Shares of Mobileye Global Inc. plummeted more than 24% today after the chipmaker warned that its revenue will decline significantly this quarter. 

The Intel Corp. unit posted the projection together with preliminary financial results for the previous quarter. During the three months ended Dec. 31, 2023, Mobileye generated revenue of $634 million to $638 million, in line with its guidance. The chipmaker’s adjusted operating income ranged between $241 million and $247 million, topping the high end of its guidance by more than $10 million.

But investors were more focused on the financial projections Mobileye provided for the current quarter. During the three months ended April 1, the chipmaker expects to generate only half the $458 million in revenue it posted the same time a year earlier. In conjunction, the $124 million adjusted operating profit Mobileye earned 12 months ago is expected to turn into an adjusted operating loss of $65 million to $80 million.

Mobileye sells chips that automakers use to power their vehicles’ driver-assistance systems. Cars powered by the company’s silicon can perform tasks such as parking and lane centering with little to no human input. Mobileye also sells a number of related products including vehicle sensors.

Intel acquired the chipmaker in 2017 at a $15.3 billion valuation. Five years later, it took Mobileye public through a stock sale that raised more than $800 million. Today, the vehicle chip supplier trades on the Nasdaq while Intel continues to retain a 88% stake.

Mobileye determined that its revenue and profit will fall this quarter through its “standard planning process for the upcoming year.” As part of that process, the company held discussions with its most important auto industry customers to estimate how many chips they will require. It determined that those customers have excess inventory of 6 million to 7 million chips, which means they will place fewer orders in the coming months.

The Intel unit attributes the expected drop in demand to two factors. The first is that some automakers and their suppliers, which were affected by the semiconductor shortages of yesteryear, have built up large chip inventories to ensure they won’t run out of processors a second time. Second, Mobileye detailed that a number of customers scaled back production in 2023 and therefore require fewer chips.

The Intel unit expects the sales slowdown to continue into the second quarter, but to a much lesser extent. Whereas Mobileye’s revenue is set to drop 50% this quarter, it’s expected to be “flat to up mid single-digits” year-over-year during the following three months. The company projects that its sales will return to normal levels in the second half of 2024.

Mobileye expects to close the fiscal year with total revenue of $1.83 billion to $1.96 billion, down from about $2.08 billion in 2023. The company’s adjusted operating profit will drop to between $270 million and $360 million. The low end of the latter range would represent a year-over-year decline of more than 50%.

The bright spot in Mobileye’s 2024 forecast is its SuperVision business. SuperVision is a partly autonomous driving system that combines two of the company’s vehicle chips with 11 cameras and a radar sensor. The system, which removes the need for automakers to build a driver-assistance platform from scratch, is the most advanced product of its kind in Mobileye’s hardware portfolio. 

The Intel unit expects to sell 31 million to 33 million chips this year compared with 37 million in 2023. SuperVision shipments, in contrast, will nearly double from 100,000 units last year to between 175,000 and 195,000 units. On the high end, that’s about three times the total number of SuperVision-equipped cars sold through late 2022. 

Photo: Mobileye