STMicro says iPhones will boost chip demand
STMicroelectronics has forecast a rebound in smartphones chips thanks to customers including Apple, but said growth won’t benefit profitability as new products ramp up.
Revenue will grow about 10pc in the third quarter from the second to roughly $2.5bn (€2.1bn), and gross margin will be about 40pc, the company said in a statement yesterday.
Before the earnings report, analysts had predicted revenue of $2.46bn and gross margin of 40.3pc for the third quarter.
“We are growing significantly in the third and fourth quarters in personal electronics, in particular smartphones. This growth from a gross margin point of view is not accretive,” Finance chief Lorenzo Grandi said on an earnings call with analysts. “Gross margins will be impacted by this ingredient of product mix.” Analysts anticipate that new iPhones, due typically in September will act as revenue catalysts for STMicro.
Another Apple supplier, AMS, eased concerns about smartphone chip demand with a strong quarterly outlook, driving a rebound in semiconductor shares. But its weaker-than-expected margins raised questions and it postponed a profitability target.
ST shares fell 3.2pc at 10.12 am in Paris and Milan trading.
With a new CEO at the helm, STMicro is sticking to a strategy of diversifying customers from phone-makers to car-makers and industrials to navigate demand swings.
After years of restructuring, it says it’s more resilient and can sustain a potential slowdown in the semiconductor business and global economy. (Bloomberg)