Royal Philips Electronics NV expects flat sequential revenue from its semiconductor operator in the last quarter of the year and lower utilization rates at its fabs as customers run down inventory in preparation for the usual slack first quarter of 2005.
The conglomerate’s chip division produced operating income of 186 million euros ($228.9 million) in the third quarter to September 30, up from a loss of 191 million euros ($235 million) on revenue 10.8% higher at 1.4 billion euros ($1.76 billion). The company says that when revenue from mobile display systems, which fell by 10% in dollar terms as it focused on higher margins products, are stripped out, revenue increased by 31% over last year.
The book-to-bill ratio fell from 1.13 at the end of the second quarter to 0.66 due to shortening of the order book, though the utilization rate remained high at 98%. However Philips expects this to fall as customers reduce inventories.
The one bright spot in the coming quarter is that Philips expects double-digit sequential growth in its mobile display systems business.