2 Chip Makers Post Losses but Signs of Upswing Are Seen

The signs of a semiconductor industry upswing became clearer Thursday, despite new reports of losses by two chip manufacturers.

Intel and VSLI Technology each showed red ink in their first-quarter reports. But Motorola, the electronics industry giant that is the largest domestic maker of computer chips, posted earnings that included a return to profitability in its semiconductor products unit after two consecutive quarters of substantial losses.

Also, the Semiconductor Industry Assn., a San Jose-based industry trade group, said its measure of orders and shipments by chip makers rose in March for the seventh consecutive month to the highest level in 21 months.

$350 Million in Losses

Since late 1984, the semiconductor industry, which makes the small electronic circuits that are the brains of computers and electronics products, has suffered a severe slump. The nation’s five largest chip makers reported combined losses of almost $350 million in 1985, and the red ink has continued into 1986 for many of them.

However, strengthening orders, some from an improving computer industry, and modest price increases are beginning to show up in the manufacturers’ financial results.

In its report of the book-to-bill ratio, the SIA said $115 worth of orders were received in March for every $100 worth of orders shipped by U.S. manufacturers. Average monthly orders for the three-month period ended March 31 totaled $748.4 million, a 12% increase from February’s average. Shipments, or billings, rose almost 32% to $794.1 million at the end of the quarter.

Motorola said its net earnings were $45 million, a 9.8% increase from the same period a year ago. Sales were up less than 2% to $1.34 billion.

In its semiconductor products sector, sales were down 10%, the company said, but orders rose 37% and operating profit was at about the same level as the first quarter of 1985.

Santa Clara, Calif.-based Intel, the third-largest U.S. semiconductor maker, said it lost $22 million in its first quarter, compared to net income of $11 million in the year-ago quarter. Revenue for the first quarter was $280 million, a 25% decline from last year. The loss, the company said, included a $7.6-million extraordinary gain resulting from the prepayment of a low-interest debt obligation.

“We think the first quarter was the bottom of this cycle,” said Andrew S. Grove, president and chief operating officer. He attributed the revenue decline in part to decreased purchases from IBM, its largest customer.

In San Jose, smaller VSLI Technology, which makes large-scale integrated circuits, said its first-quarter loss was $2.2 million, compared to year-ago earnings of $813,000. Revenue was up 10% to $20.5 million in the period.

Alfred J. Stein, chairman and chief executive of VSLI, said: “Our . . . performance reflected the lingering effects of the semiconductor industry’s now almost two-year economic downturn.” But Stein said the company was positioning itself for an upswing.