ST(US:STM)2025-02-27 21:17Key Information Selected Financial Data The company's financial performance shows significant growth from 2020 to 2023, followed by a sharp decline in 2024 | Financial Metric | 2024 | 2023 | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Revenues ($M) | 13,269 | 17,286 | 16,128 | 12,761 | 10,219 | | Gross Profit ($M) | 5,220 | 8,287 | 7,635 | 5,326 | 3,789 | | Operating Income ($M) | 1,676 | 4,611 | 4,439 | 2,419 | 1,323 | | Net Income (Parent) ($M) | 1,557 | 4,211 | 3,960 | 2,000 | 1,106 | | Diluted EPS ($) | 1.66 | 4.46 | 4.19 | 2.16 | 1.20 | | Net Cash from Operating Activities ($M) | 2,965 | 5,992 | 5,202 | 3,060 | 2,093 | | Total Assets ($M) | 24,743 | 24,453 | 19,982 | 15,540 | 14,454 | | Total Parent Equity ($M) | 17,449 | 16,729 | 12,693 | 9,209 | 8,448 | | Debt-to-Equity Ratio | 0.17 | 0.17 | 0.21 | 0.28 | 0.31 | Risk Factors The company faces a wide range of risks inherent to the semiconductor industry and its specific operations Risks Related to the Semiconductor Industry The company is exposed to significant risks from the global environment and the inherent nature of the semiconductor industry - Global economic, political, and social uncertainties, including trade policies, tariffs, and geopolitical conflicts, can adversely affect customer demand and disrupt the supply chain343637 - The semiconductor industry is highly cyclical, subject to significant downturns characterized by reduced demand, price erosion, and high inventory levels, which can negatively impact financial results41 - The company may struggle to align production capacity with fluctuating demand, leading to risks of unused capacity charges during downturns or inability to meet customer demand during upturns48 - Intense competition and industry consolidation require continuous innovation and may erode market share or pressure the company to restructure495051 Risks Related to Operations Operational risks are substantial, stemming from high fixed costs, intense competition, supply chain dependencies, and cybersecurity threats - High fixed costs associated with manufacturing facilities can adversely impact results during periods of decreased demand52 - The company's computer systems are subject to increasingly sophisticated cybersecurity threats, which could lead to system disruptions, data theft, and significant financial loss697273 - The business is dependent on continued growth in its end-markets and its ability to retain key customers, with Apple accounting for 14.5% of total revenues in 20248384 - The company depends on patents and other IP rights and may face costly litigation for alleged infringement of third-party IP9495 - The company has committed to becoming carbon neutral (scopes 1 & 2 and parts of scope 3) and achieving 100% renewable electricity sourcing by 2027, which could impose additional costs and operational burdens111112 Risks Related to Corporate and Financial Structure The company's corporate and financial structure presents unique risks, including a controlling shareholder and dual financial reporting standards - The controlling shareholder, ST Holding, owned approximately 27.5% of common shares as of December 31, 2024, and is indirectly controlled by the French and Italian governments, which may lead to conflicts of interest with other investors123124 - Anti-takeover measures, including an option agreement for an independent foundation to acquire preference shares, may deter a change of control and adversely affect the market price of common shares127 - The company is required to prepare financial statements under both IFRS and U.S. GAAP, which can increase complexity and potentially cause confusion in the marketplace due to differing results129131 - As a Dutch company, U.S. investors may face difficulties in protecting their interests and enforcing U.S. court judgments in The Netherlands133134135 Company Information Business Overview and Strategy STMicroelectronics is a global integrated device manufacturer (IDM) that designs, develops, manufactures, and markets a wide range of semiconductor products - The company operates as an Integrated Device Manufacturer (IDM), managing the entire semiconductor supply chain from design to manufacturing142 - STMicroelectronics addresses four main end-markets: Automotive, Industrial, Personal Electronics, and Communications Equipment, Computers & Peripherals139 - The company's strategy focuses on three key long-term trends: smart mobility, power & energy efficiency, and cloud-connected autonomous things143 - A key sustainability goal is to be carbon neutral in scopes 1 and 2, plus specific scope 3 emissions, and to source 100% renewable electricity by the end of 2027146 Product Information The company's product portfolio is organized into two main groups: Analog, Power & Discrete, MEMS and Sensors (APMS) and Microcontrollers, Digital ICs and RF products (MDRF) | Product Group | Reportable Segments | | :--- | :--- | | APMS (Analog, Power & Discrete, MEMS and Sensors) | AM&S (Analog, MEMS & Sensors)
