STMicroelectronics NV Q4 FY2024 earnings call

• Automotive: Continued slowdown in Q4, book-to-bill below one; 2024 supported automotive electrification and digitalization, with silicon carbide revenue $1.1 billion, multiple high-value wins, and strong design-in in China.
• Industrial: Faced delayed recovery and inventory correction; had broad design wins in various applications.
• Personal Electronics: Q4 slightly better than expected; 2024 successful with focused approach.
• Communications Equipment: RF business delivered solid results, progressing with customer programs.
• Manufacturing initiatives: Announced new silicon carbide manufacturing facility in Italy; aligned with sustainability strategy.
• Corporate development: Reorganization of product groups, manufacturing footprint reshaping program to drive cost savings.

In Q4 2024, Analog products, MEMS and Sensor were down 15.5%, Power & Discrete products decreased 22.1%, Microcontrollers revenue declined 30.2%, and Digital ICs, and RF products declined 22.8%. For full-year 2024, Analog MEMS and Sensor was down 13%, Power & Discrete decreased 18.8%, Microcontroller revenues declined 38.8%, and Digital ICs and RF products declined 16.5%. By end market in 2024, Automotive represented about 46% of total revenues, Personal Electronics about 21%, Industrial 20%, and Communication equipment, computer peripheral about 13%.

Expect Q1 2025 revenues at $2.51 billion, plus/minus 350 basis points at the midpoint, with net revenues decreasing 27.6% year-over-year and 24.4% sequentially; gross margin expected to be about 33.8%, plus/minus 200 basis points. Plan to invest about $2 billion to $2.3 billion in net CapEx in 2025.

Challenging business environment with delayed recovery and inventory correction in industrial and slowdown in automotive; book-to-bill still below parity; market share loss risk in certain segments.

Q: Given the outlook and book-to-bill, what about the rest of the year?

A: Too early to communicate full-year 2025 plan; visibility low beyond Q1, but expect Q2 to be flattish compared to Q1.

Q: Level of inventory in distribution and destocking?

A: No significant destocking, excess inventory in distribution stays in one or two months range; inventory correction still ongoing.

Q: Plans for fab loadings and underutilization charges, and net OpEx beyond Q1?

A: Significant closure of production days in Q1; net OpEx in Q1 around $850 million, start of cost saving program to impact OpEx from 2025.

Q: General purpose microcontroller market share in China?

A: Revenue decline in 2024 due to inventory correction, lower market, and market share loss mainly in China; started to win market share in Q4.

Q: Gross margin progression, capacity reservation fees, price pressure, and currency sensitivity?

A: Q1 likely bottom for gross margin; capacity reservation fees linear, pricing step down in Q1; roughly $10-12 million operating income per quarter impact for one percentage change in euro-dollar.

Q: Growth in silicon carbide in automotive in 2025?

A: 2025 transition year, start production in 8-inch in Catania H2 2025; strong socket positions in Chinese market, long-term ambition to retain 30% market share driven by innovation, manufacturing footprint, etc.