The automotive industry's demand shows no signs of recovery, and STMicroelectronics N.V. has once again lowered its full-year sales forecast
STMicroelectronics N.V. has again lowered its sales forecast for 2024 due to continued weak demand in the automotive industry, expecting annual sales of approximately $13.27 billion, a year-on-year decline of 23%. Third-quarter revenue was $3.25 billion, a year-on-year decrease of 27%, with a net profit of $351 million, down 67.8%. The company plans to cut costs and adjust product manufacturing to address market challenges
According to Zhitong Finance APP, on October 31st, before the US stock market opened, STMicroelectronics (STM.US) announced its third-quarter results for 2024. The financial report showed that STMicroelectronics' third-quarter revenue was $3.25 billion, a decrease of 27% year-on-year, while the average analyst expectation was $3.24 billion; net profit was $351 million, a decrease of 67.8% year-on-year; diluted earnings per share were $0.37, compared to $1.16 in the same period last year.
The decline in revenue for STMicroelectronics is attributed to its automotive industry customers facing increasingly adverse factors. The company stated that this year's sales will reach approximately $13.27 billion, down 23% from the previous year, at the lower end of the expected range. STMicroelectronics initially predicted that its annual net income for 2024 would reach as high as $16.9 billion, but was forced to lower it in July to between $13.2 billion and $13.7 billion.
The company expects fourth-quarter sales to be approximately $3.32 billion.
STMicroelectronics stated that it will cut costs and announced plans to change its manufacturing footprint for silicon and silicon carbide products, aiming to save "millions of dollars" by 2027.
Based on the current backlog of customer orders, the company indicated that it expects a decline in sales in the first quarter of next year to be "far greater than normal seasonality." The company produces chips for Apple and Tesla and was forced to lower its expectations twice earlier this year. CEO Jean-Marc Chery stated that the anticipated recovery from industrial customers earlier this year also failed to materialize, and the demand from automakers has decreased, catching the company off guard.
Due to consumer dissatisfaction with the cost of electric vehicles, automotive chip manufacturers have been hit by lower-than-expected demand for electric vehicles. Bloomberg's annual "Electric Vehicle Outlook" has lowered its sales forecast for 2026 by 13.5% compared to a year ago. Several of the world's largest automakers, including Volkswagen Group and Mercedes-Benz Group, have recently scaled back their targets.
Bloomberg Industry Research analyst Ken Hui stated that Tesla is the largest customer of STMicroelectronics' silicon carbide chips, accounting for about 10% of STMicroelectronics' sales. Tesla indicated this month that its autonomous taxi service may not go into production until 2026, and Hui expressed concerns in a report that Tesla's budget model may be delayed, which could mean additional pricing pressure for its suppliers
