ST heads for $16bn

Business news |
By Nick Flaherty

STMicroelectronics is confident of reaching a turnover of $16bn this year, but is facing increasing inventory that indicate the market starting to slow.

The company saw a revenue of $7.38bn in the first half of 2022, up nearly 23%, with profits of $1.61bn, up 25%. It is forecasting full year revenue between $15.9bn and $16.2bn. This is higher than the guidance back in January of $15bn and comes despite stoppages at customers in China and an outage at its fab in Crolles, France.

“Q2 net revenues and gross margin came in above the mid-point of our business outlook range driven by continued strong demand for our product portfolio,” said Jean-Marc Chery, STMicroelectronics President & CEO.

“On a year-over-year basis, Q2 net revenues increased 28.3%, operating margin increased to 26.2% from 16.3% and net income doubled to $867 million. ST’s third quarter outlook, at the mid-point, is for net revenues of $4.24 billion, increasing year-over-year by 32.6% and sequentially by 10.5%; gross margin is expected to be about 47.0%.

Operating income increased 105.4% to $1.0 billion, compared to $489 million in the year-ago quarter. The Company’s operating margin increased 990 basis points on a year-over-year basis to 26.2% of net revenues, compared to 16.3% in the 2021 second quarter.

Revenue increased in both Automotive and in Power Discrete, with operating profit increased by 251.1% to $359.2m as the recovery in car making continued. The operating margin was 24.7% compared to 9.5%.

In the Analog, MEMS and Sensors Group (AMS), the operating profit increased by 42.1% to $268.4m, while in the Microcontrollers and Digital ICs Group (MDG) operating profit doubled to $424.7m.

The company has announced several new fab projects, including a silicon carbide fab and wafer plant in Catania, Italy, and a second 300mm fab at Crolles in France in a joint venture with GlobalFoundries. This has seen capital expenditure increase to $809m in the second quarter, up from $438m in Q2 2021.

However the amount of inventory is increasing, indicating a slow down. Inventory at the end of the second quarter was $2.31bn, compared to $1.97bn in Q2 2021.

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