BARCELONA (Reuters) - STMicroelectronics (STM.PA), Europe's largest chipmaker, reiterated on Wednesday that mergers and acquisitions were not a priority for now as it focuses on boosting sales and restructuring its digital products division.
Speaking at the annual Morgan Stanley TMT conference in Barcelona, Spain, ST Chief Executive Carlo Bozotti said he could not rule out M&A becoming important for the company in the future, but it is "not on the table today".
"Our priority is No. 1: growth, and No. 2: resolve the problem in our digital products group," Bozotti said.
The Franco-Italian chipmaker, whose products are used in everything from car parts to phones, has throttled back production and slashed new capacity amid an industry-wide business slowdown which began in China and has spread to other regions.
Bozotti said the company saw no improvement in customer bookings during October, the first month of its fourth quarter, following a 6.5 percent decline in third-quarter net revenue.
ST has forecast fourth-quarter revenue will decline by around 6 percent, which would result in revenue of about $1.65 billion, far below the $1.83 billion analysts had previously predicted.
"We did not expect such a material correction of inventory in the fourth quarter and maybe first quarter of next year," Bozotti told Reuters on the sidelines of the conference.
Margin improvements postponed over the last year must await an improvement in underlying industry conditions, he said. "Frankly in the last few weeks it (the global semiconductor market) was not that great," Bozotti said.
ST has refrained from taking part in a global consolidation wave in the semiconductor industry over the past year that continues at a breathless pace.
It's two biggest rivals in Europe, Infineon (IFXGn.DE) and NXP (NXPI.O), have both agreed deals. Germany's Infineon closed its biggest merger earlier this year, while Dutch chipmaker NXP is set to overtake ST as Europe's biggest chipmaker once it completes a deal to buy Freescale FSL.N.
ST has postponed spelling out plans for its struggling digital products group until early next year, saying only that it had narrowed its options.
These are widely expected to include job cuts or the potential sale of the business, analysts said. ST executives have said repeatedly that "the status quo is not an option any longer" for the unit, which generates about 14 percent of sales.
Additional reporting by Harro ten Wolde in Frankfurt; editing by David Clarke and Susan Fenton