CHIPMAKER STMicroelectronics (STMicro) cut its full-year revenue and margins guidance for a second time on weak industrial orders and lower demand for automotive chips, sending its shares sharply lower.
The shares dropped 13.5 per cent to the bottom of France’s blue-chip CAC 40 index at 1050 GMT, on track for their worst day in over four years.
The Franco-Italian company, whose clients include Tesla and Apple, said it expects revenue of US$13.2 billion to US$13.7 billion for 2024, down from a previous forecast of US$14 billion to US$15 billion.
It forecast margins at about 40 per cent, down from the “low 40s”. “We are facing a longer and more pronounced correction in industrial than what we anticipated due to a progressive weakening of demand amplified by a severe inventory correction,” chief executive officer Jean-Marc Chery told analysts in a call.
Demand for electric vehicles (EVs) has also slowed sharply in Europe, with data from the region’s trade body last week showing sales rose by just 1.3 per cent in the first half. Despite that, STMicro still hopes EVs will drive growth for the remainder of the year, even if less than forecast.
“I confirm that H2 will be a growth driver for ST for all the components related to electrical vehicles, particularly for silicon carbide, and particularly everywhere, in China and also with our main customer,” Chery said, without naming the customer.
STMicro had already cut its outlook in April. “The cut is massive, they cut the top-line expectation by seven points,” said Sebastien Sztabowicz of Kepler Cheuvreux. He added that some investors are wondering whether there will be a recovery in time soon or a deep correction will continue.
Revenue for the second quarter came in at US$3.23 billion versus US$3.2 billion expected by analysts according to LSEG data. Margins stood at 40.1 per cent. REUTERS
