STMicroelectronics (STM) shares have plunged 47.5% on a year-to-date (YTD) basis against the Zacks  Semiconductor-General industry and the Zacks Computer & Technology sector’s return of 126.4% and 32.3%, respectively.Over the same time frame, shares of its competitors, including NVIDIA (NVDA) , Amtech Systems (ASYS) and Texas Instruments (TXN) , have climbed 172.7%, 31.2% and 11.5%, respectively.This underperformance is a result of the decline in order entry and customer backlogs during the third quarter, p ...

STMicroelectronics introduces first STM32-ready wireless IoT modules leveraging collaboration with Qualcomm WiFi6/Bluetooth 5.3/Thread ST67W611M1 modules accelerate development and boosts flexibility to deliver advanced consumer and industrial IoT solutions Geneva, Switzerland, December 11, 2024 – STMicroelectronics (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, has introduced the first product of its strategic collaboration with Qualcomm Techn ...

STMicroelectronics (STM) shares have plunged 48.6% on a year-to-date (YTD) basis against the Zacks  Semiconductor-General industry and the Zacks Computer & Technology sector’s return of 127.4% and 29.8%, respectively.Over the same time frame, shares of its competitors, including NVIDIA (NVDA) , Amtech Systems (ASYS) and Texas Instruments (TXN) , have climbed 183.2%, 35.9% and 15.7%, respectively.This underperformance stems from the deterioration in customer backlogs and order entry during the third quarter ...

STMicroelectronics (STM) shares have plunged 51.2% on a year-to-date (YTD) basis against the Zacks  Semiconductor-General industry and the Zacks Computer & Technology sector’s return of 132.2% and 27.4%, respectively.Over the same time frame, shares of its competitors, including NVIDIA (NVDA) , Amtech Systems (ASYS) , and Texas Instruments (TXN) , have climbed 186.6%, 36.9% and 16.1%, respectively.This underperformance can be attributed to the deterioration in customer backlogs and order entry during the th ...

Company Overview - STMicroelectronics CEO Jean-Marc Chery and CFO Lorenzo Grandi participated in Morgan Stanley's TMT Conference 2024 in Barcelona [1] - The company recently held a Capital Markets Day, where it shared key financial targets and growth strategies [4] Financial Targets - The company aims to achieve $18 billion in revenue with an EBIT margin of 22%-24% by 2027-2028 [5] Growth Drivers - The main revenue driver is expected to be the analog and sensors segment, primarily tied to the high-premium Personal Electronics business with a key customer [6] - Power electronics, including power MOSFET, diodes, and silicon carbide, will be the second growth driver, driven by the electrification of mobility and industrial markets [6] - General-purpose microcontrollers are projected to become a significant growth driver after 2024-2025 [6] Market Outlook - The overall market addressed by STMicroelectronics is expected to grow at a compound average growth rate (CAGR) of 5% [6]

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 ...