ST reported first quarter net revenues of $2.08bn, down almost seven per cent on the same quarter last year and over 21 percent on the previous quarter. As a result ST is cutting back on its capital investments, including updating its fabs.
"In the first quarter of 2019, revenues and gross margin performed as anticipated, amid softened market dynamics," said Jean-Marc Chery, President & CEO of STMicroelectronics in the results today. "Looking at the second quarter, we plan to return to sequential revenue growth. Our second quarter outlook, at the mid-point, is for net revenues to increase about 2.4%; gross margin is expected to be about 38.5%. For the full year 2019, we expect net revenues to be in the range of about $9.45 to $9.85 billion. We therefore plan for strong sequential growth in the second half of the year compared with the first half, across the Industrial, Automotive and Personal Electronics end markets." However this assumes improving market conditions, hence the reduction in capital expenditure (capex).
“We are moderating our investment plans, with our 2019 CAPEX plan now $1.1 - $1.2 billion, from $1.2 - $1.3 billion initially," said Chery.
Texas Instruments also saw year on year lower revenues in the first quarter results yesterday.
"Revenue decreased 5% from the same quarter a year ago as demand for our products continued to slow across most markets,” said Rich Templeton, chairman, president and CEO of TI. “In our core businesses, analog revenue declined 2% and Embedded Processing declined 14% from the same quarter a year ago. TI's second-quarter outlook is for revenue in the range of $3.46 billion to $3.74 billion.”
The analogue products division held up with sales of $2.52bn vs $2.566bn, down 2 per cent while embedded processing took the hit at $796m, down 14 per cent from $926m, and ‘other’ saw $280M down 6 percent from $297m.
Next: Rambus results