The company, whose clients include European automaker Volkswagen, supplies chips that go into drive trains of electric cars and help with driver-assistance systems like cameras and sensors.
“We are starting to see pockets of softness, with tier 1 customers in Europe working through their inventory and increasing risk to automotive demand due to high interest rates,” CEO Hassane El-Khoury said in a post-earnings call.
Tesla CEO Elon Musk had raised concerns about the impact of high interest rates on car buyers after the world’s most valuable automaker, which is also considered a bellwether for EV industry, missed revenue estimates.
Onsemi, which has laid off 1,360 employees so far this year, forecast revenue of $1.95 billion to $2.05 billion, below expectations of $2.18 billion.
In an interview, El-Khoury said the company still expects EV demand to grow, but more slowly. The job cuts announced Monday had been planned as part of a larger strategy shift to internally manufacture its more profitable chips and save costs by outsourcing other chips.
“The timing of it seems like it’s a reaction to the macro (economic environment), but the timing has always been part of the strategy,” El-Khoury said.Onsemi expects fourth-quarter adjusted diluted earnings per share of $1.13 to $1.27, below analysts’ average estimate of $1.36 according to LSEG data.
Its third-quarter revenue of $2.18 billion inched past expectations of $2.15 billion. Adjusted earnings of $1.39 per share beat estimates of $1.34.
Summit Insights Group analyst Kinngai Chan downgraded the company’s shares to hold from buy.
“Our industry checks indicate continued worsening of order rates in the auto and the industrial end-markets,” Chan said.
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