By Paolo Laudani and Ozan Ergenay
(Reuters) -German chip equipment supplier Siltronic on Thursday said it expected its annual sales to drop less than previously forecast as it anticipates a pick-up in revenue in the fourth quarter.
The global tech industry has seen demand slump since late 2022 as companies cut back on tech products and services and consumers curb spending.
Siltronic said it expects fourth quarter sales to rise versus the previous three months but noted weaker inventory corrections by chip manufacturers and their customers would weigh into 2024.
The company, which provides silicon wafers to the semiconductor industry, now expects sales to drop by up to 17% this year, versus a previous forecast of up to 19%.
"We still don’t know when we will see the turnaround in the industry and we will not be the first to see it since the typical time lag for the wafer industry is approximately six months after the end market improves," CEO Michael Heckmeier said on a call with analysts.
"We don't see any indications that the pricing environment will change, and we don't see that happening in 2024," he added. In an interview with Reuters, Heckmeier said of 2024: "We wouldn’t buy this ‘transition year’ story."
Taiwan's TSMC, a major Siltronic customer, last week posted a 25% fall in third-quarter net profit but beat expectations and said the semiconductor industry could be poised for recovery.
Siltronic's third-quarter sales fell 26% from a year earlier to 349 million euros ($368 million) in line with the 345 million euros forecast by analysts in an LSEG poll.
Its earnings before interest, tax, depreciation and amortisation (EBITDA) of 99 million euros topped a forecast of 87 million.
Shares in the Frankfurt-listed company reversed opening losses to stand 5.3% higher as of 1149 GMT.
"Siltronic delivered a good Q3 beating consensus estimates across the board despite the continued demand weakness as a result of the inventory correction at semi manufacturers," said Jefferies analyst Constantin Hesse.
Despite the weakened demand, Q4 sales are expected to be better on a quarterly basis indicating a potential low point in Q3, he added.
Amid a global tussle between the United States and China for control of the chip industry Siltronic does not expect a "major impact", its CEO told Reuters. He said the company had "only smaller sales" in the Middle East.
($1 = 0.9484 euros)