Technology
Thursday, January 4th, 2024 4:38 pm EDT
Key Points
- Anticipated Drop in Customer Orders: Mobileye, a self-driving technology company primarily owned by Intel, has issued a warning about an expected significant decline in customer orders for the first quarter of 2024. The company attributes this anticipated drop to the awareness of excess inventory at its customers, particularly automakers who had accumulated Mobileye’s chips in response to global supply chain challenges that disrupted manufacturing.
- Stock Plunge: Following the announcement of the projected decline in customer orders, Mobileye’s shares experienced a substantial plunge, declining as much as 25% during Thursday morning trading. This sharp decrease in stock value reflects investor concerns about the potential impact on the company’s revenue and future prospects.
- Excess Inventory and Supply Chain Dynamics: Mobileye explains that automakers had built up excess inventory of its chips as a precautionary measure against potential future part shortages arising from global supply chain issues. With the easing of supply chain concerns, the company expects its customers to utilize the vast majority of this excess inventory in the first quarter of the year. As a result, customers are not expected to place orders for new chips at the same level as the year-ago quarter, contributing to the projected drop in customer orders for the first quarter of 2024.
Mobileye, the self-driving technology company majority owned by Intel, issued a warning, stating that it anticipates a significant drop in customer orders for the first quarter of 2024. This announcement led to a sharp decline in Mobileye’s shares, plunging as much as 25% during Thursday morning trading. The company attributes this anticipated drop in orders to excess inventory at its customers, particularly automakers who had stocked up on Mobileye’s chips amid global supply chain challenges. Automakers sought to mitigate potential future part shortages by accumulating inventory. However, with the easing of supply chain concerns, Mobileye expects customers to utilize the excess inventory in the first quarter of the year, leading to a reduced need for new chip orders compared to the previous year. Intel initially announced the acquisition of Mobileye in 2017 for over $15 billion, later taking the company public again in October 2022. Despite Intel selling off $1.5 billion of its Mobileye stake in the previous year, it still retains an 88% stake in the company. The recent warning has impacted Mobileye’s stock, trimming back some of the gains it experienced after going public, though IPO buyers still maintain a roughly 12% advantage.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/01/04/mobileye-shares-plunge-after-chipmaker-warns-of-order-pullback.html