P&D (Power & Discrete) | | MDRF (Microcontrollers, Digital ICs and RF) | MCU (Microcontrollers)
D&RF (Digital ICs & RF Products) | APMS Product Group The APMS group consists of two segments: AM&S, providing smart power and analog ICs, and P&D, offering discrete and power transistors - The AM&S segment develops analog ICs using proprietary BCD and VIPpower technologies for automotive applications like battery management and braking systems, as well as MEMS sensors and optical sensing solutions156161164 - The P&D segment provides a broad portfolio of power transistors, including advanced wide bandgap materials like Silicon Carbide (SiC) and Gallium Nitride (GaN) for high-efficiency systems166167 MDRF Product Group The MDRF group is composed of two segments: MCU, featuring the STM32 family, and D&RF, offering digital and RF products for various applications - The MCU segment's flagship product is the STM32 family of microcontrollers, with the new STM32N6 series embedding ST's proprietary neural processing unit for enhanced machine-learning performance168 - The automotive MCU portfolio features the Stellar family, which supports real-time virtualization and over-the-air updates, optimized for vehicle electrification and new architectures177 - The D&RF segment is a leading player in ADAS, providing SoCs and radar systems for functions ranging from basic assistance to advanced autonomous driving features181 Customers and Sales ST serves over 200,000 customers, with Apple being the largest in 2024, and utilizes a significant distribution channel - Major customers include Apple, Bosch, Continental, Denso, Hyundai Motor, Mobileye, Samsung, SpaceX, Tesla, and Vitesco187 - In 2024, the largest customer, Apple, accounted for 14.5% of total net revenues84331 - In Q1 2024, a new Segment Marketing and Application (SM&A) organization was implemented to complement the existing regional sales structure, focusing on four end markets192 - Sales through distributors accounted for 27% of net revenues in 2024, a decrease from 34% in 2023335 Research & Development and Intellectual Property The company maintains a strong focus on R&D, investing approximately 15.7% of its 2024 net revenues, and actively protects its innovations | Year | R&D Expenses ($M) | % of Net Revenues | | :--- | :--- | :--- | | 2024 | 2,077 | 15.7% | | 2023 | 2,100 | 12.2% | | 2022 | 1,901 | 11.8% | - The company owns over 21,000 active and pending patents worldwide to protect its proprietary technologies and processes198212 - ST receives significant public funding, mainly from EU member states and China, to support R&D, innovation, and industrialization, including through programs like IPCEI and the European Chips Act226227232 Manufacturing and Facilities As an IDM, ST operates 14 main manufacturing sites globally and is making strategic investments to expand its capabilities - The company operates 14 main manufacturing sites worldwide, with a total front-end capacity of approximately 145,000 wafer starts per week (200mm equivalent) as of year-end 2024202207 - Significant investments include a new high-volume 200mm SiC manufacturing facility in Catania, Italy, and a 200mm SiC device manufacturing joint venture with Sanan Optoelectronics in Chongqing, China204 - In 2024, the company subcontracted approximately 11% of the value of its total silicon production to external foundries209 - Net capital expenditure payments were $2,642 million in 2024, down from $4,111 million in 2023210 Operating and Financial Review and Prospects 2024 Business Overview and Outlook In 2024, STMicroelectronics experienced a significant market downturn, with full-year net revenues decreasing 23.2% to $13.27 billion | Metric | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Revenues | $13,269 M | $17,286 M | -23.2% | | Gross Margin | 39.3% | 47.9% | -860 bps | | Operating Margin | 12.6% | 26.7% | -1410 bps | | Diluted EPS | $1.66 | $4.46 | -62.8% | | Q1 2025 Outlook | Mid-Point | Range | | :--- | :--- | :--- | | Net Revenues | $2.51 B | +/- 350 bps | | Gross Margin | 33.8% | +/- 200 bps | - The company initiated a program to resize its global cost base and reshape its manufacturing footprint, accelerating the transition to 300mm silicon and 200mm SiC, aiming for significant annual cost savings by the end of 2027309313 Annual Results of Operations (2024 vs. 2023 vs. 2022) The company's annual performance declined sharply in 2024 compared to 2023, with significant drops in revenues and profitability | (In millions) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Net Revenues | $13,269 | $17,286 | $16,128 | | % Change YoY | -23.2% | 7.2% | 26.4% | | Gross Profit | $5,220 | $8,287 | $7,635 | | Gross Margin | 39.3% | 47.9% | 47.3% | | Operating Income | $1,676 | $4,611 | $4,439 | | Operating Margin | 12.6% | 26.7% | 27.5% | | Net Income (Parent) | $1,557 | $4,211 | $3,960 | - The 23.2% decrease in 2024 net revenues was a result of an approximate 15% decrease in average selling prices (due to product mix and lower prices) and an 8% decrease in volumes330 | Net Revenues by Segment ($M) | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | AM&S | 4,764 | 5,478 | -13.0% | | P&D | 3,126 | 3,852 | -18.8% | | MCU | 3,466 | 5,668 | -38.8% | | D&RF | 1,898 | 2,272 | -16.5% | - Operating expenses in 2024 were $3,726 million, remaining flat compared to $3,731 million in 2023340 Quarterly Results of Operations (Q4 2024) In Q4 2024, net revenues were $3.32 billion, a 22.4% decrease year-over-year but a 2.2% increase sequentially, meeting guidance | (In millions) | Q4 2024 | Q3 2024 | Q4 2023 | | :--- | :--- | :--- | :--- | | Net Revenues | $3,321 | $3,251 | $4,282 | | % Seq. / YoY Change | +2.2% / -22.4% | | | | Gross Profit | $1,253 | $1,228 | $1,949 | | Gross Margin | 37.7% | 37.8% | 45.5% | | Operating Income | $369 | $381 | $1,023 | | Operating Margin | 11.1% | 11.7% | 23.9% | | Net Income (Parent) | $341 | $351 | $1,076 | | Q4 2024 Net Revenues by Segment ($M) | Revenue | % Seq. Change | % YoY Change | | :--- | :--- | :--- | :--- | | AM&S | 1,198 | +1.1% | -15.5% | | P&D | 752 | -6.8% | -22.1% | | MCU | 887 | +7.0% | -30.2% | | D&RF | 481 | +13.0% | -22.8% | Liquidity and Capital Resources The company maintained a strong liquidity position of $6.18 billion at year-end 2024, despite a significant decrease in operating cash flow | (In millions) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | 2,282 | 3,222 | | Short-term deposits | 1,450 | 1,226 | | Marketable securities | 2,452 | 1,635 | | Total liquidity | 6,184 | 6,083 | | Total financial debt | (2,953) | (2,927) | | Net Financial Position (non-GAAP) | 3,231 | 3,156 | | (In millions) | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | 2,965 | 5,992 | 5,202 | | Net cash used in investing activities | (3,742) | (5,766) | (4,591) | | Net cash used in financing activities | (155) | (267) | (567) | | Net cash decrease | (940) | (36) | 33 | - Free Cash Flow (a non-U.S. GAAP measure) was $288 million in 2024, a significant decrease from $1,774 million in 2023, mainly due to lower cash from operations and continued capital expenditures420 - The company plans to invest between $2.0 to $2.3 billion in Net Capex (non-U.S. GAAP) in 2025, primarily for manufacturing reshaping initiatives towards 300mm silicon and 200mm SiC437 Directors, Senior Management, and Employees Supervisory Board The company is overseen by a nine-member Supervisory Board, chaired by Nicolas Dufourcq, responsible for advising and supervising the Managing Board - The Supervisory Board consisted of nine members as of December 31, 2024, chaired by Nicolas Dufourcq, with Maurizio Tamagnini as Vice Chairman445 - The board has five committees: Audit, Compensation, Nominating & Corporate Governance, Strategic, and Sustainability466 | Supervisory Board Member | Total 2024 Compensation (€) | | :--- | :--- | | Nicolas Dufourcq | 0 (waived) | | Maurizio Tamagnini | 172,500 | | Pascal Daloz | 73,500 | | Janet Davidson | 115,000 | | Ana de Pro Gonzalo | 161,000 | | Frédéric Sanchez | 109,500 | | Donatella Sciuto | 107,500 | | Paolo Visca | 98,000 | | Hélène Vletter-van Dort | 123,500 | | Total | €970,500 | Managing Board The management is entrusted to the Managing Board, comprising the President and CEO and President and CFO, with performance-based remuneration - The Managing Board consists of Jean-Marc Chery (President & CEO) and Lorenzo Grandi (President & CFO)492 - The remuneration structure includes a base salary, a short-term cash incentive, and a long-term stock award incentive, with performance metrics covering financial criteria and a sustainability/CSR index506515516 | Managing Board Member | 2024 Total Compensation | | :--- | :--- | | Jean-Marc Chery (CEO) | $9,465,160 | | Lorenzo Grandi (CFO) | $1,801,587 | - The CEO's 2024 compensation was composed of 29% fixed and 71% variable pay, reflecting the strong link to performance552 Senior Management Senior Management's compensation structure is aligned with the Managing Board's, with a significant portion linked to performance and ESG criteria - The Executive Committee, chaired by the CEO, consisted of nine members as of December 31, 2024, and is responsible for managing the company's strategy and operations563564 - Sustainability and CSR metrics (health & safety, environment, diversity, people engagement) are included as performance criteria for both short-term and long-term incentives for Senior Management610615 | Group | 2024 Total Compensation ($M) | Fixed/Variable Ratio | | :--- | :--- | :--- | | Senior Management (31 members) | 108.0 | 43% / 57% | | Executive Committee (excl. M-Board) | 48.5 | 43% / 57% | | Executive Vice Presidents | 48.2 | 45% / 