Silicon Integrated Systems, another chipset company with declining sales, said Tuesday its revenues and sales would be considerably lower than expected. The firm believes there is stiff competition in the chipset market.

According to Dow Jones Business News, Hsinchu, Taiwan-based computer chipset maker Silicon Integrated Systems cut its full-year 2003 financial forecast due to lower than expected pricing of its products and a weaker than expected fourth quarter. The firm now expects its 2003 pre-tax profit to be in the range of $5.91 million, on full-year revenue of roughly $492.5 million. Initially the firm anticipated its sales to be around $587.7 million and profits to achieve $20.8 million.

Profitability is still a big progress for SiS, who was not making money for numerous quarters in 2001 and 2002. Total losses of the chipset vendor narrowed this year to approximately $1.64 million within the first three quarters of the year, according to our earlier publication.

A significant contribution into SiS bolstering sales and profits may be attributed to UMC – one of the world’s largest contract semiconductor manufacturer – and its top-managers joining SiS’ board of directors. Earlier this year UMC acquired 30% shares of SiS and the CEO of the contract semiconductor maker became the CEO of the Taiwanese second largest chipset designer.

This February Mr. John Hsuan outlined some aspects of SiS’ future strategy. The key-aspects of the new ideology were joint development of advanced manufacturing processes with UMC and focusing on products for higher-end market in order to improve gross margins and return to profitability. The new CEO also criticized SiS last year’s strategy of expanding market share with low prices. According to him, this caused the chipset designer’s gross margins to decrease 5 points from 26% in 2001 to 21% in 2002; for instance SiS’ gross margins fell to 17% in the fourth quarter 2002 what is unacceptably low.

In order to return the company to profitability, the new CEO planned to refocus SiS on higher-end market segments. Fairly speaking, we do not see SiS in the high-end, nevertheless, the company’s products are now available in mainstream and ever performance-mainstream segments. The firm’s today’s talk about lowering its forecast, may mean that SiS’ execution in achieving higher share in the mentioned segments appeared to be considerably below expectations.

One of SiS’ recent success is a contract for supplying I/O technologies for Microsoft XBOX 2 console.