PARIS: Franco-Italian chipmaker STMicroelectronics is expecting strong demand from the car and mobile phone industries to boost sales growth in the fourth quarter as it braces for a loss of revenue from China’s Huawei
The Geneva-based company, whose major clients include iPhone maker Apple and carmaker Tesla, was also positive on the outlook for 2021, helping its share to reverse declines earlier on Thursday.
STMicro said it was expecting fourth-quarter sales to grow by about 12% from the previous quarter to $2.99 billion and to generate a gross margin of about 38.5%, or two and a half percentage points higher than in the quarter that ended in September.
This forecast takes into account the loss of sales from Huawei, the world’s biggest telecoms equipment maker, following new curbs imposed by U.S. authorities, which barred companies from supplying or servicing the company.
“After thirty quarters of consecutive revenue growth with Huawei, ST’s revenue from Huawei in Q4 will be zero,” Chief Executive Officer Jean-Marc Chery said on a call.
“We have stopped shipping any pieces to Huawei (on) Sept. 15,” he said. Chery also said he expected the markets that STMicro serves to grow in 2021.
STMicro’s shares were up by 1.25% at 0919 GMT, reversing losses of more than 1% earlier on Thursday.
Amit B Harchandani, analyst at Citi said: “C4Q20 sales outlook is robust though and ~9% ahead of consensus.”
The Geneva-based company said its gross margin for three months ended Sept. 30 was 36%, in-line with its own forecast.
Its diluted earnings per share for the period amounted to $0.26, slightly below an analyst mean estimate of 28 cents, according to a consensus compiled by Refinitiv IBES.
Earlier this month, STMicro said a sharp rise in automotive and microcontrollers demand helped it beat its own forecast for sales in the third-quarter, setting it on course to top its 2020 guidance.