April 24, 2019 / 6:59 AM / a year ago

UPDATE 1-STMicro tightens its purse strings on weaker chip demand

* Capex target cut by $100 mln

* Q1 net revenues down 22 pct

* Sees strong rebound in H2 from H1 (Adds details, background)

By Mathieu Rosemain

PARIS, April 24 (Reuters) - Franco-Italian chipmaker STMicroelectronics cut its full-year spending target as it adjusts finances to the global shrinkage in demand from the smartphone and tech industries.

The move echoes the gloomy prediction made by bigger rival Texas Instruments, which indicated that the slowdown in demand from microchips may last a few more quarters.

Heightened concerns over a prolonged U.S.-China trade war and a weakening of smartphone sales have taken a toll on the world semiconductor industry, even as the auto industry is driving demand for self-driving vehicle sensors.

STMicro said it now had a capital expenditure plan in the range of $1.1 billion to 1.2 billion in 2019, down from $1.3 billion initially

The Geneva-based company, whose top clients include iPhone maker Apple and electric carmaker Tesla, said first-quarter net revenues slumped by about 22 percent from the previous quarter to $2.08 billion.

This was slightly below the $2.11 billion average of seven analyst estimates compiled by Infront Data for Reuters. The gross margin for the period stood at 39.4 percent.

The group's business unit that sells sensors to the smartphone industry was particularly affected, with net revenues slumping by 44 percent from the previous quarter.

The company said it planned net revenues to be in the range of $9.45 to $9.85 billion this year, compared with about $9,7 billion in 2018.

Chief executive Jean-Marc Chery remained confident that the second-half would see a rebound in sales from the first six months of the year, driven by demand from industrial, automotive and consumer electronics clients.

The group expects net revenues to grow by about 2.4 percent in the second-quarter, from the previous one. It also expects the gross margin to slip further to about 38.5 percent in the second quarter. (Reporting by Mathieu Rosemain; Editing by Sudip Kar-Gupta)

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