LSI Logic Corp, the Californian semiconductor system on a chip company, mildly disappointed investors with its first quarter numbers on Thursday, as profits were held back by the increasing costs of research and development. Net profits dropped 21% to $30.4m as year on year R&D costs surged by 27% to $64m, with this trend is set to peak during the second quarter, the company said. Revenues climbed 5% to $325m year on year. Wilfred Corrigan, LSI’s chairman and CEO, complained briefly about the troubles confronting the global semiconductor industry, but noted in the process that LSI’s factory utilization levels had increased on the back of high demand from the communications sector and what he described as, the resurgence of the computer market. Geographically, North America performed best with improvements in Asia, while Europe remained flat. LSI attributed most of the increased R&D costs to spending on its latest semiconductor fabrication facility in Santa Clara. Product highlights in the quarter included the unveiling of the G12 system on a chip, which LSI claims is faster and less power hungry than its G11 predecessor, allowing customers to cram more functions onto their custom, single chip systems. But despite the underlying growth, LSI missed its consensus of earnings estimates by a penny and the stock fell nearly 2% to $28.50.
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