ST(US:STM)2025-12-11 19:27Summary of STMicroelectronics FY Conference Call (December 11, 2025) Company Overview - Company: STMicroelectronics (NYSE: STM) - Industry: Semiconductor and Technology Hardware Key Points Industry and Market Conditions - 2025 was a challenging year for the semiconductor industry, particularly in the analog space, where recovery did not meet expectations [3][4] - Significant inventory corrections impacted both automotive and industrial sectors in the first half of 2025, but these issues are now resolved [4][5] Automotive and Industrial Markets - Sequential growth in automotive revenue is expected to continue, with mid-single-digit growth anticipated in the current quarter [5] - Industrial revenue also showed sequential growth, with a focus on normalizing inventory levels by year-end [6] - Book-to-bill ratio is above parity, indicating positive booking trends, especially in the industrial sector [6][8] Gross Margin and Financial Outlook - Average gross margin for 2025 is projected to be around 33.8%, significantly impacted by unloading charges exceeding $400 million [11] - Expectations for 2026 include a reduction in unloading charges and improved manufacturing efficiency, which should positively affect gross margins [12][15] - Anticipated challenges include reduced positive impacts from capacity reservation fees and unfavorable exchange rate dynamics [14] Operating Expenses (OpEx) - OpEx is expected to increase slightly in 2026, despite ongoing cost-cutting measures aimed at achieving savings of $300 to $360 million [18][19] - The positive impact from grants is expected to decline due to startup costs associated with new facilities [19] Revenue Opportunities - Silicon Photonics: Significant growth opportunity with meaningful revenues expected in 2026, potentially reaching $500 million by 2027 [20][21] - AI Power: Collaboration with NVIDIA to target the 800-volt architecture for AI servers, with revenue expected to ramp up in 2027-2029 [22][24] - Satellite Business: Strong growth anticipated, with an expanding customer base and new design wins in satellite constellations [27][28] - Silicon Carbide: 2025 was a transition year, but growth is expected in 2026 due to new sockets in Europe and China [29][30] - Humanoid Robots: Significant opportunity with high content value per unit, though the market is still developing [32][33] Acquisition of NXP's MEMS Business - The acquisition is viewed positively, enhancing STMicro's position in the MEMS market, particularly in automotive and industrial applications [34][35] - The acquisition will be fully cash-funded, and the company has sufficient cash reserves to support this transaction [35] Additional Insights - The company is optimistic about the visibility entering 2026, with improved backlog levels compared to the previous year [8][9] - The semiconductor market is expected to grow significantly, with STMicro well-positioned to capitalize on emerging trends and technologies [24][30]