STMicroelectronics' Q4 2024: Diverging Views on Automotive Demand, Margins, and Silicon Carbide Growth

These are the key contradictions discussed in STMicroelectronics' latest 2024Q4 earnings call, specifically including: Automotive Market Visibility and Market Share Trends, Gross Margin Projections, Visibility and Demand Forecasts in Automotive, and Silicon Carbide Business Growth Expectations:



Revenue and Profitability Decline:
- STMicroelectronics reported a 22.4% year-over-year decrease in Q4 2024 net revenues to $3.32 billion, with a gross margin of 37.7% and an operating margin of 11.1%.
- The decline was predominantly caused by slower revenue growth in Industrial and Automotive sectors, despite higher revenues in Personal Electronics.

Automotive Challenges:
- Automotive sector faced a slowdown, particularly in Europe, with a book-to-bill ratio below one.
- The slowdown was attributed to inventory corrections and an uncertain demand outlook, especially with car electrification and digitalization.

Silicon Carbide and Electrification:
- Silicon Carbide revenue for the year was $1.1 billion, with a strong market presence in China and new supply agreements like the one with Geely Auto.
- Growth was driven by high-value wins in automotive and industrial applications, with a focus on fourth-generation MOSFET technology.

Manufacturing Reshaping Initiatives:
- STMicroelectronics announced a new program to accelerate its 300mm silicon and 200mm silicon carbide wafer fab capacity.
- This program aims to enhance revenue growth with improved operating efficiency, resulting in annual cost savings of $300 million to $360 million by 2027.

Financial Outlook and Cost Management:
- Q1 2025 revenues are expected to decrease by 27.6% year-over-year and 24.4% sequentially, with a gross margin of about 33.8%.
- These figures reflect continued challenges in industrial and automotive sectors, with plans to reduce net OpEx by a low-single-digit percentage in 2025 compared to 2024 through cost-saving programs.