STMicro’s 2023 Outlook Beats Estimates on Strong Auto Demand

Benoit Berthelot, Bloomberg News

(Bloomberg) -- STMicroelectronics NV reported rising revenue in the fourth quarter last year and expects sales to grow 19% in the current quarter, as demand in the auto industry remains strong.

The Franco-Italian chipmaker posted net revenue of $4.4 billion for the fourth quarter, in line with an estimate from analysts surveyed by Bloomberg. That is up 24% from a year earlier, the company said in a statement Thursday.

STMicro expects net revenue of $4.2 billion in the first quarter, above an analysts’ average forecast of $3.8 billion. For the full year, STMicro sees sales growth of about 4% to 11%, beating the consensus of a 1% increase.

“Automotive and Industrial will be the key growth drivers of our revenues in 2023,” Chief Executive Officer Jean-Marc Chery said on a call after the results, adding strong demand and increased production capacity will boost sales.

Demand in the car industry, which is STMicro’s largest business area, has remained robust as producers recover from Covid-era supply shortages and make more electric vehicles.

Revenue in its personal electronics business will fall faster than the market this year due to shrinking orders from one of STMicro’s largest customers, Chery said, without elaborating. The company counts Apple Inc. as a major client in that division.

“We view today’s results positively, clearly showing ST’s resilience in the face of cycle pressures, in particular within its automotive division,” Citi analyst Andrew Gardiner wrote in a note.

Texas Instruments Inc., one of STMicro’s peers, this week published its first sales decline since 2020. It didn’t offer predictions as to when orders for semiconductors and revenue might rebound.

Key Insights

2023 revenues seen in the range of $16.8 billion to $17.8 billion.
STMicro reported full-year revenue of $16.1 billion, in line with what it forecast in July.
Revenue at its automotive unit was $1.7 billion in the fourth quarter, compared with a $1.64 billion analyst estimate.
For 2023, STMicro plans to invest about $4 billion in capital expenditures, mostly to increase 300mm wafer fabs and silicon carbide manufacturing capacity
The company reported a gross margin of 47.5% in the fourth quarter, above a 45.2% average estimate.

Market Context

STMicro shares were up 8.9% to €42.94 at 10:00 a.m. in Paris trading, the biggest gain since March.
STMicro shares have gained 30% this year, compared with a 17% increase in the Bloomberg World Semiconductors Index.

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