STMicro CEO says chip demand to exceed group capacity all year

  • Q1 beat markets expectations
  • Group confirms full-year sales target
  • Orders are about 30-40% above group capacity-CEO

PARIS, April 27 (Reuters) - Demand for semi-condutors will exceed STMicroelectronics' capacity for the rest of the year, the boss of the Franco-Italian chipmaker said on Wednesday, as the disruption of COVID-19 and war in Ukraine overshadows the sector.

The combination of conflict and renewed lockdowns has already affected some of STMicro's bigger peers, such as Texas Instruments (TXN.O), adding to concerns over STMicro's ability to meet earlier stated targets. read more

"Our sales and operating plan show our capacity fully saturated above 90% for the full remaining year," Chief Executive Officer Jean-Marc Chery told analysts in a call.

Geneva-based STMicro lost two weeks' worth of production at its plant in Shenzhen, China, in the first quarter because of a lockdown, Chery said.

However, the group was able to transfer some of the production to other plants, helping it to beat market expectations for sales of microcontrollers, he added.

Chery said that recorded orders for its chips were 30% to 40% above the capacity of the group, whose biggest clients include iPhone maker Apple (AAPL.O) and electric carmaker Tesla (TSLA.O).

STMicro's shares dipped in and out of positive territory, reflecting investors uncertainty about its business outlook.

"Investors remain highly sceptical of trends into 2023, where we have recently lowered our expectations, factoring in a global economic slowdown and, therefore, a downcycle in semis," Citi said in a note to clients.

STMicro said its first-quarter sales came slightly above its targets at $3.55 billion for a gross margin of 46.7%, and beat the $3.49 billion average of seven analysts' estimate compiled by Refinitiv.

Diluted earnings per share over the period were $0.79, above Refinitiv's mean analyst estimate of 71 cents per share.

STMicro forecast its revenue in 2022 to be in the range of $14.8 billion to $15.3 billion. It expects second-quarter net revenue to be about $3.75 billion, reflecting 5.8% growth compared with the first quarter.

Reporting by Mathieu Rosemain; Editing by Sherry Jacob-Phillips, Louise Heavens and Barbara Lewis

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