European chipmaker STMicroelectronics on Thursday forecast a more than 15% drop in first-quarter revenue, well below market expectations, due to softer automotive demand and a further decline in orders from the industrial sector.
The company, whose clients include Tesla and Apple, expects first-quarter revenue of $3.6 billion, down from $4.25 billion a year earlier. That is 11% below analysts' consensus estimate, according to LSEG.
STMicro shares were down 2.26% in premarket trading.
The company posted fourth-quarter net revenue of $4.28 billion, just below analysts' average estimate of $4.30 billion in an LSEG poll. Quarterly operating income fell 20.5% to $1.02 billion.
"In Q4, our customer order bookings decreased compared to Q3. We continued to see stable end-demand in Automotive, no significant increase in Personal Electronics, and further deterioration in Industrial," CEO Jean-Marc Chery said.
Orders from the automotive industry have been helping chipmakers offset the impact of U.S.-China trade spats and sluggish demand for personal electronics, but this trend could be waning.
U.S. peer Texas Instruments on Tuesday forecast first-quarter revenue and profit below expectations, fanning concerns the automotive chip industry may be facing a downturn.
In 2024, STMicro plans to invest about $2.5 billion in net capital expenditure, and is targetting full-year revenue in a range of $15.9 billion to $16.9 billion.
Jefferies said the sales guidance was 5% below consensus, adding there could be further risks to the outlook, depending on the level of decline in auto and industrial chip demand in the first half of 2024, and the rate of recovery in the second.
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