Fairchild Semiconductor Updates Second Quarter 2001 Outlook

    SOUTH PORTLAND, Maine--May 29, 2001--Fairchild Semiconductor International today announced it maintained its guidance for second quarter 2001 revenues.
    "During our first quarter earnings conference call about six weeks ago, we guided analysts to expect our revenues to be flat to down five percent sequentially from the first quarter. Our current view is that sales will be in the low end of that range," said Kirk Pond, president, chairman and CEO. "We continue to see signs that our market will bottom this summer. Cancellations have significantly diminished from first quarter, while our turns business, orders that are shippable within the same quarter, has grown significantly from the first quarter. Roughly one-third of our bookings in April and May have been for second quarter delivery. As we indicated in our conference call, pricing has remained very aggressive, as much of the business we are booking is for near term demand, and the environment is very competitive. Our book-to-bill ratio for the quarter has improved from around 0.7 to 1 in the first quarter to about 0.86 to 1 in the second quarter. Our experience has been that all of these are indicators of a market bottom, which we continue to expect to occur sometime during the third quarter."
    "We continue to expect our second quarter gross margins to be down sequentially in the range of 400 basis points, and continue to expect research, development, selling, general, and administrative (R&D, SG&A) expenses to be in the range of $80-82 million for the quarter. And, for the third quarter, we expect sequentially lower revenues and gross margins, while we expect our book-to-bill ratio to continue to improve from second quarter levels. We also continue to expect sequential improvements in revenues and gross margins for the fourth quarter, due to expectations for holiday builds, lower industry inventories, and some improvements in our run rate business as customers begin to rebuild their backlogs. We expect this cycle to follow the classic pattern: first cancellations, then falling prices, then high turns orders, then stronger bookings, then stronger billings, then rising prices."