55% | Employees As of December 31, 2024, STMicroelectronics had 49,602 employees, with the majority involved in manufacturing and distributed globally | Breakdown | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Total Employees | 49,602 | 51,323 | 51,370 | | By Geography (2024) | of Employees | | :--- | :--- | | Asia | 17,965 | | Italy | 12,745 | | France | 11,528 | | Mediterranean | 5,374 | | Rest of Europe | 1,169 | | Americas | 821 | | By Function (2024) | of Employees | | :--- | :--- | | Manufacturing | 31,133 | | Research and Development | 9,257 | | Administration and General Services | 3,323 | | Divisional Functions | 3,192 | | Marketing and Sales | 2,698 | Major Shareholders and Corporate Governance Major Shareholders As of December 31, 2024, STMicroelectronics Holding N.V., indirectly controlled by the French and Italian governments, was the principal shareholder | Shareholder | Common Shares Owned | % of Total | | :--- | :--- | :--- | | STMicroelectronics Holding N.V. | 250,704,754 | 27.5% | | Public | 647,470,654 | 71.1% | | Treasury shares | 13,106,512 | 1.4% | | Total | 911,281,920 | 100.0% | - ST Holding is controlled by the French government (via Bpifrance) and the Italian government (via MEF), with a shareholders agreement governing board appointments and requiring unanimous approval for ST Holding to vote its shares668669 Anti-Takeover Provisions The company has an anti-takeover mechanism through an option agreement with an independent foundation to acquire preference shares - An independent foundation (Stichting Continuïteit ST) holds an option to acquire up to 540,000,000 preference shares to deter unsolicited takeovers not supported by the company's boards672 - The preference shares, if issued, may remain outstanding for a maximum of two years, and no preference shares have been issued to date672673 Controls, Procedures, and Cybersecurity Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2024 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the fiscal year 2024789791 - Management's assessment, based on the COSO 2013 framework, concluded that internal control over financial reporting was effective as of December 31, 2024798 - The independent auditor, Ernst & Young AG, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2024799801 Cybersecurity Risk Management The company manages cybersecurity within its Enterprise Risk Management framework, with dedicated teams and certifications ensuring resilience - Cybersecurity risk is managed within an Enterprise Risk Management (ERM) framework, with governance led by the Chief Audit & Risk Executive and overseen by the Executive and Audit Committees835837839 - A dedicated Information Security team and a Cyber Security Incident Response Team are in place to monitor threats and manage incidents, with clear escalation paths to senior management840842 - The company's cybersecurity maturity is periodically audited by independent third parties and holds key certifications, including ISO 22301 (Security and Resilience) and ISO/SAE 21434 (Automotive Cybersecurity)844845 Financial Statements and Notes Consolidated Financial Statements The consolidated financial statements for 2024 reflect a significant downturn, with decreased revenues, net income, and cash flow from operations | (In millions) | 2024 | 2023 | | :--- | :--- | :--- | | Income Statement | | | | Net Revenues | 13,269 | 17,286 | | Gross Profit | 5,220 | 8,287 | | Operating Income | 1,676 | 4,611 | | Net Income (Parent) | 1,557 | 4,211 | | Balance Sheet (End of Period) | | | | Total Assets | 24,743 | 24,453 | | Total Liabilities | 7,064 | 7,601 | | Total Parent Equity | 17,449 | 16,729 | | Cash Flow Statement | | | | Net Cash from Operating Activities | 2,965 | 5,992 | | Net Cash used in Investing Activities | (3,742) | (5,766) | | Net Cash used in Financing Activities | (155) | (267) | Notes to Consolidated Financial Statements The notes provide detailed explanations of accounting policies, segment reporting changes, public funding, debt structure, and legal proceedings - Effective January 1, 2024, the company changed its reportable segments to AM&S, P&D, MCU, and D&RF, with prior year information restated for comparability9931085 - The company has significant public funding receivables of $766 million and liabilities of $214 million as of year-end 2024, primarily related to R&D and capital investment programs in Europe and China987988 - Total long-term debt was $2.95 billion, including $1.5 billion in senior unsecured convertible bonds due in 2025 and 202710191020 - The company has commitments of $1.1 billion for outsourced foundry wafers and $1 billion for power purchase agreements as part of its carbon neutrality goals1122 - A jury verdict in a patent infringement lawsuit resulted in a potential loss of $32 million, which the company is challenging through post-trial motions and intends to appeal if necessary1126