- STMicroelectronics (STM, Financial) reported a 27.3% year-over-year revenue decline in Q1 2025, amounting to $2.52 billion.
- Q2 2025 revenue outlook stands at $2.71 billion, indicating a 16.2% year-over-year decrease but a 7.7% sequential increase.
- The company aims for significant annual cost savings through a manufacturing restructuring program by 2027.
STMicroelectronics (STM), a global leader in semiconductor technology, disclosed its financial results for the first quarter of 2025, revealing a turbulent period for the company. Net revenues reached $2.52 billion, marking a steep 27.3% decline from the same period last year. The company's gross margin stood at 33.4%, and its operating income saw an almost complete collapse to $3 million, reflecting a 99.5% drop from the prior year's $551 million. Net income also suffered dramatically, plummeting 89.1% to $56 million, equivalent to $0.06 per diluted share.
Various segments of STM have been affected, notably the Power and Discrete segment that swung from a $77 million profit to a $28 million loss, indicating significant challenges in maintaining its previous margins. Moreover, inventory levels have increased sharply, with days sales of inventory climbing to 167 days from 122 days a year prior.
Despite these challenges, STM remains committed to its strategic investments. Its Q2 2025 guidance predicts a sequential revenue growth of 7.7%, expecting net revenues to reach $2.71 billion. This would still represent a year-over-year decline of 16.2%. The gross margin is anticipated to remain steady at around 33.4%, despite being impacted by approximately 420 basis points of unused capacity charges.
As part of a broader strategy to improve efficiency and cut costs, STM is undergoing a significant restructuring of its manufacturing operations. The company maintains its capital expenditure plans for 2025, ranging between $2.0 billion and $2.3 billion, in pursuit of targeting high triple-digit million-dollar annual cost savings by 2027.
STM projects that Q1 2025 might represent the bottom of its financial cycle, offering a potentially optimistic outlook for recovery and stabilization as reflected in an improved book-to-bill ratio, particularly in the Automotive and Industrial segments. The company reports a strong financial position with $5.96 billion in total liquidity, providing a robust foundation for navigating current challenges and executing strategic long-term goals.
