ST(US:STM)2024-07-25 12:05Financial Data and Key Metrics Changes - In Q2 2024, net revenues decreased by 25.3% year-over-year to $3.23 billion, primarily due to declines in industrial and automotive sectors [39][41] - Gross margin fell to 40.1% from 49% in the same quarter last year, while operating margin decreased to 11.6% from 26.5% [39][66] - Net income dropped 64.8% to $353 million compared to $1 billion in the previous year [45][66] - For Q3 2024, the company expects net revenues of approximately $3.25 billion, representing a year-over-year decline of 26.7% [99] Business Line Data and Key Metrics Changes - Analog products, MEMS, and Sensors decreased by 10% year-over-year, while Power and Discrete products fell by 24.4% [42] - Microcontrollers revenues declined by 46%, mainly due to general-purpose microcontrollers [42] - Digital ICs and RF products saw a decline of 7.6%, with a decrease in ADAS offsetting an increase in RF Communications [42] - For Q3, automotive is expected to grow 4% sequentially, while industrial is projected to decrease by 17% [9][10] Market Data and Key Metrics Changes - Year-over-year sales to OEMs decreased by 14.9% and by 43.7% to distribution [43] - Industrial market is experiencing a significant downturn, with a decline of more than 50% year-over-year [64] - Automotive market is down about 15% year-over-year, while Personal Electronics decreased by about 6% [64] Company Strategy and Development Direction - The company is focusing on car electrification and has secured multiple wins in Power Discrete technologies for traction inverters [48] - There is a commitment to convert to 300-millimeter and 200-millimeter production processes, which is deemed mandatory for future growth [14] - The company is building a silicon carbide campus to enhance its manufacturing capabilities [74] Management's Comments on Operating Environment and Future Outlook - Management noted a longer and more pronounced correction in the industrial sector than anticipated, driven by weakening end demand and inventory corrections [72] - The automotive sector is expected to grow in H2 2024, particularly in components related to electric vehicles, despite a decline in legacy automotive forecasts [89] - The semiconductor cycle is impacted by desynchronization in end markets and inventory adjustments, with a shift from tension to excess capacity [54] Other Important Information - The company announced a new share buyback plan totaling up to $1.1 billion to be executed over three years [68] - A Capital Markets Day is scheduled for November 20 in Paris to provide further updates [55] Q&A Session All Questions and Answers Question: What is the outlook for the automotive and industrial sectors? - Management indicated that automotive demand has weakened, with a decline in legacy business forecasts impacting revenue [86][88] - The industrial sector is facing a significant downturn, with inventory corrections expected to take longer than previously thought [72][84] Question: How is the company addressing the current pricing environment? - The pricing environment remains stable, with low single-digit declines expected [78][80] Question: What are the expectations for operational expenses in the coming quarters? - The company anticipates operational expenses to be between $905 million and $915 million for Q3, maintaining strict control over costs [30][149]