(Bloomberg) -- Shares of STMicroelectronics NV suffered their largest intraday loss in four years after the company cut its annual revenue outlook, blaming depressed demand on an inventory glut and lower sales to carmakers.
Sales this year will fall somewhere between $13.2 billion and $13.7 billion, the Franco-Italian semiconductor company said in a statement on Thursday. That’s down from a previous range of $14 billion to $15 billion. In January, the chip manufacturer forecast annual revenue of as much as $16.9 billion.
The stock dropped 14.2% to €31.79 at 2:09 p.m. in Paris, the biggest intraday decline since March 2020.
Chipmakers’ results in the quarter have been mixed. Texas Instruments Inc. said Chinese electronics makers were ramping up orders again after working through stockpiles of unused components. Meanwhile, Dutch chipmaker NXP Semiconductors NV reported a drop in revenue because of lower automotive chip orders and gave a disappointing forecast that sent shares tumbling.
“During the quarter, contrary to our prior expectations, customer orders for industrial did not improve and automotive demand declined,” Chief Executive Officer Jean-Marc Chery said in the statement. Automotive revenues were lower than expected and offset higher sales in the company’s personal electronics business, he said.
Sales fell 25% in the second quarter from a year earlier to $3.23 billion, the company said. That compares to analysts’ average $3.2 billion forecast, according to estimates compiled by Bloomberg.
Automotive chipmakers are facing low demand due to disappointing growth in the electric vehicle market. Automakers including Mercedes-Benz Group AG and Ford Motor Co. have cut back or delayed production targets for electric vehicles due to costly batteries and a lack of scale hampering profitability. BloombergNEF’s annual Electric Vehicle Outlook reduced sales projections by 6.7 million vehicles through 2026 — a 13.5% fall compared to projections made last year.
“Despite the small beat in the reported quarter, the company did not see the expected recovery in industrial orders and automotive orders declined,” JPMorgan analyst Sandeep Deshpande said in a note. “The key question is, given the company’s very significant sequential cuts, will the market believe that the worst is over?”
STMicro — whose chips are used by electric vehicle and smartphone makers, including Tesla Inc. and Apple Inc. — announced last month that it would buy back as much as $1.1 billion in its shares over the next three years, as a previous buyback program was completed. The program would be the equivalent of 2.8% of outstanding stock.
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