According to Futu Securities News app, in pre-market trading on October 31, STMicroelectronics (STM.US) announced its performance for the third quarter of 2024. The financial report shows that STMicroelectronics had a revenue of $3.25 billion in the third quarter, a 27% year-on-year decrease. Analysts' average expectation was $3.24 billion in revenue; net income was $0.351 billion, a 67.8% decrease year-on-year; diluted EPS was $0.37, compared to $1.16 in the same period last year.

STMicroelectronics' revenue declined due to increasingly unfavorable factors faced by its automotive clients. The company stated that this year's sales will reach approximately $13.27 billion, a 23% decrease from the previous year, at the lower end of expectations. STMicroelectronics initially forecasted annual net income for 2024 to be as high as $16.9 billion but was forced to lower it to between $13.2 billion and $13.7 billion in July.

The company estimates that fourth-quarter sales will be around $3.32 billion.

STMicroelectronics stated it will cut costs and announced plans to change the manufacturing footprint of its silicon and silicon carbide products, aiming to save "millions of dollars" by 2027.

Based on the current backlog of customer orders, the company anticipates a "substantially higher than normal seasonal" decrease in first-quarter sales next year. The company produces chips for Apple and Tesla, both of which had their expectations revised downwards twice earlier this year. CEO Jean-Marc Chery previously mentioned that the anticipated recovery by industrial customers earlier this year did not materialize, and the demand from auto manufacturers also declined, catching the company off guard.

Due to consumer dissatisfaction with the cost of electric cars, automotive chip manufacturers suffered from lower-than-expected demand for electric vehicles. Bloomberg's annual "Electric Vehicle Outlook" has downgraded the 2026 sales forecast by 13.5% compared to a year ago. Several of the world's largest auto manufacturers, including Volkswagen Group and Mercedes-Benz Group, have recently adjusted their targets downward.

Bloomberg industry research analyst Ken Hui said that Tesla is STMicroelectronics' silicon carbide chip's largest customer, accounting for about 10% of STMicroelectronics' sales. Tesla stated this month that its self-driving rental cars may not be put into production until 2026, while Hui expressed concerns in a report that Tesla's budget model could be delayed, which could mean additional pricing pressure for its suppliers.