STMicroelectronics Posts Second-Quarter Profit as Auto Revenue Increase

STMicroelectronics NV, Europe’s largest semiconductor maker, posted a second-quarter profit as sales surged in its auto, consumer and industrial segments.

Net income was $356 million, compared with a net loss of $318 million a year earlier, the Geneva-based company said in a statement today after the close of trading in New York. Excluding items, profit was 18 cents a share, in line with the average of analysts’ estimates compiled by Bloomberg. Sales rose to $2.53 billion from $1.99 billion.

For the rest of the year orders are “building up very nicely,” Chief Executive Officer Carlo Bozotti said on a conference call with reporters. “There’s a solid buildup of the backlog, and we are very pleased to see this is very much across the board.”

Semiconductor producers are returning to growth as demand climbs for consumer electronics and cars that require computer chips. Intel Corp., the world’s biggest chipmaker, on July 13 forecast third-quarter sales of about $11.6 billion, topping analysts’ estimates.

STMicroelectronics fell as much as 4.1 percent in Milan after its ST-Ericsson unit reported a loss. The stock traded 3.9 percent lower at 6.485 euros at 11:50 a.m.

Chipmakers and the manufacturers that rely on their products have struggled to complete orders this year as a rapid increase in demand constrained supplies. Hitachi Ltd. had trouble supplying electronic controls to Nissan Motor Co. because of a lack of chips, Nikkei reported July 14.

“Demand has actually come back quite quickly,” and is likely to remain strong as inventories are rebuilt, Adrien Bommelaer, an analyst at Piper Jaffray in London, said by phone. “I don’t expect a hard landing.”

Increasing Capacity

Alcatel-Lucent SA, the largest French telecommunications equipment manufacturer, blamed a first-quarter loss on a lack of basic components including semiconductors.

“The demand is very, very strong and we and our competitors are not always able to serve all of the demand,” Bozotti said today. The company is boosting capacity at European facilities to increase production, he said.

STMicroelectronics’ gross margin, the percentage of revenue remaining after manufacturing costs, was 38.3 percent, compared with 26.1 percent a year earlier.

Revenue will increase 13 percent to 19 percent in the third quarter, Bozotti said in the statement. That equates to as much as $2.71 billion, compared with an average estimate of $2.63 billion, according to Bloomberg data.

Growth Forecast

Sales of chips, used in products from mobile phones to television set-top boxes and washing machines, are picking up after the global recession cut demand for consumer goods. In April, Bozotti predicted the company’s market may grow 15 percent to 20 percent this year.

In June, the Semiconductor Industry Association and researcher Gartner Inc. raised their forecasts for global sales of microchips this year to growth of 28 percent and 27 percent, respectively.

ST-Ericsson, a 50-50 joint venture with Ericsson AB that makes chips used in mobile phones, said in a separate statement its second-quarter loss narrowed to $139 million from $213 million a year earlier. Clients of ST-Ericsson include Nokia Oyj and Samsung Electronics Co., the world’s top two handset makers.

STMicroelectronics’s sales to the automotive market advanced 48 percent, consumer sales climbed 42 percent, telecommunications sales retreated 3 percent, and industrial sales increased 43 percent, according to the statement.

To contact the reporters on this story: Chiara Remondini in Milan at cremondini@bloomberg.net; Matthew Campbell in London at mcampbell39@bloomberg.net.

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