ST(US:STM)2024-11-22 16:05Company 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