Under the impact of geopolitical tensions, the recovery of chip demand is weak, and STMicroelectronics NV expects Q4 revenue to be below expectations

According to the Zhitong Finance APP, STMicroelectronics (STM.US) released its fourth-quarter revenue forecast on Thursday, attracting market attention. The expected revenue for the quarter is $3.28 billion, lower than the analysts' average expectation of $3.35 billion, which has intensified concerns about the stagnation of the recovery in the mature semiconductor industry. Since the beginning of the year, the chip industry has been continuously impacted by geopolitical tensions. U.S. President Trump initiated a trade war, threatening to impose large-scale tariffs. Looking back, STMicroelectronics' third-quarter revenue fell 2% year-on-year to $3.19 billion, while analysts generally expected $3.163 billion. Earnings per share were $0.29, a year-on-year decline of 21.62%, which was 28.89% higher than the analysts' average expectation of $0.23. Operating profit plummeted 53% to $180 million, falling short of expectations. The company explained that a $37 million asset impairment and restructuring costs from a previously announced cost-cutting plan impacted profits for the quarter. The company's CEO Jean-Marc Chery stated in a statement that the market showed "signs of recovery" for the year, with a projected median revenue of approximately $11.75 billion for the full year 2025, indicating a 22.4% growth in the second half compared to the first half. At the same time, the company announced a reduction in its annual net capital expenditure plan to below $2 billion to "optimize investments based on current market conditions." The escalation of geopolitical tensions is threatening the chip industry, which has just recovered from an inventory surplus. The chip supply shortage during the COVID-19 pandemic led customers to stockpile, but demand has been recovering slowly. Previously, STMicroelectronics unexpectedly reported a loss in the second quarter, with CEO Chery blaming one customer and stating that it was merely a "temporary setback," expecting growth in the fourth quarter. Notably, a significant portion of STMicroelectronics' sales relies on Apple (AAPL.US) and Tesla (TSLA.US). Coincidentally, the performance forecast released by STMicroelectronics' competitor Texas Instruments (TXN.US) on Tuesday also disappointed investors, showing that customers are reducing orders due to escalating trade tensions and economic instability. Additionally, the Dutch government has unprecedentedly invoked Cold War-era laws to seize control of the Chinese chip manufacturer Nexperia located in Amsterdam, leading to serious disruption risks in the automotive chip supply chain. The Chinese government subsequently banned Nexperia from exporting chips from its Chinese factories to Europe, further raising concerns about potential severe shortages for automotive manufacturers and suppliers