STMicro cuts full-year outlook for second time, shares tumble

By Nathan Vifflin

(Reuters) -Chipmaker STMicroelectronics (STM) cut its full-year revenue and margins guidance for a second time on weak industrial orders and lower demand for automotive chips, sending its shares sharply lower.

The shares dropped 13.5% to the bottom of France's blue-chip CAC 40 index at 1050 GMT, on track for their worst day in over four years.

The Franco-Italian company, whose clients include Tesla and Apple, said it expects revenue of $13.2 billion to $13.7 billion for 2024, down from a previous forecast of $14 billion to $15 billion.

It forecast margins at about 40%, down from the "low 40s".

"We are facing a longer and more pronounced correction in industrial than what we anticipated due to a progressive weakening of demand amplified by a severe inventory correction," CEO Jean-Marc Chery told analysts in a call.

Demand for electric vehicles (EVs) has also slowed sharply in Europe, with data from the region's trade body last week showing sales rose by just 1.3% in the first half.

Despite that, STM still hopes EVs will drive growth for the remainder of the year, even if less than forecast.

"I confirm that H2 will be a growth driver for ST for all the components related to electrical vehicles, particularly for silicon carbide, and particularly everywhere, in China and also with our main customer," Chery said, without naming the customer.

STM had already cut its outlook in April.

"The cut is massive, they cut the top-line expectation by seven points," said Sebastien Sztabowicz of Kepler Cheuvreux, adding some investors are wondering whether there will be a recovery in time soon or a deep correction will continue.

Revenue for the second quarter came in at $3.23 billion versus $3.2 billion expected by analysts according to LSEG data. Margins stood at 40.1%.

(Reporting by Nathan Vifflin; editing by Janane Venkatraman, Jason Neely and Sharon Singleton)

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