Core Viewpoint - STMicroelectronics (STM) reported Q2 2025 revenue of $2.77 billion, down 14.4% year-on-year but up 9.9% quarter-on-quarter, exceeding the midpoint of guidance [1][8]. Group 1: Financial Performance - Q2 2025 revenue was $2.77 billion, down 14.4% year-on-year and up 9.9% quarter-on-quarter, surpassing the midpoint of guidance by $56 million [1][8]. - Gross margin was 33.5%, down 6.6 percentage points year-on-year but slightly above guidance [1][8]. - Net profit was -$97 million, a significant decline from $353 million year-on-year [10]. - Inventory at the end of Q2 was $3.27 billion, with a turnover period of 166 days, slightly exceeding expectations [11]. Group 2: Business Segment Performance - Automotive revenue was $1.11 billion, down 24% year-on-year but up 14% quarter-on-quarter, with a BB ratio dropping below 1 due to specific customer dynamics [2][12]. - Industrial revenue was $610 million, down 8% year-on-year but up 15% quarter-on-quarter, with a BB ratio above 1 indicating improved order intake [2][14]. - Personal electronics revenue was $640 million, down 5% year-on-year and up 3% quarter-on-quarter, showing stable demand [2][16]. Group 3: Guidance and Outlook - For Q3 2025, the company expects revenue to reach $3.17 billion, down 2.5% year-on-year but up 14.6% quarter-on-quarter, with all end markets except automotive expected to show year-on-year growth [3][19]. - The gross margin for Q3 is projected to be around 33.5%, with inventory turnover days expected to decrease significantly [3][19]. - The automotive sector is anticipated to approach a market turning point, with expectations for sequential growth in Q3 and Q4 [3][19]. Group 4: Strategic Developments - The company is advancing its automotive electrification strategy, achieving progress in silicon carbide and silicon-based devices for various applications [12][13]. - STM's "China for China" strategy aims to enhance local manufacturing and design capabilities, which is expected to strengthen its competitive position in the Chinese market [35]. - The company has received recognition for its sustainability efforts, being listed among the "World's Most Sustainable Companies" by TIME magazine [18].

Investment Rating - The report maintains a "Recommended" rating for the industry, indicating a positive outlook for the sector's fundamentals and expectations for the industry index to outperform the benchmark index [5]. Core Insights - The industrial market is in an upward cycle, with automotive terminal revenues expected to improve quarter-on-quarter [1]. - In Q2 2025, the company reported revenues of $2.77 billion, a year-on-year decline of 14.4% but a quarter-on-quarter increase of 9.9%, exceeding the midpoint of guidance [1][13]. - The gross margin was 33.5%, down 6.6 percentage points year-on-year but slightly up 0.1 percentage points quarter-on-quarter [1][13]. - The net profit was a loss of $97 million, a significant decline from a profit of $353 million in the same period last year [15]. Summary by Sections Financial Performance - Q2 2025 revenue was $2.77 billion, with a year-on-year decline of 14.4% and a quarter-on-quarter increase of 9.9%, surpassing guidance [1][13]. - The gross margin was 33.5%, with a year-on-year decrease of 6.6 percentage points and a slight quarter-on-quarter increase [1][13]. - Net profit was a loss of $97 million, compared to a profit of $353 million in the previous year [15]. Business Segments - Automotive revenue was $1.11 billion, down 24% year-on-year but up 14% quarter-on-quarter, driven by demand in Asia-Pacific and the Americas [2][16]. - Personal electronics revenue was $640 million, down 5% year-on-year and up 3% quarter-on-quarter [2]. - Industrial revenue was $610 million, down 8% year-on-year but up 15% quarter-on-quarter, indicating a recovery in the market [2][18]. Inventory and Orders - Inventory at the end of Q2 2025 was $3.27 billion, with a turnover period of 166 days, slightly exceeding expectations [15]. - The backlog-to-billings (BB) ratio for automotive business declined below 1 due to specific customer dynamics [2][16]. - The company expects inventory turnover days to significantly improve in Q3 2025, with a target of around 140 days [3][23]. Future Guidance - For Q3 2025, the company guides revenue to a midpoint of $3.17 billion, representing a year-on-year decline of 2.5% but a quarter-on-quarter increase of 14.6% [3][23]. - All end markets, except automotive, are expected to show year-on-year growth [3][23]. - The gross margin is expected to remain around 33.5%, with potential fluctuations due to capacity underutilization costs and currency effects [3][23]. Market Trends - The automotive sector is approaching a market inflection point, with expectations for revenue growth in Q3 and Q4 2025 [3][16]. - The industrial sector is experiencing an upward cycle, driven by real end-user demand in smart industrial and energy sectors [3][18][36]. - The company is actively pursuing opportunities in electric vehicle electrification and digitalization, with significant design wins in the automotive sector [16][17].