STMicroelectronics logged higher sales in the fourth quarter as customers sought chips for personal electronics, communications equipment, computer peripherals and industrial machinery, though demand for semiconductors from the automotive industry is struggling to rebound.
The European chip maker posted $3.33 billion in sales, marking a return to year-over-year growth with a 0.2% gain after several quarters of declines. Sales came above the mid-point of company guidance and also beat analysts' forecast of $3.28 billion, according to Visible Alpha.
Despite the improvement, Chief Executive Jean-Marc Chery said the company's business catering to automotive clients fared below expectations, an indication of stubbornly weak demand from a key end-market since STMicroelectronics counts Elon Musk's Tesla, Hyundai Motor, German parts supplier Continental and Israel's Mobileye among its customers.
Carmakers have been grappling with a slow electric-vehicle rollout and fierce competition from Chinese rivals. Meanwhile, automakers are still digesting chip inventories they built at the height of the pandemic, meaning that demand for semiconductors from the sector has remained subdued in recent years.
That weakness in autos painted a stark contrast with artificial-intelligence chips, for which demand continues to be strong as companies seek more sophisticated semiconductors to power data centers despite fears of an AI bubble.
The schism in demand between AI chips and legacy semiconductors has forced STMicroelectronics to lower its guidance several times in recent years and cut jobs. Chery said in June that he expected 5,000 employees to leave the company 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 group said it expected to invest between $2 billion and $2.2 billion in net capital expenditure this year.
For the first quarter, the company is forecasting revenue of about $3.04 billion, up from $2.52 billion a year earlier, a sign that sales should continue to improve. Its gross margin--a closely watched metric for companies operating in the semiconductor industry--should be about 33.7% compared to 33.4% a year earlier.
In the fourth quarter, STMicroelectronics swung to a net loss of $30 million from a profit of $341 million a year earlier. Gross profit slid to $1.17 billion from $1.25 billion, generating a 35.2% gross margin. Analysts had forecast $233.2 million in net profit and $1.15 billion in gross profit, according to Visible Alpha.