September 7, 2011 / 7:33 AM / 6 years ago

Wafer maker Sumco slashes forecast, outlook grim

TOKYO, Sept 7 (Reuters) - Japan’s Sumco Corp , the world’s No.2 supplier of silicon wafers used to make chips, slashed its annual operating profit forecast by 37 percent on weak PC demand and slower-than-expected growth in smartphones and tablet PCs, and it said the fragile economy could make chip demand retreat further.

Sumco, which trails market leader Shin-Etsu Chemical , said it now expects on operating profit of 12 billion yen ($155.6 million) for the year to Jan. 31, missing the consensus estimate of 19 billion yen by 19 analysts polled by ThomsonReuters I/B/E/S.

Sumco and Shin-Etsu together command 60 percent of the market for silicon wafers, which are sliced to make semiconductors, supplying such top memory chip makers such as Samsung Electronics Co and Hynix Semiconductor Inc .

Shin-Etsu halted its largest wafer plant for nearly two months due to damage from the March 11 quake and tsunami, but wafer inventories held by chip makers prevented a massive shortage and exodus to rivals such as Siltronic and LG Siltron.

Sumco, which is also taking hits from a strong yen, said there is still a supply of wafers used to make solar cells.

Ahead of the announcement, Sumco shares closed up 1.5 percent, while Shin-Etsu rose 2.6 percent.

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