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    STM
    Earnings call· Dec 2025(Q4 FY25)

    STMicroelectronics N.V. STM

    Jan 29, 2026 Source

    Executive summary

    STMicroelectronics Q4 FY25 — Strong Q1 Outlook and Strategic Growth Drivers

    STMicroelectronics reported Q4 FY25 results above expectations for revenue and gross margin, marking a return to year-over-year growth. The company is entering FY26 with improved visibility, anticipating better-than-seasonal Q1 performance and organic growth driven by specific programs in automotive, industrial, personal electronics, and data centers. Management expects gross margin to bottom in Q1 and improve throughout the year, supported by manufacturing reshaping efforts.

    Highlights

    5

    • Q4 revenues of $3.33 billion exceeded the midpoint of the business outlook range.

    • Gross margin of 35.2% was also above the midpoint of the business outlook range, mainly due to better product mix.

    • Generated a positive $257 million free cash flow in Q4 FY25.

    • Industrial revenues were better than expected, increasing 5% sequentially and year-over-year, with normalizing distribution inventories.

    • Q1 FY26 revenue guidance of $3.04 billion represents a better-than-seasonal sequential decline, with confidence in organic growth for the full year.

    Concerns

    5

    • Automotive revenues were below expectations in Q4 FY25, despite sequential growth.

    • Full year 2025 net revenues decreased 11.1% to $11.8 billion.

    • Full year 2025 gross margin was 33.9%, down from 39.3% in FY24.

    • Q4 diluted earnings per share was negative $0.03, including a $0.18 per share negative one-time tax expense impact.

    • Power and Discrete products segment decreased 31.6% year-over-year in Q4 FY25.

    Guidance & targets

    9
    CategoryTargetConfidence
    Q1 2026 Revenue
    $3.04 billion
    high materiality
    High
    Q1 2026 Gross Margin
    33.7%
    high materiality
    High
    Full Year 2026 Net CapEx
    $2.2 billion
    high materiality
    High
    Silicon Carbide Revenue Recovery
    recover to 2024 levels
    medium materiality
    Medium
    General Purpose MCU Market Share
    23%
    medium materiality
    Medium
    AI and Data Center Infrastructure Revenue
    $1 billion
    high materiality
    Medium
    AI and Data Center Infrastructure Revenue
    $500 million
    high materiality
    Medium
    Q4 2026 Gross Margin
    better than Q4 2025
    medium materiality
    High
    Full Year 2026 Net Operating Expenses
    low single-digit increase
    medium materiality
    High

    Segment performance

    17
    SegmentRevenueYoYQoQMargin
    Analog products, MEMS and sensor
    YoY growth mainly due to Imaging. Operating margin for Q4 FY25.
    		—7.5%1.1%16.2%
    Power and Discrete products
    Operating margin for Q4 FY25.
    		—-31.6%-3.9%-30.2%
    Embedded Processing
    YoY growth driven by higher general purpose and automotive microcontrollers, offsetting declines in connected security and custom processing. Operating margin for Q4 FY25.
    		—1-2%3.9%19.2%
    RF and optical communication
    Operating margin for Q4 FY25.
    		—22.9%30.5%23.4%
    Communication equipment and computer peripheral
    YoY and sequential growth by end market.
    		—17%23%—
    Personal Electronics
    YoY growth by end market. Sequential decline reflects seasonality of engaged customer programs.
    		—17%-2%—
    Industrial
    YoY and sequential growth by end market. Inventories in distribution further decreased and are normalizing.
    		—5%5%—
    Automotive
    YoY decline by end market. Sequential growth in Q4.
    		—-15%3%—
    Automotive (FY25 Revenue Mix)
    Represents about 39% of total 2025 revenues.
    		39%———
    Personal Electronics (FY25 Revenue Mix)
    Represents about 25% of total 2025 revenues.
    		25%———
    Industrial (FY25 Revenue Mix)
    Represents about 21% of total 2025 revenues.
    		21%———
    Communication and Computer Peripheral (FY25 Revenue Mix)
    Represents about 15% of total 2025 revenues.
    		15%———
    OEMs (FY25 Customer Channel Mix)
    Represents 72% of total revenue in 2025.
    		72%———
    Distribution (FY25 Customer Channel Mix)
    Represents 28% of total revenue in 2025.
    		28%———
    Americas (FY25 Regional Mix)
    Represents 43% of 2025 revenues.
    		43%———
    Asia Pacific (FY25 Regional Mix)
    Represents 31% of 2025 revenues.
    		31%———
    EMEA (FY25 Regional Mix)
    Represents 26% of 2025 revenues.
    		26%———

    Operational metrics

    28
    Gross Profit
    $1.17 billion-6.5% YoY
    Q4 FY25
    Gross Margin
    35.2%-250 bps YoY
    Q4 FY25

    Included about 50 basis points of negative impact from a nonrecurring cost related to manufacturing reshipping program.

