(News Bulletin 247) – The Franco-Italian semiconductor group STMicroelectronics posted one of the biggest declines in the CAC 40 this Tuesday, penalized by Samsung which expects lower results in the fourth quarter.

STMicroelectronics was one of the stocks with a view to 2023, with a stock which had increased by more than 37% last year.

But the start of the year is looking more difficult for the sixth best performance of the CAC 40 in 2023, due to the multiple profit warnings launched in recent days by its clients or competitors. The latest and not the least being Samsung, the world number two in semiconductor production.

The South Korean giant announced on Tuesday that it was counting on a decline in its results over the period from October to December 2023, citing weak demand for electronic devices. Samsung therefore expects a drop of more than a third in its operating profit in the fourth quarter of 2023 compared to the same period the previous year.

Turnover is expected to fall by 4.9% to 67,000 billion won, or 47 billion euros. “This shows that the rebound is slower than we all thought,” Tom Kang, research director at Counterpoint Technology Market Research, told Bloomberg

The semiconductor group’s action is suffering from an unfavorable cross-reading on the Paris Stock Exchange, and is currently down 2.3% at 40.32 euros around 10:30 a.m. And since the start of the year, the stock has lost more than 8.7%. Last week, STMicroelectronics had already been shaken by the resounding warning launched by Mobileye

Mobileye in the viewfinder

The Intel subsidiary specializing in autonomous driving assistance technologies (ADAS) warned last Thursday that in 2024 its turnover will be below expectations, due to excess stocks among its customers.

“We expect revenues in the first quarter of 2024 to be significantly lower than those of the first quarter of 2023 and that revenues will normalize during the remainder of 2024,” Mobileye warned. The group therefore expects to suffer a 50% drop in its turnover compared to the $458 million generated in the first quarter of 2023.

The group expects lower-than-expected sales for its EyeQ SoC business (its driving assistance system-on-chip, Editor’s note), which will have “temporary” repercussions on Mobileye’s profitability.

“As with revenue, we expect first quarter profit levels to be significantly lower than subsequent quarters. We expect first quarter 2024 operating loss to be between $257 million and $242 million.” , explains the company which expects revenues between 1.83 and 1.96 billion dollars for the whole of 2024. Which is well below the consensus of 2.6 billion dollars from Wall Street analysts.

In New York, this immense disappointment was then punished. Mobileye shares fell 24.5% on Thursday, January 4, the day of the announcement.

For its part, STMicroelectronics will publish its financial results for the fourth quarter and fiscal year 2023 on Thursday, January 25, 2024, before the opening of the Paris Stock Exchange. Before this key publication, the Franco-Italian company had benefited from the support of the UBS bank. In a note published in mid-December, UBS switched to buying the file, for the first time since 2020, and at the same time increased its target to 54 euros from 52 euros.

The bank then believed that STMicroelectronics presented itself as a good option for investors, because the company very often managed to outperform its market.

“Our analysis shows that STMicro has outperformed (this market in) 83% of quarters over the last five years on revenue compared to 62% over the last ten years, suggesting a significant change in share market and execution”, appreciates the establishment. The bank judges that the group’s positions in electric vehicles and driver assistance systems (ADAS) will enable it to continue this good trend.