(Reuters) -Self-driving technology company Mobileye Global (NASDAQ:MBLY) warned on Thursday that a pullback in orders from customers clearing excess inventory will batter its results this year, sparking a selloff in the shares of auto chip suppliers.
Shares of the Israel-based company, whose customers include Volkswagen (ETR:VOWG_p) and Porsche, tumbled 28.2% to more than a one-year low of $28.52.
Mobileye forecast preliminary 2024 revenue below estimates showing that the automotive chip industry, which had so far avoided the chip supply glut crisis, will likely face a downturn too.
Shares of auto chipmakers such as NXP Semiconductors (NASDAQ:NXPI), Onsemi, Texas Instruments (NASDAQ:TXN) and Wolfspeed (NYSE:WOLF) were down between about 2% and 5.1%. Mobileye parent Intel (NASDAQ:INTC)'s shares fell about 2.2% to $46.02.
The excess inventory reflects a pullback in demand from so-called Tier 1 customers, who rapidly built up chip stocks to avoid shortages after the supply crunch that persisted through 2021 and 2022, Mobileye said.
"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," according to the company.
Mobileye expects revenue in the first quarter of the year to fall about 50% from a year earlier.
Estimating an excess supply of 6 million to 7 million units of its highest revenue-generating product, the EyeQ advanced driver-assistance chip, Mobileye expects first-quarter profit to be "significantly below the subsequent quarters".
The company forecast preliminary 2024 operating loss between $468 million and $378 million, compared with its preliminary 2023 operating loss of $39 million-$33 million.
Its adjusted operating income forecast for 2024 was also lower.
Mobileye forecast 2024 revenue between $1.83 billion and $1.96 billion, compared with estimates of $2.58 billion, according to LSEG data.