STMicroelectronics cuts outlook as Q3 revenue misses, shares fall

GENEVA – STMicroelectronics N.V. (NYSE:STM) reported third-quarter earnings that beat analyst estimates, but revenue fell short of expectations as the chipmaker continues to face challenges in the industrial market. The company’s shares dropped 2% following the announcement and lowered guidance.

STMicroelectronics posted adjusted earnings per share of $0.37 for the third quarter, surpassing the analyst consensus of $0.33. However, revenue came in at $3.25 billion, missing the expected $3.29 billion and representing a significant 23.5% decline YoY across all reportable segments.

The company’s Q3 gross margin was 37.8%, broadly in line with expectations. STMicroelectronics President and CEO Jean-Marc Chery noted that while revenues were higher than anticipated in Personal Electronics, they were lower in Automotive and declined less than expected in Industrial.

Looking ahead, STMicroelectronics provided a cautious outlook for the fourth quarter, projecting revenue of $3.32 billion at the midpoint. This forecast represents a 22.4% YoY decrease and only a 2.2% sequential increase, falling short of the $3.4 billion analyst consensus. The company expects Q4 gross margin to be about 38%, impacted by approximately 400 basis points of unused capacity charges.

“We anticipate a revenue decline between Q4 2024 and Q1 2025 well above normal seasonality,” Chery warned, highlighting ongoing challenges in the semiconductor industry.

In response to these headwinds, STMicroelectronics announced a new company-wide program to reshape its manufacturing footprint, focusing on accelerating wafer fab capacity to 300mm Silicon and 200mm Silicon Carbide while resizing its global cost base. The company expects this initiative to result in annual cost savings in the high triple-digit million-dollar range by the end of 2027.

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