STMicroelectronics (STM, Financial) reported its third-quarter 2024 earnings, revealing a notable decrease in revenue and profits. The company's revenue for the quarter stood at $3.25 billion, a 27% decline from the same period last year, slightly missing analysts' expectations of $3.24 billion. Net profit plummeted by 67.8% to $351 million, with diluted earnings per share dropping to $0.37 from $1.16 a year ago.
The downturn in revenue is attributed to worsening conditions faced by its automotive industry clients. STMicroelectronics anticipates annual sales to reach approximately $13.27 billion, marking a 23% decline and aligning with the lower end of its projected range. Initially, the company had forecasted a 2024 annual revenue of up to $16.9 billion but revised this down to a range of $13.2 billion to $13.7 billion back in July.
Looking ahead, the company projects fourth-quarter sales of around $3.32 billion. STMicroelectronics plans to cut costs and intends to adjust its silicon and silicon carbide production footprint to save millions by 2027. Given the current backlog of customer orders, a sharper-than-usual seasonal decline is expected in the first quarter of the next year.
STMicroelectronics, which supplies chips for major clients like Apple and Tesla, had earlier this year had to reduce its outlook twice due to unmet recovery expectations from industrial clients and declining demand from automakers. The company is particularly affected by lower-than-anticipated demand for electric vehicles as consumer dissatisfaction with EV costs rise. Bloomberg's annual Electric Vehicle Outlook has reduced its 2026 sales forecast by 13.5% compared to the previous year's estimation.
Bloomberg analyst Ken Hui noted that Tesla is the largest customer for STMicroelectronics' silicon carbide chips, contributing about 10% to its sales. Hui expressed concerns in a report about potential delays in Tesla's budget model production, which could apply additional pricing pressure on suppliers.
