PARIS (Reuters) - Franco-Italian chipmaker STMicroelectronics lowered its full-year sales guidance on Thursday in spite of improved activity in the second-quarter, signaling how the sector remains volatile given trade tensions between the United States and China.
The supplier to iPhone maker Apple (O:AAPL) and electric carmaker Tesla (O:TSLA) is betting on the success of its more sophisticated chips and sensors for the smartphone and auto industries to increase sales, but weaker demand for older and mass-markets products is having a toll.
STMicro said it was now forecasting full-year net revenue in the range of $9.35-$9.65 billion, down from an earlier target presented in May of $9.45-$9.85 billion.
The Geneva-based group managed to grow, as expected, its second-quarter net revenue from the previous one, posting an increase of 4.7% growth to $2.17 billion.
Yet its gross margin was lower than it targeted, at 38.2%, compared with a guidance at 38.5%.
STMicro's shares were down 0.7% in early session trading in Paris.
Recent statements by Chinese and U.S. leaders over a resumption of trade talks between the two powers have partially alleviated concerns that the chip industry could be at the tip of a downturn for the industry.
Strong quarterly results by bigger rival Texas Instruments (O:TXN), considered a bellwether for the sector, as well as Dutch chipmaker ASM (AS:ASMI), also reassured investors.
STMicro expects third-quarter net revenue to grow by 15.3% from the previous quarter and gross margin of 37.5%.