Microchip Technology forecasts fourth-quarter net sales lower than Wall Street projections due to weak customer demand.
Microchip Technology estimated fourth-quarter net sales lower than Wall Street projections on Thursday, citing weak client demand as they cleared surplus inventory.
Shares of the Chandler, Arizona-based firm plummeted more than 3% in extended trading.
Demand for vehicle semiconductors has been declining as customers cope with surplus inventory, which is hurting chipmakers like Microchip Technology in an uncertain environment.
“We are cautious about demand in the near term given the weak macro environment and customers’ ongoing actions to reduce inventory.” Ganesh Moorthy, the company’s chief executive officer
“As a result, we intend to have two-week shutdowns in our large wafer fabrication facilities in each of the March and June quarters and reduced activity in many of our other factories, resulting in underutilization charges,” he said.
Last month, Microchip Technology’s peer Texas Instruments estimated first-quarter revenue and earnings below expectations, citing early signs of weakening in the automotive sector and concerns about a chronic supply glut in its industrial industries.
Similarly, Israel-based firm Mobileye Global estimated preliminary 2024 revenue below expectations, citing a drop in orders from customers clearing excess inventory.
According to LSEG statistics, Microchip forecasts net sales of $1.23 billion to $1.43 billion in the fourth quarter ending March, which is lower than analysts’ average expectation of $1.66 billion.
It anticipates a fourth-quarter adjusted profit per share of 33 cents to 36 cents, compared to projections of 92 cents.
The company reported net revenues of $1.77 billion for the three months ended December 31, which was in line with analysts’ expectations. Excluding adjustments, its third-quarter adjusted profit per share was $1.08, compared to expectations of $1.04.
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