Mobileye’s supply glut warning rattles auto chip stocks. Mobileye Global (MBLY.O), a self-driving technology company, issued a warning on Thursday, stating that declining orders from clients looking to get rid of surplus inventory could negatively impact its performance this year and cause auto chip suppliers’ stock to plummet.
The Israel-based company’s shares fell 28.2%, surpassing a one-year low of $28.52, with clients including Porsche (PSHG_p.DE) and Volkswagen (VOWG_p.DE).
According to Mobileye’s preliminary 2024 revenue prediction, which is below forecasts, the automotive chip industry—which has managed to sidestep the chip supply glut issue thus far—is also expected to see a slump.
Auto chipmakers’ stock dropped between 2% and 5.1%, including NXP Semiconductors (NXPI.O), Onsemi (ON.O), Texas Instruments (TXN.O), and Wolfspeed (WOLF.N). The stock of Mobileye’s parent company, Intel (INTC.O.), dropped 2.2% to $46.02.
According to Mobileye, the surplus inventory reflects a decline in demand from so-called Tier 1 clients, who quickly accumulated chip supplies to prevent shortages during the supply constraint that lasted through 2021 and 2022.
“As supply chain concerns have eased, we expect that our customers will use the vast majority of this excess inventory in the first quarter of the year,” the business stated.
According to Mobileye, first-quarter revenue would decrease by almost 50% compared to last year’s period. With an estimated surplus supply of 6 million to 7 million units of its most lucrative product, the EyeQ advanced driver-assistance chip, Mobileye anticipates first-quarter earnings to be “significantly below the subsequent quarters.”.
In contrast to its early operational loss of $39 million to $33 million for 2023, the business projected a preliminary operating loss of $468 million to $378 million for 2024.
Additionally, its projected adjusted operating income for 2024 was reduced. Based on LSEG data, Mobileye projected revenue for 2024 to be between $1.83 billion and $1.96 billion, as opposed to predictions of $2.58 billion.
