STMicroelectronics Cuts Guidance Amid Automotive Market Slowdown — Update
By Mauro Orru
STMicroelectronics lowered its sales and margin forecasts for the year after posting revenue below analysts' expectations for the first quarter amid a slowdown in demand for chips in the automotive sector.
The European chip maker said Thursday that it now expects revenue of $14 billion to $15 billion this year compared with a previous range of $15.9 billion to $16.9 billion to factor in weaker demand in the automotive industry. Meanwhile, its gross margin is now anticipated to be in the low 40s compared with the previously expected low to mid-40s.
STMicroelectronics and the wider chip industry have been grappling for months with low demand for their semiconductors in consumer devices as manufacturers of smartphones and computers held off ordering more chips they had stockpiled in recent years.
In contrast, the automotive industry has long provided a lifeline to the sector as car makers seek smaller and more energy-efficient chips in their push for electric vehicles. Now, the tide is changing.
STMicroelectronics, which counts Tesla, Samsung Electronics and Apple among its customers, said demand for chips in personal electronics had picked up in the first quarter, though not enough to offset the slowdown in automotive.
Revenue in the first quarter slumped 18% to $3.47 billion. Analysts had forecast revenue of $3.61 billion, according to consensus estimates compiled by Visible Alpha.
Net profit plunged to $513 million from $1.04 billion. Gross profit--a closely watched metric for companies operating in the semiconductor industry--fell to $1.44 billion from $2.11 billion, generating a 41.7% gross margin.
STMicroelectronics had expected first-quarter revenue of $3.6 billion, and a gross margin of roughly 42.3%.
For the current quarter, the company is targeting revenue of $3.2 billion and a gross margin of 40%.
Write to Mauro Orru at mauro.orru@wsj.com
(END) Dow Jones Newswires
April 25, 2024 02:08 ET (06:08 GMT)
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