STMicro Raises Outlook As High Chip Demand Drives Plants At Full Steam

Franco-Italian chipmaker STMicroelectronics raised full-year sales and investment outlook on Thursday as surging demand from car and phone makers boosted second-quarter profits and kept its factories under pressure to meet orders. Bottlenecks in the chip industry due to a wave of orders led German carmaker Volkswagen and iPhone maker Apple, two of the biggest buyers of sensors and sophisticated semiconductors, to alert markets about potential production difficulties due to chip shortages.

Apple is one of STMicro's top clients, as well as electric carmaker Tesla and most major carmakers. STMicro says it is doing its best to keep up.

"During the second quarter we were again operating with a backdrop of strong demand, stretching the global supply chains," STMicro Chief Executive Officer Jean-Marc Chery said on a call with analysts.

"We have continued to work closely with our customers across all verticals and channels to adapt to this difficult allocation situation."

STMicro's top clients include electric carmaker Tesla and most major carmakers

STMicro shares were up nearly 5% at 0933 GMT, making it the best-performing stock of France's blue-chip index CAC 40

The surge in global demand notably stems from the rollout of new mobile 5G technology, the shift of the auto industry toward electric cars and the proliferation of new connected products.

The trend also boosted sales and profits for Qualcomm, the biggest supplier of mobile phone chips in the world and the leader in 5G technology, and Japanese chipmaker Renesas, which both reported strong results this week.

In that context, STMicro has bet heavily on silicon carbide chips, aimed at improving the charging capacity of batteries in electric vehicles and the time between charges.

The group plans to generate $1 billion from the sales of these chips by 2025. It increased its investment plan again for the year to $2.1 billion, from $1.28 billion in 2020.

It also improved its full-year revenue target, now expecting it to be around $12.5 billion, up from the $12.1 billion previously announced.

The Geneva-based company's quarterly net revenue rose to $2.99 billion from $2.09 billion a year earlier, beating analysts' estimates of $2.89 billion, according to IBES data from Refinitiv.

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