summary of the latest STMicroelectronics earnings call Q2 2023

Here is a summary of the latest STMicroelectronics earnings call.

Net revenues for Q2 2023 were $4.25 billion, an increase of 19.8% year-over-year. Gross margin was 49.7%, up from 46.7% in the same quarter last year. Operating margin was 28.3%, up from 24.7% in the same quarter last year. Net income was $1.04 billion, an increase of 39.8% year-over-year. The company’s outlook for Q3 2023 is for net revenues of about $4.28 billion, representing a year-over-year increase of 11.5% and a sequential increase of 0.8%. Gross margin is expected to be about 49%.

The company’s CEO, Jean-Marc Chery, said that the strong results were driven by “continued strong demand in our end markets, including automotive, industrial, and consumer.” He also noted that the company’s “focus on innovation and product differentiation” is helping to drive growth.

Looking ahead, Chery said that the company is “confident in our ability to continue to deliver strong results in the future.” He cited the company’s “strong product portfolio,” “global reach,” and “focus on customer satisfaction” as key drivers of future growth.

Here are some additional highlights from the earnings call:

The company’s automotive business grew 27.5% year-over-year in Q2 2023. The company’s industrial business grew 16.1% year-over-year in Q2 2023. The company’s consumer business grew 12.7% year-over-year in Q2 2023. The company’s gross margin expansion was driven by “favorable product mix,” “cost savings,” and “pricing actions.” The company’s operating margin expansion was driven by “strong gross margin performance,” “lower operating expenses,” and “a favorable tax rate.”

Overall, the latest STMicroelectronics earnings call was positive. The company reported strong results, and the CEO expressed confidence in the company’s future growth prospects.

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Brief Introduction to STMicroelectronics

STMicroelectronics is a multinational semiconductor company that designs, manufactures, and distributes a wide range of integrated circuits (ICs), microcontrollers, sensors, and other electronic components. The company was founded in 1987 through the merger of two European semiconductor giants: SGS Microelettronica of Italy and Thomson Semiconducteurs of France. Today, STMicroelectronics has become one of the world’s largest semiconductor manufacturers.

The company operates in various markets, including automotive, industrial, personal electronics, communications, and more. STMicroelectronics’ products are used in a wide range of applications, such as automotive systems, power management, microcontrollers for embedded systems, wireless communication, smart devices, and Internet of Things (IoT) solutions.

STMicroelectronics has a diverse portfolio of products, including analog and mixed-signal ICs, digital ICs, discrete semiconductors, microelectromechanical systems (MEMS) sensors, power management ICs, and more. Their products cater to different industry sectors and enable technological advancements in areas such as autonomous driving, energy efficiency, healthcare, smart homes, and industry automation.

The company’s commitment to research and development has led to numerous innovations and advancements in semiconductor technology. They actively invest in developing cutting-edge solutions, collaborating with industry partners, and working on emerging technologies.

STMicroelectronics operates globally, with research and development centers, manufacturing facilities, and sales offices spread across Europe, the Americas, and Asia. They have established a strong presence in key markets worldwide and work closely with customers to provide customized solutions that meet their specific requirements.

Overall, STMicroelectronics is a prominent player in the semiconductor industry, known for its extensive product range, technological expertise, and contributions to various sectors with its innovative semiconductor solutions.

STM’s Competitive Advantages

Overall, STM has 2 main competitors, Onsemi and Omnivision. In terms of technological advancement, STM has the highest skills. The second is Onsemi. The last is Omnivision. We can prove that by their margins. Usually the higher the margins, the better the technology or skills a company has. Moreover, businesses with higher margins implies that it’s easier for them to raise product prices without losing market share. STM has a gross margin of 49.7% and Onsemi 46.8%. However, Omnivision has only a gross margin of 21.9%.

About STM’s technology, its strength lies in the high-voltage and high-power semiconductors. Their technology is more advanced than Taiwan. However, in terms of advanced chip manufacturing process, Taiwan is better than STM. When we say Taiwan, we mean the company TSMC, Taiwan Semiconductor Manufacturing Company.

STMicroelectronics and Semikron have joined forces to introduce silicon carbide technology into electric vehicle drivetrain systems. STMicroelectronics provides the SiC technology, which is integrated into Semikron’s EV power modules. SiC is emerging as the preferred power technology for electric vehicles, offering improved driving range and reliability. Semikron, the partner in this collaboration, recently secured a procurement contract worth 1 billion euros. Starting in 2025, they are expected to supply a German automaker with new power modules. STMicroelectronics further highlights that the partnership utilizes STPOWER SiC MOSFETs for controlling the power switches in EV traction inverters. The integration of Semikron’s fully sintered direct press packaging technology, DPD, enhances power and voltage capabilities at lower costs. Semikron has developed 750V and 1200V product platforms suitable for applications ranging from 100kW to 750kW, as well as battery systems ranging from 400V to 800V.

Alessandro Cremonesi, Executive Vice President and Chief Innovation Officer of STMicroelectronics said, “Innovation is at the core of value creation and competitive advantage for our company. It enables us, together with customers and partners, to create unique technologies and products that provide solutions for a more sustainable future. Being recognized as a winner of the Top 100 Global Innovator Award for the fifth time demonstrates the quality of our R&D, and the excellence of our teams and their creativity.”

In 2022, ST invested 12% of its revenues in R&D, has over 9,000 R&D employees, and engages in extensive collaboration with leading research labs and corporate partners throughout around the world. The Company’s Innovation Office focuses on connecting emerging market trends with internal technology expertise to identify opportunities, stay ahead of the competition, and lead in new or existing technology domains.

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