

"In fourth quarter, we posted record revenues at the Chartered level as well as record revenues including our share of SMP, as we capitalized on the growth in our leading-edge technologies and favorable market conditions. Although 2005 started out disappointing with the overhang of inventory correction in the semiconductor supply chain and demand softness in certain end markets negatively impacting our bottom line, our fundamentals were improving leading us to achieve several key milestones by the end of the year. Revenues from the 90-nanometer (nm) technology node exceeded the $100 million mark in fourth quarter 2005, contributing 28 percent of our total business base revenues in just its second quarter of ramp. We were also able to achieve our target to bring down our breakeven utilization to 75 percent in the fourth quarter, setting the path toward a sustainable profitability model," said Chia Song Hwee, president & CEO of Chartered.

Summary of Fourth Quarter 2005 Performance

-- Revenues were $367.2 million in fourth quarter 2005, up 92.7 percent from $190.6 million in fourth quarter 2004. Revenues including Chartered's share of SMP were $399.4 million, up 95.1 percent from $204.7 million in the year-ago quarter, with the largest dollar increase coming from the consumer sector, followed by the computer and communications sectors. Sequentially, revenues were up 26.6 percent compared to $290.1 million in third quarter 2005. Revenues including Chartered's share of SMP were up 26.2 percent from $316.5 million in third quarter 2005 primarily due to significant growth in the consumer sector followed by the computer sector, partially offset by a decline in the communications sector.

-- Gross profit was $88.0 million, or 24.0 percent of revenues, up from a profit of $0.8 million, or 0.4 percent of revenues in the year-ago quarter, primarily due to significantly higher revenues. Gross profit was up 137.7 percent sequentially from $37.0 million, or 12.8 percent of revenues in third quarter 2005, primarily due to higher revenues.

-- Research and development (R&D) expenses were $35.4 million, an increase of 24.4 percent from the year-ago quarter, primarily due to increased design services activities and higher development activities related to the advanced 65nm technology node, partially offset by the completed 0.13-micron technology development program.

-- Pre-production fab start-up cost was nil in fourth quarter 2005 as Fab 7 started commercial production during second quarter 2005. Pre-production fab start-up cost was $9.9 million in fourth quarter 2004.

-- Sales and marketing expenses were $10.2 million, up 13.8 percent compared to $8.9 million in the year-ago quarter, primarily due to higher expenses related to the Electronic Design Automation (EDA) offerings. Compared to the previous quarter, sales and marketing expenses were down 10.7 percent from $11.4 million, primarily due to lower financial support for customer prototyping activities.

-- General and administrative (G&A) expenses were $9.7 million, an increase of 20.6 percent compared to $8.0 million in the year-ago quarter, primarily due to higher payroll-related expenses and the effect of employee leave clearance in fourth quarter 2004.

-- Other operating expense was nil in fourth quarter 2005 compared to an income of $10.0 million in the year-ago quarter, which included a gain of $10.4 million resulting from an equipment disposition with CSMC Technologies Corporation.

-- Equity in income (loss) of Chartered's minority-owned joint-venture fab, SMP (Fab 5), was an income of $10.5 million compared to a loss of $10.4 million in the year-ago quarter and an income of $4.2 million in the previous quarter, primarily due to higher revenues.

-- Other income was $1.9 million compared to $24.8 million in the year-ago quarter. Other income in fourth quarter 2004 included the recognition of a gain of $14.3 million related to the Technology Transfer and License Agreement (TTLA) and the Operational Assistance Agreement (OAA) with CSMC Technologies Corporation and a training grant income of $8.4 million.

-- Net interest expense was $16.1 million, compared to a net interest expense of $1.2 million in the year-ago quarter, primarily due to higher interest expense resulting from higher interest rates and higher outstanding debt and lower interest capitalization associated with the ramp of Fab 7, partially offset by higher interest income.

-- None of the losses in Chartered's consolidated joint-venture fab, Chartered Silicon Partners (CSP or Fab 6), were allocated to the minority interest in fourth quarter 2005. CSP's financial position continued to be in capital deficit in fourth quarter 2005; therefore, Chartered continued to recognize 100 percent of the joint venture's results, which was a loss of $16.3 million in the quarter. CSP's loss decreased in fourth quarter 2005 compared to the previous quarter primarily due to higher revenues and to a lesser extent lower depreciation. At the end of fourth quarter 2005, CSP's capital deficit was $395.2 million.

-- Net income was $26.5 million, or 7.2 percent of revenues, compared to a net loss of $26.8 million, or negative 14.1 percent of revenues, in the year-ago quarter and a net loss of $34.5 million or negative 11.9 percent of revenues in the previous quarter.

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