STMicro's Forecast Falls Short as Chip Stocks Under Pressure

(Bloomberg) -- STMicroelectronics NV, which sells chips to customers including Apple Inc., forecast sales growth but no gross margin boost in the final leg of this year. Shares fell, with chip stocks stuck in a rough patch.

The semiconductor maker predicts revenue will increase about 5.7 percent in the fourth quarter from the third to roughly $2.7 billion, while gross margin will remain unchanged at about 39.8 percent. That compares with analysts’ estimates for revenue of $2.7 billion and a 40.2 percent gross margin on average.

“We don’t see significant improvement in the gross margin,” Chief Financial Officer Lorenzo Grandi said in a conference call with analysts Wednesday. “Manufacturing efficiency will offset the price pressure that we see.”

The company warned in July that new product ramp-ups will mean more growth in smartphone chips but probably not higher profitability. Investors have been looking for clues on how Apple’s latest iPhones, which went on sale from September, will affect sales momentum and profitability for chips in the final months of 2018.

Shares of STMicro fell 6.58 percent to 12.64 euros at 10:12 a.m. in Paris trading, the stock’s lowest level in more than 15 months.

The chipmaker this week was among the European tech stocks hammered in a broad selloff spurred by weaker-than-expected outlooks from AMS AG and Atos SE. It published results after Texas Instruments Inc. offered a disappointing sales and earnings forecast, suggesting customers may be slowing purchases amid an escalating trade war between the U.S. and China.

STMicro reported third-quarter net income of $369 million on revenue of $2.5 billion. Analysts had predicted sales of $2.5 billion and net income of $327 million.

©2018 Bloomberg L.P.