STMicroelectronics NV shares fell as the chipmaker warned of price pressures in the second half.
(Bloomberg) — STMicroelectronics NV shares fell as the chipmaker warned of price pressures in the second half.
“In the second part of the year we will see negative price pressure,” Chief Financial Officer Lorenzo Grandi said on a call with analysts on its first quarter results. STMicro has been buoyed by demand from carmakers and industry customers, which insulated it from a downturn in the broader semiconductor industry.
Shares fell 7.8% to €39.02 at 10:53 a.m. in Paris.
The Franco-Italian chipmaker’s net revenue rose 20% from a year earlier to $4.25 billion in the first quarter, the company said in a statement Thursday. That compares to an average estimate of $4.21 billion by analysts surveyed by Bloomberg.
STMicro’s “strong results and slight upgrade to guidance for this year should not come as a surprise” after its German peer Infineon Technologies AG gave upbeat comments on auto and industrial sectors in March, Bernstein analyst Sara Russo wrote in a note.
Demand for STMicro products has been driven by customers like Tesla Inc. in its automotive unit, which is the company’s largest business area and has benefited from growing electric vehicle sales. Its industry division is expected to be another key area of growth this year as factories become more connected, STMicro said in January.
Texas Instruments Inc., one of STMicro’s peers and an industry bellwether, gave a disappointing sales forecast for the latest quarter on Tuesday, suggesting the semiconductor industry faces sluggish demand in the short term. However, it said the car industry remains a robust market.
Guidance Upgrade
STMicro forecast net revenue of $4.28 billion for the second quarter, compared to a $4.24 billion estimate from analysts. The company sees a gross margin of 49% for the period, beating analyst expectations of 47.1%.
The company increased the lower bound of its net revenue target in 2023, now seen from $17 billion to $17.8 billion. Previous guidance was for at least $16.8 billion in sales.
STMicro sees revenue growing by 5% to 10% this year despite a “complex environment,” Chief Executive Officer Jean-Marc Chery said on the analyst call. Automotive and industrial divisions will continue to drive growth, he said.
The group also produces chips for the personal electronics business, and counts Apple Inc. as a major client. Revenue in this division is expected to fall faster than the market this year due to shrinking orders from one of STMicro’s largest customers, the company said last quarter.
Net revenue from the automotive division grew 44% in the first quarter from previous year, while net revenue from the personal electronics division decreased 0.9%.
–With assistance from Henry Ren.
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