"While our FPD customers are experiencing stronger demand for monitors and larger television form factors, they have not yet begun to release new designs from their development pipeline," stated Michael J. Luttati, Chief Executive Officer. "All indicators suggest that the design release cycle should improve by end of calendar 2007. In our semiconductor photomask business, several of our customers are completing the re-alignment of their strategic partnerships for next generation process technologies amidst a mild industry down cycle."

The company may have referring to the winding-down of the Crolles2 Alliance at the end of the year as well as the memory spin-off at STMicroelectronics.

"Visibility in our business has always been limited, typically 1 to 2 weeks since we operate with minimal backlog thereby introducing a degree of uncertainty quarter to quarter. The strategic actions we have underway, coupled with rapidly changing market factors, has created an additional component of volatility in our performance which will likely continue over the next few quarters. The ramp up of our new facility in China, improved market momentum in Flat Panel, especially G7 and above technologies, and the start up of our North American NanoFab, where we will begin to service customers using 65 nanometer and below processes, will all contribute positively to Photronics' competitive positioning and long-term growth," Luttati said.