NEW YORK STMicroelectronics N.V. executives said they are anticipating the semiconductor market will recover at a faster pace than previously expected as signs of sales improvements emerge from key regions.
ST executives said demand from customers in China and across Asia has picked up since the end of the first quarter, boosting sales in the wireless, computer, industrial and multi-application markets.
"The early signs of market improvement have been confirmed in the last two weeks," Carlo Bozotti, ST's president and CEO, said in a presentation Friday (May 15) at the company's annual Analyst Day here. "We still need to monitor the situation until at least the end of the quarter to evaluate the strength of the improvement."
ST is forecasting second quarter revenue will be between $1.73 billion and $1.93 billion, up as much as 16 percent from $1.66 billion in the first quarter.
Chief financial officer Carlo Ferro said ST is more confident it will hit the second quarter forecast, adding that the Geneva-based company "anticipates a shorter recovery time although there is still some uncertainty in the market."
The market improvement observed by ST is not broad-based, however. Sales in Europe, Japan and in the United States remain weak, forcing the chip maker to keep costs on a tight leash.
ST executives said they expect the total global chip market to decrease 25 percent in 2009, and "more than seasonal sequential growth for the second and following quarters," according to Ferro.
As part of its cost control plans, ST continues to slash capital expenditures and is seeking to reduce capex to $500 million for 2009.
"Limited capex is now a part of ST's future," Ferro warned. "Based on our fabless strategy, we see a sustainable annual capex of 5 percent to 7 percent of sales for the future."
The company lowered inventory $184 million in the first quarter, and is targeting a further $100 million in cuts during the current quarter. The momentum will be maintained for the rest of the year, the company predicted.
According to a market researcher, ST has retained its lead in one industry segment. ISuppli said ST managed double-digit revenue growth in the automotive infotainment chip market.