MEMC Electronic Maintains 3Q Revenue Target as Polysilicon Demand Softens

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Researched by Industrial Info Resources (Sugar Land, Texas)--MEMC Electronic Materials Incorporated (NYSE:WFR) (St. Peters, Missouri) announced in a mid-quarter update on September 2 that its revenue target of between $560 million and $620 million remains unchanged. According to President and CEO Nabeel Gareeb, "There is increased softness in demand from semiconductor applications customers, primarily due to their inventory reduction initiatives." With four weeks left in the third quarter, Gareeb said MEMC remains "cautiously optimistic." The company has also raised its targeted operating expenses from $41 million to $43 million.

In regard to the soft demand, Gareeb said that it cannot be attributed to any specific segment or subsegment and that the reasons are across the board. "Unit growth isn't as rapid as [customers] had originally thought," he said. "They had built up a little bit more wafer stock inventory than they would have liked, so they're going into basically inventory correction initiatives for the most part." He said that although this could have ripple implications for customers in the fourth quarter, MEMC is already seeing it in the third quarter. Therefore, the company is looking to move more into the solar sector where demand remains strong and margins are healthy, Gareeb said.

Since May 2007, Industrial Info has been tracking the $100 million Phase III expansion project at MEMC's granular polysilicon plant in Pasadena, Texas. A chemical process train will be installed to increase the facility's polysilicon production capacity by 1,300 metric tons per year. In mid-August, the plant experienced an unplanned maintenance turnaround in two of its units. According to Gareeb, units 1 and 2 both experienced valve failures, but repairs have since been completed.

MEMC is a global leader in the manufacture and sale of wafers and related intermediate products to the semiconductor and solar industries.

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