Geneva-based STMicroelectronics reported net revenues of $2.23 billion early Wednesday, an increase of 7.5% over a year ago despite challenges from COVID-19.
ST is the eighth largest semiconductor maker in the world and the largest in Europe. Revenues in 2019 exceeded $9 billion.
The company said it faced challenges to its manufacturing operations and logistics because of government containment measures due to the pandemic. The result was a 5% decline in revenues from the mid-point of what it expected at the start of the quarter.
ST saw higher sales of imaging products and analog and microcontrollers, but experienced lower sales in automotive (down by 16%), power discrete and digital. Other semiconductor companies are reporting a similar impact on electronics sold to auto makers, which have seen big declines in vehicle sales in the U.S. and other countries amid factory shutdowns.
On Wednesday, Texas Instruments reported earnings that included declines in chips sold to customers in auto, analog and embedded. The tone on the TI earnings call was somber, as officers laid out plans to continue chip production for two quarters despite what appears to be a significant recession.
ST said the second quarter outlook takes into account declining demand for its products, especially automotive, as well as ongoing operations and logistics challenges with government regulations. But ST CEO Jean-Marc Chery said the company anticipates all its manufacturing sites will be operational “while some..will run at reduced capacity.”
ST’s outlook for the full 2020 fiscal year called for revenues between $8.8 billion and $9.5 billion with growth in the second half up to $1.04 billion. The growth estimate is based on existing customer orders.
ST closed the acquisition of a majority stake in Exagan, a French Gallium Nitride company, on April 7. Terms of the deal were not disclosed. GaN products can be used in power factor correction and DC-DC converters that are used in servers, telecom and industrial apps. They can also be used in on-board chargers for electric vehicles.
ST shares dropped 5% Tuesday to $21.39 before the company announced earnings prior to the New York Stock Exchange opening on Wednesday.