Automotive Semiconductor Demand Slowed Down in Q1 2024, ST CEO

U.S. GAAP financial data for STMicroelectronics’ first quarter ending March 30, 2024, were released. Additionally, the latest official ST 2024 First Quarter Financial Results announcement includes non-U.S.

According to Jean-Marc Chery, President & CEO of ST, “The ongoing industrial correction accelerated during the quarter, while automotive semiconductor demand slowed down compared to our expectations, entering a deceleration phase.”

ST 2024 First Quarter Financial Results recorded $3.47 billion in net revenues, a 41.7% gross margin, a 15.9% operating margin, and $513 million in net income, or $0.54 diluted profits per share.

Key Comments of Jean-Marc Chery, ST President & CEO on ST 2024 First Quarter Financial Results 

• “Q1 net revenues and gross margin both came in below the midpoint of our business outlook range, driven by lower revenues in Automotive and Industrial, partially offset by higher revenues in Personal Electronics.”
• “On a year-over-year basis, Q1 net revenues decreased 18.4%, operating margin decreased to 15.9% from 28.3% and net income decreased 50.9% to $513 million.”
• “During the quarter, Automotive semiconductor demand slowed down compared to our expectations, entering a deceleration phase, while the ongoing Industrial correction accelerated.”
• “Our second quarter business outlook, at the mid-point, is for net revenues of $3.2 billion, decreasing year-over-year by 26.0% and decreasing sequentially by 7.6%; gross margin is expected to be about 40%.”
• “We will now drive the Company based on a revised plan for FY24 revenues in the range of $14 billion to $15 billion. Within this plan, we expect a gross margin in the low 40’s.”
• “We plan to maintain our Net Capex¹plan for FY24 at about $2.5 billion focusing on our strategic manufacturing initiatives.”

A Profit Plummet in ST 2024 First Quarter Financial Results

The first quarter of ST 2024 had net revenues of $3.47 billion, an 18.4% decline from the same period the previous year. Net sales to OEMs and distribution fell by 11.5% and 30.8%, respectively, year over year. Net revenues dropped 19.1% sequentially, 320 basis points less than ST’s projection midpoint.

The gross profit for the year was $1.44 billion, a 31.6% decline from the previous year. The gross margin of 41.7%, which was 800 basis points lower than the year-ago level and 60 basis points below the midpoint of ST’s estimate, was primarily caused by lower production efficiency, underutilized capacity costs, and a combination of sales price and product mix. 

Operating income dropped from $1.20 billion in the same period last year to $551 million, a 54.1% decline. ST’s operating margin dropped from 28.3% of net sales in the first quarter of 2023 to 15.9% of net revenues on a year-over-year basis.

ST 2024 First Quarter Financial Results Compared With The Year-Ago Quarter:

Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group in ST 2024 First Quarter Financial Results:

Analog products, MEMS and Sensors (AM&S) segment:

• Revenue decreased 13.1% mainly due to a decrease in MEMS and Imaging.
• Operating profit decreased by 44.8% to $185 million. Operating margin was 15.2% compared to 23.9%.

Power and Discrete products (P&D) segment:

• Revenue decreased 9.8% mainly due to a decrease in Discrete.
• Operating profit decreased by 41.6% to $138 million. Operating margin was 16.8% compared to 26.0%.

ST 2024 First Quarter Financial Results In Terms of Microcontrollers, Digital ICs and RF products (MDRF) Product Group:

Microcontrollers (MCU) segment:

• Revenue decreased 34.4% mainly due to a decrease in GP MCU.
• Operating profit decreased by 66.7% to $185 million. Operating margin was 19.5% compared to 38.3%.

Digital ICs and RF products (D&RF) segment:

• Revenue decreased 2.1% due to a decrease in ADAS more than offsetting an increase in RF Communications.
• Operating profit decreased by 8.2% to $150 million. Operating margin was 31.8% compared to 33.9%.

At This Moment, ST’s Guidance For The Second Quarter Of 2024 Are As Follows:

• Net revenues of $3.2 billion, plus or minus 350 basis points, are projected to represent a 7.6% sequential decline.
• A 40% gross margin, give or take 200 basis points.
•This prediction takes into account the effects of current hedging arrangements and is predicated on an effective currency exchange rate of around $1.08 = €1.00 for the second quarter of 2024.The deadline for the second quarter is June 29, 2024.