By Mauro Orru


STMicroelectronics lowered its sales and margin forecasts for the year after posting revenue below analysts' expectations for the first quarter as it grapples with slower demand for chips from the automotive industry.

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. Meanwhile, its gross margin is now expected to be in the low 40s compared with the previously forecast 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 sought 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 picked up in the first quarter, though not enough to offset the slowdown in automotive.

Shares fell as much as 5% at market open. The stock is down more than 15% since the year began.

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.

The group 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

04-25-24 0344ET