STMicro Europe Chief Says Outlook Improves on Chip Demand

STMicroelectronics NV (STM), the chipmaker that makes about a quarter of its sales in Europe, said customers in the region are starting to expect improvement in the economy after months of grim prospects.

“What we’re seeing is a stabilization of the marketplace in the euro zone,” Paul Grimme, STMicro’s head of Europe, the Middle-East and Africa, said in an interview yesterday. “Some of our customers expect slight improvement -- Europe is moving to a stable, slight growth period.”

Germany is leading the way, helped by auto manufacturers and positive feedback from some industrial clients, Grimme said, speaking in Barcelona where STMicro is among companies showcasing its products at the Mobile World Congress fair. France’s outlook is the most negative of the region, he said.

STMicro last month forecast it will grow faster than its addressable market this year and said it will return to profit in 2014 as it gains share from rivals such as Germany’s Infineon Technologies AG (IFX) and U.S. chip giant Qualcomm Inc. Chip demand is usually regarded as an advanced indicator of economic activity.

As Europe slowly heals from the aftermath of the debt crisis, the euro-area economy will continue to lag behind the U.S. and China this year and next as high levels of unemployment and debt hinder the currency bloc’s recovery, the European Commission said yesterday.

Photographer: Simon Dawson/Bloomberg

An STMicroelectronics NV microprocessor chip sits on display in Barcelona. Close

An STMicroelectronics NV microprocessor chip sits on display in Barcelona.

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Photographer: Simon Dawson/Bloomberg

An STMicroelectronics NV microprocessor chip sits on display in Barcelona.

Europe Demand

STMicro shares rose 4.8 percent to close at 6.49 euros in Paris for their biggest increase in more than five months. The stock has gained 11 percent this year, giving the chipmaker a market value of 5.9 billion euros ($8.1 billion).

Geneva-based STMicroelectronics, whose revenue last year shrank about 5 percent to $8.08 billion, a quarter of which was in the EMEA region, in recent years has refocused business on cars, smartphones and industrial machinery. The company is now well-positioned to benefit from a pickup of demand in Europe, Grimme said.

“Industrial and automobile are big markets for us in Europe, so this is good news,” Grimme said. “The question today is whether the trend is going to continue -- Europe needs consumer confidence to make sure of that.”

To contact the reporter on this story: Marie Mawad in Barcelona at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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