STMicro advances key sales target by two years

STMicro advances key sales target by two years

Franco-Italian chipmaker STMicroelectronics advanced by two years a target of $12 billion in annual sales as a wave of orders swept the semiconductor industry to cause a global shortage that stopped production lines at several automakers.

The Geneva-based company, whose top clients include iPhone maker Apple and automaker Tesla, said on Thursday it now expected full-year revenues to be around $12.1 billion, a threshold it had postponed to 2023.

The group added that it planned investments of $2 billion, at the high end of its guidance, to meet booming orders for chips worldwide, which led to shortages and forced some automakers, such as General Motors and Volkswagen , to cut production.

The global chip shortage has spilled over into a debate over the capacity of the United States and Europe to make the most-advanced chips at home to cut dependence on Asia, now the heart of the industry.

That prompted chip giants Intel and TSMC to announce massive investments to boost capacity or build new plants. Top executives of both firms are set to meet European industry chief Thierry Breton on Friday in Brussels.

STMicro produces a wide range of chips, from low-margin microcontrollers to more sophisticated sensors used in smartphones and autonomous vehicles.

Silicon carbide chips, aimed at boosting the charging capacity of batteries in electric vehicles and the time between charges, are a key growth prospect for the group led by Jean-Marc Chery, who decided to step up investment in the technology.

STMicro posted better-than-expected revenue and profits for the first quarter of 2020. It reported first-quarter net revenues of $3.02 billion, beating a Refinitiv IBES estimate of $2.92 billion.

The group’s gross margin of 39% for the period exceeded its own expectations. It sees net revenues of about $2.9 billion and a gross margin of about 39.5% in the second quarter.


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