Chipmaker STMicro

STMicroelectronics on Thursday forecast fourth quarter sales below market expectations, as weak automotive sales spoiled a recovery in its main markets, sending its shares lower.

STM, which is one of Europe’s largest chipmakers, expects fourth quarter revenue of $3.28 billion, up from the $3.19 billion it reported this quarter. That’s below the average analyst forecast of $3.34 billion, according to LSEG data.

The Franco-Italian firm, whose top clients include Tesla and Apple, also trimmed its capital expenditure plans for 2025 citing weakness in silicon carbide, an advanced semiconductor material used in EVs.STMicro shares were down 7.9per cent at 1003 GMT, the worst performer among France’s CAC 40, and Italy’s FTSE MIB blue chip indexes.

Lower sales to one important electrical vehicle customer weighed on the outlook, said STMicro’s finance chief Lorenzo Grandi during the earnings call.

The company declined to name the customer but analysts said it was most likely Tesla, which STMicro supplies with silicon carbide power chips.

STMicro’s capex plan is now slightly below $2 billion, from a range of 2$ to $2.3 previously.

“The main impact of a capacity limitation is on silicon carbide,” Grandi said. “We have limited capex driven by the demand, which is below what we expected one year ago”.

Chipmakers exposed to the struggling automotive, industrial, and consumer chip markets such as STMicro, Texas Instruments , or NXP have faced a multi-year long sales slump since the pandemic’s end, hit by low demand, high inventories, and geopolitical disruptions.

Analysts had raised concerns after U.S.’ Texas Instruments forecast a dour fourth quarter on Wednesday, with sales falling more than expected.

“The sales guidance confirms… that though the industry is in an up-cycle, the up-cycle is very muted” analysts of JP Morgan said in a note.

STMicro’s third quarter results were lifted by stronger sales of imaging sensors and microcontrollers, but weakness in power and discrete products for cars and factories hurt results.

The firm also said its cost-cutting plan “remains on schedule” after it faced opposition in Italy over its implementation.

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