Release Date: January 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- STMicroelectronics NV (STM, Financial) achieved Q4 2024 financial results in line with the midpoint of their guidance, despite a challenging environment.
- The company reported strong momentum in the Chinese market for silicon carbide products, with more engagements with top Chinese carmakers than any other suppliers.
- STMicroelectronics NV (STM) introduced a new strategic collaboration with Qualcomm Technologies for the next generation of industrial and consumer IoT solutions.
- The company is on track to be carbon-neutral by 2027 and has made significant progress towards its 100% renewable energy goal.
- STMicroelectronics NV (STM) announced the construction of a new high-volume silicon carbide manufacturing facility in Catania, Italy, to enhance its manufacturing capabilities.
Negative Points
- Q4 2024 net revenues decreased by 22.4% year over year, with a significant decline in the Industrial and Automotive segments.
- The company's gross margin decreased to 37.7% in Q4 2024, down from 47.9% in the previous year, due to unfavorable product mix and higher unused capacity charges.
- STMicroelectronics NV (STM) faced a slowdown in the Automotive sector, particularly in Europe, with a book-to-bill ratio below 1.
- The company experienced a 63% decrease in net income for the full year 2024, reflecting a challenging market environment.
- STMicroelectronics NV (STM) had to postpone its $20 billion-plus revenue ambition plan to 2030 due to weaker demand and higher inventory levels.
Q & A Highlights
Q: Given the outlook for Q1 and the book-to-bill ratio, what should we expect for the rest of the year?
A: Jean-Marc Chery, CEO, stated that visibility beyond Q1 remains low, especially in Automotive and Industrial sectors. They expect Q1 to be the low point of 2025, with potential growth beyond seasonality in H2 driven by content increase.
Q: How do you see inventory levels and destocking trends?
A: Lorenzo Grandi, CFO, noted that there hasn't been significant destocking, with excess inventory still present, particularly in distribution. The inventory correction is expected to continue.
Q: How are you planning for fab loadings and underutilization charges?
A: Lorenzo Grandi explained that the impact of unloading charges is significant, above 500 basis points. They plan temporary closures of many fabs in Q1 and expect some improvement in Q2, but unloading will still significantly impact gross margins.
Q: Can you provide an update on the manufacturing footprint and cost reductions?
A: Lorenzo Grandi mentioned plans to accelerate the transformation of their manufacturing footprint, moving from 200mm to 300mm for silicon and from 150mm to 200mm for Silicon Carbide. Significant cost savings are expected by 2027, with some benefits starting in 2026.
Q: What is the outlook for Silicon Carbide growth, particularly in China?
A: Jean-Marc Chery highlighted a strong position in China with a focus on converting manufacturing to 8-inch wafers by H2 2025. Marco Cassis added that they have strong socket positions in China and aim to retain a 30% market share, with growth expected beyond 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
