STMicro earnings beat estimates on demand for next-generation chips

Earnings

Franco-Italian chipmaker STMicroelectronics’ fourth-quarter results beat analysts’ estimates on Thursday as demand for chips dedicated to the next generation of smartphones and low-emission cars helped offset a slowdown in more traditional products.

STMicro’s results reflect a wider industry move towards more sophisticated semiconductors within the telecoms, auto, and manufacturing sectors, as equipment makers gear up for the deployment of the new mobile Internet infrastructure, or 5G, and increased demand for cleaner vehicles.

The supplier to iPhone maker Apple and electric carmaker Tesla said fourth-quarter net revenue rose by 7.9% from the previous quarter to $2.75 billion, above STMicro’s targets.

The gross margin for the period stood at 39.3 percent. Shares were up about 4% in early trading.

The Geneva-based company expects first-quarter sales to fall by 14% to about $2.36 billion from the last quarter of 2019, as the auto industry continues to suffer from weakening sales for older-generation cars.

It also plans to invest about $1.5 billion in capital expenditure in 2020.

STMicro’s results came on the back of a good performance by bigger rival Taiwan Semiconductor Manufacturing, which forecast an up to 45% spike in January-March revenue earlier this month.

Dallas-based Texas Instruments also indicated on Wednesday a prolonged slowdown in the semiconductor industry was bottoming out.

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