STMicroelectronics NV cut its annual revenue outlook for the second consecutive quarter after an inventory glut and lower sales to carmakers depressed demand.

Sales this year will fall to US$13.2 billion to US$13.7 billion, the Franco-Italian semiconductor company said in a statement on Thursday. That’s down from a previous range of US$14 billion to US$15 billion. In January, the chip manufacturer forecast annual revenue of as much as US$16.9 billion. 

Chipmakers’ results in the quarter have been mixed. Texas Instruments Inc, an industry bellwether, said Chinese electronics makers were ramping up orders again after working through stockpiles of unused components. Meanwhile, Dutch chipmaker NXP Semiconductors NV reported a drop in revenue because of lower automotive chip orders and gave a disappointing forecast that sent shares tumbling. 

“During the quarter, contrary to our prior expectations, customer orders for industrial did not improve and automotive demand declined,” chief executive officer Jean-Marc Chery said in the statement. Automotive revenues were lower than expected and offset higher sales in the company’s personal electronics business, he said. 

STMicro’s shares dropped more than 11% to €32.88 at 9.42am in Paris trading, the biggest intraday decline since December 2020. The stock has declined 27% this year.

Sales fell 25% in the second quarter from a year earlier to US$3.23 billion, the company said. That compares to analysts’ average US$3.2 billion forecast, according to estimates compiled by Bloomberg.

Automotive chipmakers are facing low demand due to disappointing growth in the electric vehicle (EV)market. Lack of EV demand has impacted carmakers, with companies including Mercedes-Benz Group AG and Ford Motor Co delaying EV production targets this year. According to a Bloomberg Intelligence survey in February, only 18% of respondents in Europe who are planning to buy a car in the next year will choose an EV. BloombergNEF’s annual Electric Vehicle Outlook reduced sales projections by 6.7 million vehicles through 2026. 

“Despite the small beat in the reported quarter, the company did not see the expected recovery in industrial orders and automotive orders declined,” JPMorgan analyst Sandeep Deshpande said in a note. “The key question is, given the company’s very significant sequential cuts, will the market believe that the worst is over?” 

STMicro - whose chips are used by EV and smartphone makers, including Tesla Inc and Apple Inc  - announced last month that it would buy back as much as US$1.1 billion in its shares over the next three years, as a previous buyback programme was completed. The programme would be the equivalent of 2.8% of outstanding stock.

  - Bloomberg