Company and Industry Overview * **Company**: STMicroelectronics N.V. (NYSE:STM) * **Industry**: Semiconductor * **Focus**: Analog and sensors, power electronics, general-purpose microcontrollers Key Messages and Assumptions * **Revenue Target**: $18 billion with an EBIT margin of 22%-24% by 2027-2028. * **Growth Drivers**: * Analog and sensors in high-premium Personal Electronics * Power electronics, particularly power MOSFETs, diodes, and silicon carbide * General-purpose microcontrollers post-2024 and 2025 * **Success Factors**: * Reshaping manufacturing footprint and infrastructure * Cost base resizing to leverage growth and productivity improvement * Execution of the plan Transition Year and Visibility * **2025**: Transition year with low visibility in industrial markets * Bear scenario: Market flattish * Bull scenario: Acceleration in Q2 and H2 * **2026-2027**: Acceleration phase * Megatrends: Electrification of mobility, decarbonization of industry, AI * Additional revenue from connectivity, edge AI, and power: $1.5 billion - $1.7 billion Cost Restructuring * **Reorganization**: Splitting organization into two groups with similar technology and product development * **Manufacturing Transformation**: Transition to 300-millimeter and 200-millimeter fabs * **Headcount Reduction**: Attrition through early retirement and layoffs Industrial Market and Margins * **Visibility**: Short-term, with bear and bull scenarios * **Margin Impact**: Capacity reservation fees declining, unloading charges reducing, and efficiency improving China Strategy * **China-for-China**: Local production to compete with local players * **Partnerships**: Joint ventures with Sanan and [indiscernible] for critical technologies Automotive Market * **China**: Hybrid and extended-range vehicles growing, with ST leading in SiC market share * **Global**: Focus on SiC and power electronics for all vehicle types AI Opportunities * **Edge AI**: $600 million by 2030 * **Silicon Photonics**: $500 million by end of the decade * **AI Server**: 10% market share by end of the decade Sustainable Margin Structure * **2027-2028**: Gross margin of 44%-46% and operating margin of 22%-24% * **Long-term**: Potential for 50% gross margin and 30% operating margin Organic Growth and Acquisitions * **Organic Growth**: Strong belief in organic growth potential * **Acquisitions**: Open to larger-scale accretive acquisitions in automotive or industrial markets

Core Insights - The analysis of STMicroelectronics (NYSE: STM) has been conducted twice over the year, focusing on risks to price and future outlook beyond 2024 [1]. Group 1: Company Analysis - The first report (Q1 analysis) highlighted three specific risks that could impact the price of STMicroelectronics [1]. - The second report (Q2 analysis) aimed to provide insights into the company's performance and potential beyond the year 2024 [1]. Group 2: Market Context - The analysis is part of a broader trend where buy-side hedge professionals are engaging in fundamental, income-oriented, long-term analysis across various sectors in developed markets globally [1].

Financial Model and Targets - The company has set an intermediate financial model with revenues expected around $18 billion and an operating margin within a 22% to 24% range for 2027-2028 [1] - The company reiterates its $20 billion plus revenue ambition and associated financial model, now expected to be reached by 2030 [1] - The company expects to achieve high triple-digit million-dollar savings by 2027 through its manufacturing reshaping program and cost base resizing initiative, enabling an operating margin between 22% and 24% in 2027-2028 [2] Strategic Focus and Value Proposition - The company remains focused on sustainable and profitable growth, providing differentiating enablers to customers with a strong commitment to sustainability [3] - The company aims to be a key actor in the transformation of all industries towards a smarter, safer, and more sustainable future, working closely with customers and partners [3] Financial Metrics and Assumptions - The company projects a gross margin of ~44-46% for 2027-2028 and ~50% by 2030 [4] - The operating margin is expected to be ~22-24% for 2027-2028 and over 30% by 2030 [4] - The free cash flow margin is projected to be ~20% for 2027-2028 and over 25% by 2030 [5] - Financial assumptions include a currency exchange rate of approximately $1.09 = €1.00 [5] Capital Markets Day Details - The Capital Markets Day event will cover the company's strategy, key market trends, growth opportunities, developments in manufacturing, technology, and products, and value creation [6] - The event will feature presentations from key executives, including the President & CEO, and heads of various product groups and financial overviews [6] - The event will be webcast live from Paris, France, on November 20, 2024, and will be accessible on the company's website [7] Industry and Market Trends - The company is positioned to address challenges and opportunities in smarter mobility, efficient power and energy management, and the deployment of cloud-connected autonomous things [12] - The company is committed to becoming carbon neutral on scope 1 and 2 and partially scope 3 by 2027, aligning with industry trends towards sustainability [12]

