Chipmaker STMicro sees auto industry driving 2021 sales

Chipmaker STMicroelectronics is stepping up investment to meet a sudden surge in demand from the auto industry, confident it can reap the benefits in an over-stretched semiconductor industry, its chief executive said on Thursday.

File image used for representational purpose (Bloomberg)
File image used for representational purpose

The Franco-Italian group sees an "accelerated path" towards its $12 billion annual sales target, which it had previously postponed by a year to 2023, Jean-Marc Chery told analysts on a call.

STMicro's shares, which were down in early Paris trading, reversed course on the upbeat comments and were up by close to 5% at 1016 GMT.

Also Read : Taiwan says chipmakers to prioritise auto chips amid global shortage

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"We see clearly this accelerated path," Chery said.

"That's the reason why we have increased our capex (capital expenditure) plan in order to fulfill the strong market demand."

STMicro, whose top customers include electric carmaker Tesla , expects sales of silicon carbide chips, aimed at improving the charging capacity of batteries in electric vehicles and the time between charges, to reach $450-500 million this year, with strong growth in second half, Chery said.

He did not give a comparable figure for 2020.

Chery also said he expected "no material change" in sales of sensors and other sophisticated chips for the smartphone industry in 2021.

The comments alleviated some investor concerns over bottlenecks seen recently in the semiconductor industry, with carmakers such as Volkswagen and Toyota forced to halt some production due to a shortage of chips.

Also Read : After chip woes, auto recovery may soon be in China's hands

"Clearly, there is an important gap today between the short-term demand of the automotive industry versus the capacity in total in the semiconductor industry," Chery said.

"You cannot overnight increase the capacity."

STMicro said it planned to lift investments this year to $1.8-$2.0 billion, up from $1.28 billion in 2020.

It forecast first-quarter sales up 31.2% from the previous year to around $2.93 billion.

First Published Date: 28 Jan 2021, 17:57 PM IST
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