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ST plans temporary fab closures after 2024 fall

ST plans temporary fab closures after 2024 fall

Business news |
By Nick Flaherty

Cette publication existe aussi en Français


STMicroelectronics is planning temporary closures of multiple fabs as inventory and weak markets hit its 2024 results.

“2024 turned out to be one of the worst years in many decades for the industries we serve, particularly in Industrial and Automotive,” said Jean Marc Chery, CEO of STMicroelectronics. “It was characterized by unexpectedly weaker end demand and higher level of inventories which significantly impacted ST.”  There is already a cost cutting programme that includes temporary fab closures.

“We have a plan for temporary closing of many of our fabs during this quarter,” said Lorenzo Grandi, chief financial officer.

The 23.2% fall in revenue to $13.27bn in 2024, driven by industrial and automotive has pushed back the company ambition to reach $20bn by 2030 and sees a drop in the first quarter of 2025.

“We believe it’s really too early to communicate our new plan for the full-year 2025,” said Chery.

“We see a phenomena of inventory adjustment. That’s the reason why we anticipate that Q1 will be significantly below the seasonality that generally speaking are only due to personal electronics and China and Asia, amplified by an inventory correction at automotive with orders coming with two or three weeks visibility,” he added.

Microcontroller revenue declined 30.2% mainly due to general purpose microcontroller. Digital ICs, and RF products declined 22.8%, mainly due to ADAS and infotainment. By end market, Industrial declined by about 41%, Automotive by about 20%, Personal Electronics by about 17% and Communication equipment and computer peripherals increased by about 2%. Year-over-year sales decreased 19.8% to OEMs and 28.7% to distribution. 

ST tips restructuring program and a weak start to 2025

With silicon carbide power products, where Catania in Sicily is a key site with wafer and device fabs, the revenue for the year was $1.1 billion with multiple high-value design wins with both silicon carbide devices and modules for automotive customers, including a cooperation with Ampere, as well as broadly in industrial applications. In China which is the fastest-growing market for electrical vehicles Chery says ST has more silicon carbide engagement with top Chinese carmakers than any other supplier. It plans to have its 200mm SiC line in Catania operational by H2 2025.

“In ADAS, we worked closely with our long-time customer and partner Mobileye with a focus of their latest market introduction the EyeQ6 family. The family includes the EyeQ6L designed for performance, power, and cost efficiency for level 1 and 2 driver assistance, as well as EyeQ6H, which delivers premium ADAS and full surround view functionality,” he said.

However the weak industrial market in Europe hit the results. “In industrial, during Q4, we continued to face a delayed recovery and inventory correction, particularly in Europe, and our book-to-bill ratio remained below one,” he said.

Inventory in the supply chain remained high all year, holding back sales.

“In term of inventory in distribution in the quarter, we have not seen a significant destocking, I would say there is some excess of inventory. This excess of inventory stays in the range of one or two months, let’s say depending on the product higher in respect of what we consider a normal situation in distribution,” said Grandi

www.st.com

 

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