    Gross Margin (nonrecurring cost impact)
    -50 bps
    Q4 FY25

    Negative impact from a nonrecurring cost related to manufacturing reshipping program. Similar negative impact expected in next few quarters.

    Total Net Operating Expenses (ex-restructuring)
    $906 millionslightly increasing YoY
    Q4 FY25

    Due to unfavorable currency effect, but better than expected due to cost discipline and initial benefits from cost savings.

    Net Operating Expenses (ex-restructuring)
    $860 milliondecreasing QoQ
    Q1 FY26

    Expected for Q1 2026.

    Operating Income (reported)
    $125 million
    Q4 FY25

    Included $141 million for impairment, restructuring charges and other related phaseout costs.

    Non-U.S. GAAP Operating Margin
    8%
    Q4 FY25

    Excluding nonrecurring items.

    Net Loss (reported)
    $30 millionvs $341M net income YoY
    Q4 FY25

    Included $163 million for one-time noncash income tax expenses.

    Diluted EPS (reported)
    -$0.03vs $0.37 YoY
    Q4 FY25
    Non-U.S. GAAP Net Income
    $100 million
    Q4 FY25

    Excluding nonrecurring items related to impairment, restructuring charges and other related phaseout costs.

    Non-U.S. GAAP Diluted EPS
    $0.11
    Q4 FY25

    Including $0.18 per share negative one-time tax expenses impact.

    Net Revenue
    $11.8 billion-11.1% YoY
    FY25
    Gross Margin
    33.9%down from 39.3% in FY24
    FY25
    Operating Income (reported)
    $175 millionvs $1.68 billion in FY24
    FY25

    Included $376 million for impairment, restructuring charges and other related phaseout costs.

    Non-U.S. GAAP Operating Margin
    4.7%
    FY25

    Excluding $376 million for impairment, restructuring charges and other related phaseout costs.

    Net Income (reported)
    $166 million
    FY25
    EPS (reported)
    $0.18
    FY25
    Non-U.S. GAAP Net Income
    $486 million
    FY25
    Non-U.S. GAAP Diluted EPS
    $0.53
    FY25
    Net CapEx
    $1.79 billionvs $2.5 billion in FY24
    FY25

    In line with revised expectation.

    Cash Dividends Paid
    $321 million
    FY25
    Share Buybacks
    $367 million
    FY25
    Net Financial Position
    $2.79 billion
    Dec 2025

    As of end of December 2025.

    Total Liquidity
    $4.92 billion
    Dec 2025

    As of end of December 2025.

    Total Financial Debt
    $2.13 billion
    Dec 2025

    As of end of December 2025.

    Industrial POS growth
    low teens, mid-teens
    Q4 FY25

    Point-of-Sale growth in Industrial segment.

    Embedded Processing growth
    low 30sYoY
    Q1 FY26

    Expected year-over-year growth for the Embedded Processing segment.

    Addressable Bill of Material
    $600
    current

    Estimated current addressable bill of material per system for human-wind robotics.

    Industry KPIs

    8
    MetricValueDetails
    Book to bill ratiowell above parity
    Ai data center revenue$500 millionUSD
    Fab capacity utilization—
    Bookings net order intakewell above parity
    Design wins socket pipelinemultiplecount
    Inventory channel inventory$3.14 billionUSD
    Node platform ramp schedule18-nanometer process
    End market segment revenue mixAutomotive: ~39%; Personal Electronics: ~25%; Industrial: ~21%; Communication and Computer Peripheral: ~15%%

    Product announcements

    3
    ProductTypeDetails
    STM32 Microcontrollerlaunch
    Next-generation wireless microcontrollerslaunch
    Edge AI software toolsupdate

    Deals & partnerships

    1
    NXPAcquisition of NXP's MEMS sensor business.

    Transaction announced in July, still expected to close in H1 2026.

    Capital programs

    1
    Manufacturing Reshaping Planunderway

    Benefit: Reduced 6-inch (SiC), 150mm (SiC), and 200mm (Si) capacity; increased 8-inch (SiC) and 300mm (Si) production

    Program to reshape manufacturing footprint and resize global cost base. Progressively reducing capacity in certain fabs and moving production to different, more efficient fabs. Expected to yield positive impact in manufacturing efficiency towards H2 2027 and 2028.

    Risks & headwinds

    6
    Automotive market softness for legacy applicationsQ4 FY25

    Q4 revenue below expectations

    Mitigation: Focus on new electronic architectures, EV powertrain, and ADAS ASICs.

