ST forecasts a big first quarter revenue drop
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European chip company STMicroelectronics revealed sales revenue exactly on guidance at $3.32 billion for 4Q24 but said sales will drop by about 27 percent sequentially to about US$2.5 billion in 1Q25.
A quarter before the company had said that 2025 would start weakly and that 1Q25 sequential drop in revenue would exceed 6 percent. The company is struggling with exposure to weak markets such as the automotive and industrial sectors without any benefits from booming sales associated with AI and data centers.
For 4Q25 ST made a net income of US$341 million on sales of US$3.32 billion that were up 2.2 percent sequentially but down 22.4 percent year-on-year. The weakness of the outlook for 1Q25 tipped ST’s share price lower, It lost about 9 percent of its value after the financial results were posted.
All of ST’s product divisions saw double-digit percentage revenue declines year-on-year that varied between 15.5 percent for analog, MEMS and sensors and 30.2 percent for the microcontroller business. Particular problems with microcontroller sales in 2023 and into 2024 were revealed at the company’s analyst day in November 2024.
For the full year 2024 ST made a net income of US$1.557billion on revenue of US$13,269 billion. The 2024 revenue was down 23.2 percent compared with US$17.286 billion in 2023.
The company confirmed that it had started a restructuring program in 4Q24 that aimed to produce annual cost savings in the “high triple-digit million-dollar range exiting 2027.” In terms of operating expenses (SG&A and R&D), ST said it expects annual cost savings totaling US$300 million to US$360 million, exiting 2027, compared to the cost base of 2024. The company did not indicate if any, or how many, jobs would be cut.
The company said the plan involved the transfer of all manufacturing capacity to 300mm-diameter wafers for silicon production at Agrate, Italy and Crolles, France and to 200mm wafers for silicon-carbide in Catania, Italy.
The company said it was budgeting for capital expenditure of between US$2.0 billion and US$2.3 billion in 2025.
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