Chip, those who cry and those who laugh between STM and Micron
2024 has started badly for Stmicroelectronics, the Italian-French controlled chip maker: first quarter results below expectations. Good news instead for Micron (an American company but also present in Italy), which obtains subsidies of 6 billion dollars for two factories in the United States
2024 has started worse than expected for Stmicroelectronics, the semiconductor company based in Switzerland but controlled by the Italian Economy Ministry and French state bank Bpifrance.
In fact, according to CEO Jean-Marc Chery's admission , in the first quarter the company's net turnover and gross margin "both remained below the midpoint of our prospects": blamed on the decline in revenues in the automotive and industrial, only partially offset by the increase in the personal electronics sector.
STMICROELECTRONICS RESULTS IN THE FIRST QUARTER OF 2024
Stmicroelectronics' net revenue in the first quarter of 2024 fell 18.4 percent year-over-year to $3.4 billion.
The operating margin instead fell to 15.9 percent, compared to 28.3 percent a year ago. Gross margin was 41.7 percent. Free cash flow was negative $134 million (the year before it was positive $206 million).
Finally, net profit amounted to 513 million dollars (-50.9 percent).
A total of $48 million in dividends were paid to shareholders in the first quarter.
FORECASTS FOR THE NEXT MONTHS
Despite the difficulties, the company still decided to confirm investment spending for the whole of 2024 – i.e. 2.5 billion dollars -, but revised the revenue plan: they will amount to 14-15 billion dollars, according to estimates released by Chery, while the gross margin will be around 40 percent.
For the second quarter of 2024 Stmicroelectronics expects net sales of $3.2 billion (-26 percent year-on-year) and a gross margin of approximately 40 percent.
THE WEAKNESS OF ORDERS
Chery explained that in the January-March 2024 period “automotive semiconductor demand slowed compared to our expectations, entering a deceleration phase, while the ongoing correction in the industrial sector accelerated.”
The Automotive sector was affected by the revisions of customer estimates, also due to the decline in production of electric vehicles: Stmicroelectronics specializes in the production of silicon carbide components. In the Industrial sector, however, the company spoke of a general weakness in orders in all geographical areas.
The CEO specified that Stmicroelectronics' long-term strategy has not changed.
MEANWHILE, MICRON…
The United States on Thursday announced a preliminary agreement with Micron Technology to award $6.1 billion in subsidies to be used to build two microchip factories in New York and Idaho.
The financing is part of the CHIPS Act, the over $52 billion law that aims to stimulate semiconductor manufacturing in the United States. The United States is very advanced in the design phase of these components, but they account for only about 10 percent of their global production.
According to Micron, its will be the largest private investment in the history of the states of New York and Idaho and will create seventy thousand jobs in total.
Micron is an American company specializing in memory chips. It also has several offices in Italy: in Avezzano, Arzano and Vimercate, for example.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/stmicroelectronics-micron-confronto/ on Fri, 26 Apr 2024 10:01:03 +0000.