(Reuters) - GlobalFoundries Inc projected quarterly revenue below estimates on Tuesday as the chip manufacturer takes a hit from slumping sales of smartphones and other consumer electronics, sending its shares down nearly 5% in premarket trading.
The chip industry has struggled in the past few months due to a slowdown in orders from data center operators and consumer electronics maker, with a recovery expected only later this year.
GlobalFoundries forecast second-quarter revenue between $1.81 billion and $1.85 billion, the midpoint of which was slightly lower than estimates of $1.85 billion, according to Refinitiv. Its profit outlook was also below expectations.
The company reported a nearly 30% drop in revenue at its mainstay business that caters to the smartphone market and accounts for more than a third of its total sales.
But the automotive unit was a bright spot, with revenue there more than doubling to $180 million thanks to a burst of demand from car makers, which were ramping up output after a dearth of chips hampered operations over the past two years.
Last week, Qualcomm (NASDAQ:QCOM) Inc also posted a 20% jump in its automotive business - a positive spot in what was an otherwise dull report due to smartphone market weakness.
GlobalFoundries' revenue came in at $1.84 billion for the quarter ended March 31, beating analysts' estimates of $1.83 billion, according to Refinitiv.
A bulk of the company's business comes from making silicon wafers for chip designers such as Advanced Micro Devices (NASDAQ:AMD) and Qualcomm Inc , which do not have their own fabrication plants, called fabs.
GlobalFoundries reported an adjusted profit of 52 cents per share, exceeding Wall Street estimates of 49 cents per share.
In a separate statement, the company said Tim Stone would be its new chief financial officer, taking over from David Reeder, and Niels Anderskouv would be its new chief business officer.