Mobileye quarterly revenue plunges as chip orders decline

Mobileye Global MBLY reported a sharp fall in first-quarter revenue on Thursday, hurt by fewer orders for its driver-assistance chips as clients rein in spending amid excess inventory.

The company's shares were down 3%.

Mobileye in January warned that the company was grappling with slowing orders for its autonomous driving technology and chips as clients cut back on spending to clear the excess stock they had built up to avoid a supply crunch during the pandemic.

However, around 70% to 75% of excess inventory at auto clients was consumed in the first quarter, Chief Executive Amnon Shashua told investors on a post-earnings call, easing concerns about the effect of the supply glut in automotive markets.

"We expect that the inventory of 31 customers will be back around normal by the end of Q2," finance chief Moran Shemesh said on the call.

Additionally, Mobileye's gross margin would improve to the low 40% range by the second quarter, Shemesh said, as it expects more shipments for its EyeQ assisted driving chips.

All key operating metrics in the first quarter were impacted by lower volume of the EyeQ chip to Tier 1 customers, the company said.

Mobileye reported a near 50% drop in first-quarter revenue to $239 million, but higher than analysts' average estimate of $231.6 million, according to LSEG data.

Mobileye, owned by Intel INTC, said net loss widened to $218 million in the quarter from $79 million a year ago, weighed down by a slump in sales.

European chipmaker STMicroelectronics STMPA lowered its full-year sales forecast as weakening auto demand weighs on chip suppliers.

Mobileye's gross margin plunged to 23% in the first quarter from 45% in the same period last year.