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MEMC has provided an update to its next quarter revenue target that falls significantly below guidance given only a few weeks ago in its 3Q08 results. Citing a worsening macroeconomic environment that has impacted demand from semiconductor and solar customers alike, the company expects revenue to be approximately $500 million, plus or minus $25 million, compared to $540-$600 million, as previously guided.
“The weak macroeconomic environment has continued to deteriorate, and has had an increasingly negative effect on the semiconductor and solar markets over the past few weeks,” commented Marshall Turner, Interim Chief Executive Officer. “These effects are quickly cascading backward through global supply chains, and we cannot expect to be immune to the impact on our customers in all the markets we serve. This recent sequence of events has increased pricing pressure in the short term solar market and exacerbated the demand weakness in the semiconductor market.”
Former MEMC President and Chief Executive Officer Nabeel Gareeb had said in the most recent conference call with financial analysts that the softening in demand from semiconductor manufacturers would be replaced with increased sales to photovoltaics customers in the form of more polysilicon sold in short-term contracts and via the spot market. However, Gareeb noted that it takes approximately twice the amount of polysilicon to make the same amount of revenue selling wafers to the solar market compared to the semiconductor market.
Gareeb had also noted in the call that MEMC would increase solar wafer output as the margins were better than with pure polysilicon. But with demand from solar then seen as remaining positive, Gareeb had guided revenue up to $540-$600 million. Revenue posted in the third quarter was $546 million.
The significant cut in guidance was not specifically detailed between semiconductor and solar markets; however, based on comments from MEMC executives in the 3Q conference call, the semiconductor shortfall had been factored into the original guidance.
