By Deborah Mary Sophia
(Reuters) -Mobileye Global cut its annual revenue and profit forecasts on Thursday, slammed by volatile demand for its driver-assistance chips in China, even as it recovered from a sales slump brought on by a global auto inventory glut.
Shares of the Israel-based automotive tech company tumbled almost 10% in premarket trading.
Automakers worldwide had scaled back on orders with their suppliers due to a pandemic-induced inventory glut, denting business at companies like Mobileye, which has partnerships with carmakers such as Ford (NYSE:F) and Volkswagen (ETR:VOWG_p) for its ADAS technologies.
While inventories have largely normalized, weak consumer demand has forced automakers to slim down production targets, translating into fewer orders for Mobileye's chips.
A frail Chinese economy has forced consumers in the country to rein in big-ticket spending, prompting Chinese automakers to cut orders at Mobileye.
China's car sales fell 2.9% in June, according to data from the China Passenger Car Association.
Mobileye expects second-half shipments of its EyeQ chips, its mass-market product, to be 3.5 million units lower than previously estimated. It had earlier forecast 31 million to 33 million EyeQ shipments for 2024.
Shipments of its more advanced SuperVision system, which investors have been focused on, would also be lower, the company said.
"The narrative on Mobileye is more tied to SuperVision than macro. Winning SuperVision is a huge aspect and that's what the stock is trading on... More contracts were supposed to come in H2 and we're already in August, so some investors might be getting a little impatient,” RBC Capital Markets analyst Tom Narayan said.
Mobileye expects full-year revenue of $1.60 billion to $1.68 billion, lower than $1.83 billion to $1.96 billion expected previously. Analysts estimate $1.87 billion, according to LSEG data.
It reported second-quarter revenue of $439 million, compared with $454 million a year ago and analysts' average estimate of $424.8 million.