Europe's biggest chip maker, STMicroelectronics, said sales had grown seven per cent between its first and second quarters, but 27.6 per cent over the same period last year.

For Q2 2004 STMicro reported revenues of $2.17bn, up from Q1's $2.03bn and Q2 2003's $1.70bn. The company had expected Q2 2004's figure to be higher, but "order push-outs in the computer peripherals market and short-term testing bottlenecks" adversely affected STMicro's ability to ship "certain products".

Still, net income totalled $148m ($0.16 a share), up 91.7 per cent on Q1's $77m ($0.08 a share) and 85.7 per cent on Q2 2003's $80m ($0.09 a share).

Gross margin came in at 37.4 per cent, beyond the company's expectations. It laid the improvement at the door of improved manufacturing efficiency and higher fab utilisation rates.

Sales to STMicro's automotive, consumer and industrial customers were strong through the quarter, with wired and wireless comms products showing good growth. Demand for the company's hard drive chips was soft.

Pasquale Pistorio, CEO, expects Q3 revenues to grow 2-8 per cent, to $2.21-2.34bn. However, euro-to-dollar exchange rates and production problems that emerged at the end of June may depress earnings. ®

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