STMicro struggles with softening smartphone market

High Tech microchip technology
Nicolas Loran | Vetta | Getty Images

Despite the softening smartphone market, Europe's largest maker of semiconductors STMicroelectronics will recover later in the year, the company's chief executive told CNBC on Tuesday.

STMicroelectronics posted a second-quarter loss more than double that of a year earlier, as it struggles with a softening smartphone market and an uncertain home economy.

"We see a good direction on many products and in the very recent weeks we have seen a softening in the smartphone market but that's it. Overall, the bookings in the second quarter were good," Bozotti told CNBC Europe's "Squawk Box."

"We expect to get back to profit in the fourth quarter of this year," Carlo Bozotti told CNBC.

He said a 1.3 billion euro investment program in developing nanotechnology over the next five years was a big part of the company's business and expected a good return from the investment.

STMicro, which makes microchips for cars, computers and mobile phones, said it expects third-quarter revenue to remain flat with the second, plus or minus 3.5 percentage points.

The outlook came as the world's eighth-biggest semiconductor maker by salesreported second-quarter revenue of $2.05 billion, down from $2.15 billion a year earlier and just shy of the $2.07 billion that analysts had expected on average.

"Macro trends remain uncertain," Bozotti said in an earlier statement. "We have seen a progressive improvement in bookings in the second quarter, although, towards the end of the second quarter, we experienced a softening in thesmartphone market."

The company recorded a net loss attributable to ST of $152 million in the second quarter, compared with a loss of $75 million in the same quarter a year earlier.

On Monday, STMicro said it expects gross margin of about 33.5 percent in the third quarter, plus or minus 2 percentage points, versus 32.8 percent in the second quarter.

-Reuters contributed reporting to this story.