ST Sees Sales Growth Despite Weak Smartphone Demand

Results coming in from several of the chip companies this week have shown a seasonal decline in demand from smartphones impacting revenue growth. STMicroelectronics announced strong first quarter results despite slowdown in sales for smartphones, while Austrian chipmaker ams expects a significant short-term impact from changes in its customers’ smartphone programs.

STMicroelectronics’ announced net revenues of $2.23 billion in Q1 2018, up 22.2 percent year-over-year, but a sequential decrease from the previous quarter of 9.8 percent.

ST President and CEO Carlo Bozotti, who is retiring May 31, said in a press statement that the company expects second quarter revenue to be up about 17.5 percent compared with the second quarter of last year, "despite the weak demand we are experiencing for smartphones in the first half of 2018."

Bozotti said ST's projections for second quarter growth come from strong sales in automotive, industrial and IoT chips.

First quarter sales declined sequentially due to a 25 percent decline in sales for ST's analog, MEMS and sensor group. The company said these was due to unfavorable seasonal dynamics for smartphone applications, negatively impacting the its imaging business.

Meanwhile, Austrian chip maker ams, which provides high performance sensor solutions, warmed that it expects negative adjusted operating margins for its second quarter based on "a significant under-utilization of capacity."

According to ams, the capacity underutilization is being driven by " product transitions and product changes in a major consumer program preventing a pre-production of parts." While ams did not specify the customer, most analysts pointed to Apple, which uses ams optical sensors for its facial recognition technology.

"At the same time, preparations for expected major ramp-ups in the second half 2018 are on track," ams added.

The company reported first quarter sales of $452.7 million, up 147 percent from the year-ago quarter but down 22 percent from the previous quarter. The company said its consumer and communications business started the year on a positive but more balanced note as the market success of its solutions was moderated by noticeable customer volume effects in the smartphone market.