Silicon Valley memory chip designers Catalyst Semiconductor Inc and Sandisk Corp have both joined the long and despondent line of semiconductor firms to issue profit warnings in recent weeks, with both companies announcing on Friday that upcoming results will fall short of expectations. Catalyst, which designs and markets non-volatile memory chips (EEPROMs and flash memory) said its fourth quarter revenues will be significantly down on the third quarter figure of $10m but declined to add any comments about earnings. This warning follows a cost-cutting exercise in April, which saw a 20% reduction in the workforce designed to bring the company back into profit. The Sunnyvale-based company has now made six consecutive quarters of losses but the one piece of good news was that Catalyst has successfully placed 1.5 million shares at a dollar each with a technology holding company called Elex NV. This combined with a recent $1.9m credit financing arrangement at least gives the firm a small breathing space because its cash reserves at the end of the last quarter were just $6.5m, most of which is pledged as security to its fabrication partners and has therefore been untouchable. The severe shortage of funds has forced the company to delay wafer purchases and product shipments, it said. The looming threat of insolvency has also driven the company’s stock price to below a dollar since March, putting Catalyst in breach of the Nasdaq listing requirements. A spokesperson for the company said that, as of Friday, there had been no word from the Nasdaq on what it intends to do. No news is good news it seems. Meanwhile, Sunnyvale-based Sandisk Corp, also a fabless designer of flash memory products, is facing a similarly poor quarter. Sandisk sells compact memory cards for use in digital cameras and palmtop computers, and although unit shipments have remained flat, average selling prices have plummeted, leaving Sandisk with 20% less revenues for the June quarter than the $34m recorded in the preceding three months. Earnings will be break even at best, the company said. Sandisk, however, has been highly profitable in the last three years, giving it a substantial $125m cash cushion to help it ride out the cyclical downturn in prices.

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