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STMicro cuts full-year revenue guidance as the chip market to remain volatile

FILE PHOTO: A logo is pictured at the plant of the Time in Plan-les-Oautes in the vicinity of Geneva, Switzerland, on December 6, 2016. REUTERS/Denis Balibouse/File Photo

PARIS (Reuters) – Franco-Italian chipmaker STMicroelectronics cut its full-year sales guidance on Thursday, in spite of the improved activity in the second quarter, which shows that the sector continues to be volatile, given the trade tensions between the United States and China.

The supplier of iPhone maker Apple (AAPL.O) -, and electric-car maker Tesla (TSLA.D) it is committed in the success of the more advanced chips and sensors on your smartphone and in the car industry to increase sales, but a lower demand for the older mass market products, it will have a toll.

STMicro said it is now forecasting full-year net sales in the range of $9.35-$9.65 billion, compared with a previous target of the presentation in May, from $9.45-$9.85 million.

The Geneva-based group has been able to grow as expected in the second quarter, net sales increased from the previous one, posting an increase of 4.7% growth to $2.17 billion.

However, the gross profit margin is lower than it is at 38.2%, compared with guidance of 38.5%.

STMicro’s shares were down by 0.7% at the beginning of the session in the trade in Paris, france.

Recent statements from the Chinese and united states leaders over a resumption of the trade talks between the two powers have been illuminated to ensure that the chip industry may be at the tip of a downturn in the industry.

The strong second quarter results due to a larger rival Texas Instruments ‘ (TXN.(O), is seen as a bellwether for the industry, as well as the Dutch chipmaker ASM (ASMI.AND, also reassured investors.

STMicro expects for the third quarter, with net sales growing by 15.3% from the prior quarter and a gross margin of 37.5%.

Reporting by Mathieu Rosemain and Gwenaelle Barzic; Editing by Sudip Kar-Gupta

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