UPDATE 1-Chartered Semiconductor sees higher sales in Q2

* Q2 sales, loading rate to improve from Q1

* Hard to predict trend beyond Q2, sees no quick recovery (Recasts with quotes and details)

TAIPEI, April 24 - Contract chip maker Chartered Semiconductor is forecasting a rise in second-quarter sales and looking to buy used chip equipment to cut costs, even though it sees no quick recovery yet for the foundry sector.

The Singapore-based company posted a third straight quarter of losses on Friday, but the chip maker has forecast sales and its capacity utilisation rate will improve in the second quarter, citing increasing orders from its customers. "The improvement in customer orders and the resulting sequential growth expectation into the second quarter are definitely encouraging signs," Chartered Chief Executive Officer Chia Song Hwee told an analyst conference call.

"Due to macroeconomic conditions that continue to be challenging, it is difficult, however, to predict the growth trend beyond the second quarter."

Chartered booked a net loss of $114.2 million, reversing a net profit of $2.4 million a year earlier. But the loss was narrower than a loss of $114 million in the fourth quarter of 2008 and a consensus forecast of a $147.2 million loss.

Chartered forecast second-quarter revenue to rise to between 32 percent and 37 percent from the first quarter's $243.9 million, and expects its net loss to narrow to between $54 million and $64 million in the current quarter. In a telephone interview with Reuters right after the results, Chia said his company targets reaching a break-even utilisation rate of 75 percent by the year's end, compared with about 58 percent it forecast for the second quarter.

However, Chia declined to predict when his company would return to profit again on a quarterly basis.

Chia said Chartered was still looking to buy used equipment to lower costs but it was not interested in a facility that insolvent German chipmaker Qimonda AG put up for sale earlier this week.

The company has no plans for an additional rights issue now after securing $300 million via a rights offering earlier this month.

Shares of Chartered fell 3.7 percent in the United States on Thursday. The stock was flat in Singapore.

State-controlled Chartered ranks alongside China's Semiconductor Manufacturing International Corp (SMIC) in the market for custom-built microchips, which is dominated by larger rival Taiwan Semiconductor Manufacturing Co Ltd (TSMC) and United Microelectronics Corp (UMC).

In Taiwan, TSMC is set to report its smallest quarterly profit next week, while UMC is likely to see another quarter in the red. (Click for the preview story)