STMicro sends upbeat signal on smartphone demand in second half

PARIS (Reuters) – STMicroelectronics on Wednesday delivered an upbeat assessment on second-half demand for its smartphones-focused products in second-half, brushing off investor anxiety over the soft takeoff of Apple’s iPhone X.

The Franco-Italian chipmaker, whose clients range from carmakers to industrial groups and makers of new connected devices, said sales should grow in the first half, offsetting a seasonal smartphone dip in the first three months of the year.

Its forecasts come as investor concerns about a potential stagnation of smartphone demand intensified after South Korean chipmaker SK Hynix Inc Inc’s warned of a slower growth in smartphone chip sales on Tuesday.

SK Hynix Inc outlook echoed a warning last week from Apple supplier Taiwan Semiconductor Manufacturing and European rival AMS of a downturn owing to weak orders.

Analysts estimate that Apple represents about 10 percent of STMicro’s revenues. The group makes imaging and proximity sensor products used in the iPhone X, according to analysts.

ST declines to identify its customer.

“For the second half of the year, we see healthy demand, with a strong backlog across all our product groups, end markets, including smartphones,” said chief executive Carlo Bozotti in a written statement on Wednesday.

First-quarter results were in line with market expectations.

The group’s quarterly net revenues rose 22 percent to $2.23 billion from a year earlier but fell from the last quarter of 2017 due to a seasonal smartphone dip.

Gross margin rose to 39.9 percent from 37.7 percent.

The Geneva-based group said it expected second-quarter revenues to increase by about 1.5 percent, plus or minus 3.5 percentage points, from the previous quarter.

The mid-point target for gross margin is 40 percent for the second quarter.