    Full year 2025 revenue declineFY25

    $11.8 billion, down 11.1%

    Mitigation: Focus on specific growth drivers for FY26, including sensors, ADAS, SiC, industrial portfolio, PE engaged programs, data center optical interconnect, and LEO satellites.

    Full year 2025 gross margin contractionFY25

    33.9%, down from 39.3% in FY24

    Mitigation: Manufacturing reshaping plan to improve efficiencies, expected revenue growth in FY26.

    Negative one-time tax expensesQ4 FY25

    $0.18 per share impact

    Unused capacity charges impacting gross marginQ1 FY26 and next few quarters

    220 bps in Q1 FY26

    Mitigation: Manufacturing reshaping program to reduce capacity in older fabs and shift production to more efficient ones; expected to reduce unloading charges over time.

    Softness in automotive microcontrollerscurrent

    Offsetting strong general purpose MCU growth

    Mitigation: Reworking roadmap for automotive microcontrollers, with payback expected end of FY27 and FY28.

    What to watch in Q1 FY26

    5

    Industrial inventory normalization

    by end of Q2 FY26
    Currentfurther decreased and normalizing
    Targetexcess inventory cleared

    Why it matters

    Indicates a healthier demand environment and potential for stronger order intake in the industrial segment.

    But on the inventory correction, what we communicated, okay, I and Lorenzo and myself is to say by end of Q2, we believe we will be hold the excess of inventory. And this today, I can confirm -- it's already the case for many product family.

    Q&A highlights

    6

    Given the better-than-seasonal Q1 revenue guidance, can this above-seasonal trend continue, or is it a false start like in previous years? Is there genuine evidence of a cycle recovery?

    CEO confirms confidence in organic growth for FY26, citing a healthier situation than entering FY25. He highlights specific growth drivers beyond the cycle, including sensors, ADAS ASICs, silicon carbide recovery, strong industrial portfolio, engaged customer programs in Personal Electronics, data center optical interconnect, and low-earth orbit satellites.

    “we are confident in our ability to grow organically for next year. But it's clear that we enter in a better and healthier situation compared to '25.”

    asked by Francois-Xavier Bouvignies · answered by Jean-Marc Chery

    2 min read5 chapters

    Detailed Narrative

    01

    Q4 FY25 Performance and Full Year Overview

    STMicroelectronics reported Q4 FY25 revenues of $3.33 billion, exceeding the midpoint of its guidance range, and a gross margin of 35.2%, also above expectations due to a better product mix. The quarter marked a return to year-over-year revenue growth. For the full year 2025, net revenues decreased 11.1% to $11.8 billion, with gross margin at 33.9%, down from 39.3% in FY24. The company generated $265 million in free cash flow for the full year.

    02

    Automotive and Industrial Market Dynamics

    Automotive revenues grew 3% sequentially in Q4 but were below expectations, primarily due to lower inventory pulling from some Tier 1s for legacy applications. Despite this, automotive design momentum remains strong across EV and traditional vehicle domains. In contrast, Industrial revenues outperformed, growing 5% sequentially and year-over-year, with distribution inventories normalizing. The company's portfolio is well-positioned for industrial transformation and physical AI applications.

    03

    Personal Electronics and Communication Equipment Strength

    Personal Electronics revenues were above expectations, though down 2% sequentially due to seasonality. The company strengthened its position in mobile platforms and connected consumer devices, benefiting from engaged customer programs and increased silicon content. Communication Equipment and Computer Peripherals saw a significant 23% sequential increase, driven by AI and data center infrastructure demand, including silicon photonics technology and high-performance microcontrollers for optical interconnects. The low-earth orbit satellite business also continued to progress with shipments ramping to a second major customer.

    04

    Strategic Growth Drivers for FY26 and Beyond

    STMicroelectronics anticipates organic growth in FY26, supported by several specific drivers. These include solid momentum in ADAS ASICs and a return to growth for silicon carbide power devices after a challenging 2025. The company expects to regain historical market share in general-purpose microcontrollers by 2027 and projects $500 million in AI and data center infrastructure revenue in 2026, targeting $1 billion before 2030. The acquisition of NXP's MEMS sensor business is expected to close in H1 2026, further strengthening its sensor position.

    05

    Manufacturing Reshaping and Sustainability Progress

    The company's manufacturing reshaping program is progressing as planned, involving the reduction of 6-inch, 150mm, and 200mm capacity while shifting production to 8-inch for SiC and 300mm for Si. This is expected to yield manufacturing efficiency benefits in H2 2027 and 2028. On sustainability, STMicroelectronics remains on track for its 2027 carbon neutrality and 100% renewable energy commitments, highlighted by the launch of Singapore's largest industrial district cooling system at its Ang Mo Kio facilities.

    AI-generated summary of the company’s earnings call. Not investment advice.