Here we go again?

23 October 2003 By Robert Cyran Follow @rob_cyran

The FrenchItalian chipmaker is raising capital expenditure by a third to revamp production facilities. This looks bullish, but is it premature? Chip sales may be going up but margins aren’t.

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ST Microelectronics plans to raise capital expenditure by 33% in 2004. This would increase the amount spent from 2003's estimated $1.2bn to $1.6bn.

The FrancoItalian semiconductor company also reported a $49m loss in the third quarter. STM earned $131m during the same period last year. Sales rose to $1.8bn from $1.6bn. Earnings were hit by a pretax charge of $193m in the third quarter, $150m of which came from the closure of older, inefficient plants. Earnings before the exceptional charge were slightly above analysts' estimates.

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