STMicro sees auto market driving 2021 income

(Reuters) – Chipmaker STMicroelectronics is stepping up investment decision to meet a sudden surge in demand from customers from the car sector, confident it can reap the benefits in an over-stretched semiconductor market, its main executive stated on Thursday.

FILE Picture: A brand is pictured on the factory of STMicroelectronics in Plan-les-Oautes around Geneva, Switzerland, December 6, 2016. REUTERS/Denis Balibouse

The Franco-Italian team sees an “accelerated path” to its $12 billion annual sales concentrate on, which it had formerly postponed by a calendar year to 2023, Jean-Marc Chery told analysts on a call.

STMicro’s shares, which had been down in early Paris investing, reversed system on the upbeat feedback and have been up by shut to 5% at 1016 GMT.

“We see evidently this accelerated route,” Chery reported.

“That’s the purpose why we have amplified our capex (cash expenditure) program in get to satisfy the robust sector demand from customers.”

STMicro, whose top rated buyers consist of electrical carmaker Tesla, expects product sales of silicon carbide chips, aimed at improving upon the charging capability of batteries in electric vehicles and the time concerning rates, to arrive at $450-500 million this calendar year, with potent growth in 2nd 50 percent, Chery explained.

He did not give a similar figure for 2020.

Chery also said he expected “no substance change” in product sales of sensors and other sophisticated chips for the smartphone industry in 2021.

The feedback alleviated some investor problems over bottlenecks seen not long ago in the semiconductor sector, with carmakers this sort of as Volkswagen and Toyota compelled to halt some output owing to a scarcity of chips.

“Clearly, there is an crucial hole right now among the short-time period demand of the automotive field versus the capability in total in the semiconductor sector,” Chery stated.

“You can not overnight enhance the capacity.”

STMicro stated it prepared to raise investments this yr to $1.8-$2. billion, up from $1.28 billion in 2020.

It forecast 1st-quarter revenue up 31.2% from the previous yr to around $2.93 billion.

Reporting by Mathieu Rosemain in Paris and Charles Regnier in Gdansk. Editing by Tomasz Janowski and Mark Potter