ST(US:STM) Huachuang Securities·2025-10-25 13:56Investment Rating - The report assigns a neutral investment rating to STMicroelectronics (STM) based on its performance and future guidance [5]. Core Insights - In Q3 2025, STM reported revenue of $3.19 billion, exceeding the midpoint of its guidance by $17 million, with a quarter-over-quarter increase of 15.2% but a year-over-year decrease of 2.0% [1][2]. - The gross margin for Q3 2025 was 33.2%, slightly below the guidance midpoint, primarily impacted by the automotive and industrial product mix [2][3]. - The company has lowered its capital expenditure plan for 2025 to slightly below $2 billion, down from a previous expectation of $2 billion to $2.3 billion [3][20]. Revenue Performance - Q3 2025 revenue breakdown shows growth in personal electronics, while automotive revenue declined by approximately 17% year-over-year but increased by 10% quarter-over-quarter [2][20]. - The industrial segment saw an 8% quarter-over-quarter increase and a 13% year-over-year increase, marking its first year-over-year growth since Q3 2023 [17][20]. - Personal electronics revenue exceeded expectations with a 40% quarter-over-quarter increase [20]. Inventory and Capital Expenditure - As of the end of Q3 2025, inventory stood at $3.17 billion, down by $100 million from the previous quarter, with inventory turnover days decreasing from 166 days in Q2 to 135 days in Q3 [3][20]. - The company anticipates a low single-digit quarter-over-quarter revenue growth in Q4 2025 due to continued inventory reduction [17][20]. Q4 2025 Guidance - The revenue guidance for Q4 2025 is set at $3.28 billion, reflecting a quarter-over-quarter increase of 2.9% and a year-over-year decrease of 1.23% [3][19]. - The gross margin guidance for Q4 2025 is projected at 35%, with a quarter-over-quarter increase of 1.77 percentage points [3][19]. Strategic Focus Areas - STM is focusing on key strategic areas including industrial, automotive, personal electronics, and communication devices, with ongoing efforts in electric vehicle applications and AI data centers [17][20]. - The company is actively working on enhancing its MEMS and optical sensor solutions, collaborating with partners like NVIDIA to develop advanced architectures for AI data centers [20].