Financial Data and Key Metrics - Q3 net revenues were $3.25 billion, in line with the midpoint of the business outlook range [10] - Q3 gross margin was 37.8%, broadly in line with guidance [11] - Q3 net revenues decreased 26.6% year-over-year, driven by declines in Industrial and Automotive segments [11] - Operating margin decreased to 11.7% from 28% year-over-year, and net income was $351 million [11] - For the 9-month period, net revenues were down 23.5% year-over-year to $9.95 billion [12] - Q4 2024 revenue guidance is $3.32 billion at the midpoint, representing a 22.4% year-over-year decline [13] - Full-year 2024 revenue is expected to be $13.27 billion, a 23.2% decrease year-over-year [14] Business Line Performance - Analog products, MEMS, and Sensors revenue decreased 13.3% year-over-year, driven by declines in imaging and analog products [16] - Power and Discrete products revenue decreased 18.4%, with declines in both Power and Discrete segments [16] - Microcontrollers revenue declined 43.4%, mainly due to General Purpose microcontrollers [16] - Digital ICs and RF products declined 29.7%, primarily due to ADAS and Infotainment [17] Market Performance - Industrial market declined by more than 50% year-over-year, Automotive by about 18%, Personal Electronics by about 9%, and Communication Equipment and Computer Peripherals by about 5% [17] - Sequentially, Industrial was down 12%, Automotive was flat, Personal Electronics increased 20%, and Communication Equipment and Computer Peripherals decreased 8% [18] Strategic Direction and Industry Competition - The company is launching a new program to reshape its manufacturing footprint, accelerating the transition to 300mm silicon and 200mm silicon carbide [15] - The company expects annual cost savings in the high triple-digit million-dollar range by 2027 [36] - The company is focusing on innovation and strategic manufacturing initiatives to adapt to market dynamics [37] Management Commentary on Operating Environment and Future Outlook - The company anticipates a revenue decline between Q4 2024 and Q1 2025, well above normal seasonality [14] - Management highlighted challenges in the Automotive and Industrial markets but remains optimistic about long-term growth opportunities [36] - The company is adapting its operating plans to the current market cycle and investing in innovation [37] Other Important Information - Inventory at the end of Q3 was $2.88 billion, with days sales of inventory at 130 days [20] - The company paid $80 million in cash dividends and executed a $92 million share buyback in Q3 [21] - The company's net financial position was $3.18 billion as of September 28, 2024 [21] Q&A Session Summary Question: Drivers of Q1 revenue decline and pricing environment [39] - The decline is driven by customer backlog and order dynamics, not pricing [40] - Pricing pressure is expected to be mid-single digit decline in 2025, slightly higher than 2024 [42] Question: Microcontroller inventory correction [43] - Inventory correction is lasting longer than expected, with normalization expected in H2 2025 [47] Question: Automotive market slowdown [48] - The slowdown is due to a shift from full battery electric to hybrid vehicles and downsized production by carmakers [49] - Inventory correction is ongoing in the automotive supply chain [51] Question: R&D spending and silicon carbide strategy [59] - R&D spending was lower due to one-time items and better expense control, but the company continues to invest in silicon carbide [61][62] Question: AI server wins [64] - The company is addressing all three main blocks of AI server power semis architecture, with a focus on power supply units and voltage handling [66][67] Question: Q1 gross margin outlook [69] - Q1 gross margin is expected to be impacted by unused capacity charges and inventory control measures [71] Question: Restructuring program and M&A [74][75] - The restructuring program is expected to result in high triple-digit million-dollar savings by 2027 [74] - The company is actively looking at bolt-on acquisitions as part of its organic growth strategy [76] Question: Silicon carbide targets [84] - The company expects silicon carbide revenue to be $1.15-$1.2 billion in 2024, with a long-term target of over $5 billion by 2030 [85][86] Question: CapEx implications of 300mm transition [92] - The company plans to reduce CapEx in the coming years as it transitions to 300mm wafer production [93][94]

