By Mauro Orru

Shares of Tesla and Apple supplier STMicroelectronics surged Wednesday after its chief executive said the company would hit guidance for the current quarter as demand for its semiconductors is picking up.

The European chip maker is forecasting revenue of about $2.71 billion in the second quarter, down more than 16% on year, but 7.7% higher compared with the first quarter. Its gross margin--a closely watched metric for companies in the semiconductor industry--should be about 33.4% in the second quarter, down from 40.1% a year earlier.

Chief Executive Jean-Marc Chery said at an event hosted by BNP Paribas that the company would deliver at least the mid-point of guidance in the second quarter and that a recovery in demand would also benefit the third quarter unless trade tensions get in the way.

STMicroelectronics shares jumped 10% in Paris as investors welcomed Chery's remarks that appetite for semiconductors is improving after months of lackluster sales, particularly for chips used in electric vehicles and industrial equipment. The stock is down nearly 35% over the past 12 months.

The industry has been navigating uneven demand for several quarters now. Semiconductors to power the data centers behind the artificial-intelligence boom continue to be in high demand, but orders for chips used in cars and industrial equipment had been stubbornly weak.

Chery said Wednesday that he expects 5,000 employees to leave the group through 2027, including 2,800 job cuts that STMicroelectronics announced in April as part of a program to reshape its manufacturing footprint and cut costs. The company employed 49,602 people at the end of 2024, according to its latest financial report.

The executive said he believes the first quarter marked the bottom of demand. The company posted $2.52 billion in sales in the first quarter, down more than 27% on year, while net profit slumped 89% to $56 million.

For the current quarter, STMicroelectronics expects to outperform its forecasts for sales of chips used in personal electronics and industrial equipment. Sales of chips found in cars are expected to be in line with forecasts, Chery said.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

June 04, 2025 11:27 ET (15:27 GMT)

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