May 6 (Reuters) - Microchip Technology forecast first-quarter net sales and profit below Wall Street estimates on Monday, signaling weak demand as customers continue to clear excess inventory, sending its shares down 4.9% in aftermarket trading.
Slowing electric vehicle sales at a time when customers are clearing excess inventory have weighed heavily on demand for chips in the automotive industry, hitting chipmakers such as Microchip Technology amid an uncertain economic environment.
Customers had built excess inventory to avoid a supply crunch during the pandemic.
"We believe we are under shipping to end market demand, as customers and channel partners continued to reduce inventory. This situation has required us to implement ongoing austerity measures, including taking actions to reduce factory utilization, that will persist into the June quarter," CEO Ganesh Moorthy said in a statement.
Moorthy said the June quarter marks the bottom of the cycle for the company and the business will return to revenue growth in the second quarter, ending September.
In April, Israel-based Mobileye Global reported a sharp fall in first-quarter revenue, hurt by fewer orders for its driver-assistance chips as clients rein in spending amid excess inventory.
Microchip forecasts net sales in the range of $1.22 billion to $1.26 billion for the first quarter ending in June 30, compared with analysts' average estimate of $1.34 billion, according to LSEG data.
The Chandler, Arizona-based company expects adjusted profit per share between 29 cents and 32 cents, compared with an estimate of 59 cents.
The company posted net sales of $1.33 billion for the fourth quarter ended March 31, compared with analysts' average estimate of $1.33 billion.
Excluding items, its profit per share in the fourth quarter was 57 cents, in-line with analysts' estimates.