STMicroelectronics (STM) is scheduled to report its third-quarter 2024 results on Oct. 31.For the third quarter, the company expects net revenues of $3.25 billion at the midpoint. The Zacks Consensus Estimate for revenues is pegged at $3.22 billion, implying a 27.3% year-over-year decline.The consensus mark for earnings has remained unchanged over the past 60 days at 33 cents per share, indicating a decline of 71.6% from the year-ago reported figure.STM surpassed the Zacks Consensus Estimate in three of the ...

STMicroelectronics' innovative biosensing technology enables next-generation wearables for individual healthcare and fitness Highly integrated biosensor device combines input channel for cardio and neurological sensing with motion tracking and embedded AI core Demonstration to take place at Electronica 2024, Munich, November 12-15 Geneva, Switzerland, October 28, 2024 – STMicroelectronics (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, has introd ...

LOS ANGELES, Oct. 18, 2024 /PRNewswire/ -- The DJS Law Group reminds investors of a class action lawsuit against STMicroelectronics N.V. ("ST" or "the Company") (NYSE: STM) for violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the U.S. Securities and Exchange Commission. Shareholders who purchased shares of STM during the class period listed are encouraged to contact the firm regarding possible lead plaintiff appointments. Appointment as lead pla ...

SAN DIEGO, Oct. 17, 2024 (GLOBE NEWSWIRE) -- Robbins Geller Rudman & Dowd LLP announces that purchasers or acquirers of STMicroelectronics N.V. (NYSE: STM) securities between January 25, 2024 and July 24, 2024, inclusive (the "Class Period"), have until Tuesday, October 22, 2024 to seek appointment as lead plaintiff of the STMicroelectronics class action lawsuit. Captioned Wang v. STMicroelectronics N.V., No. 24- cv-06370 (S.D.N.Y.), the STMicroelectronics class action lawsuit charges STMicroelectronics and ...

Core Points - STMicroelectronics disclosed a downward revision of its full-year revenue and margin projections for 2024, now expecting total revenue to be between $13.2 billion and $13.7 billion, down from a previous forecast of $14 billion to $15 billion [1] - The company had initially projected 2024 revenues to range between $15.9 billion and $16.9 billion during its fourth-quarter 2023 earnings call [1] - For the second quarter of 2024, STMicroelectronics reported a revenue decline of 25.3% year-over-year, totaling $3.23 billion [1] - Net sales to Original Equipment Manufacturers (OEMs) and through Distribution channels decreased by 14.9% and 43.7% year-over-year, respectively [1] - Following the announcement, STMicroelectronics' stock dropped over 13% during pre-market trading on July 25, 2024 [1] Shareholder Information - Shareholders who purchased shares of STMicroelectronics during the class period from January 25, 2024, to July 24, 2024, are encouraged to contact the Gross Law Firm regarding possible lead plaintiff appointment [1][2] - The deadline for shareholders to register for the class action is October 22, 2024, and there is no cost or obligation to participate [2]

NEW YORK, Oct. 11, 2024 (GLOBE NEWSWIRE) -- WHY: Rosen Law Firm, a global investor rights law firm, reminds purchasers of securities of STMicroelectronics N.V. (NYSE: STM) between January 25, 2024 and July 24, 2024, both dates inclusive (the "Class Period"), of the important October 22, 2024 lead plaintiff deadline. SO WHAT: If you purchased STMicroelectronics securities during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee a ...