STMicro profit beat estimates on demand for its next-generation chips

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

(Reuters) – Franco-Italian chipmaker STMicroelectronics’ fourth-quarter results beat analysts ‘ estimates on Thursday as demand for the chips will be dedicated to the next generation of smart phones and low-emission cars helped to offset a slowdown in more traditional products.

STMicro’s results reflect a broader industry move toward more advanced semiconductor devices within the telecom, automotive and industrial sectors, such as manufacturers of equipment, equipment for the deployment of new wireless Internet infrastructure, or 5G, and the increase in demand for cleaner-burning vehicles.

The supplier of iPhone maker Apple’s electric car manufacturer Tesla said during the fourth quarter, net sales increased by 7.9% from the previous quarter to a total of $2.75 billion, up STMicro targets.

The company’s gross profit margin for the period amounted to 39.3 per cent. The shares are up about 4% in early trading.

The Geneva-based company expects first-quarter revenue decreased by 14% to $2.36 billion for the third quarter of 2019, as the auto industry continues to suffer from a decline in sales of older-generation cars.

There is also a plan to invest about $ 1.5 billion in capital spending by the year 2020.

STMicro’s results came on the back of a good performance by a larger rival, Taiwan Semiconductor Manufacturing Co. (TSMC), which has a forecast of up to a 45% surge in the January-March earnings release earlier this month.

The Dallas-based Texas Instruments Inc., also indicated on Wednesday it is a long-term slowdown in the semiconductor industry was bottoming out.

Reporting by Mathieu Rosemain and Pawel Goraj; Editing by Kim Coghill and David Evans

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