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Automotive industry is driving revenue for at least one chip company: STMicroelectronics

Look, a semiconductor manufacturer that isn't whining about weak demand

Chipmaker STMicroelectronics appears to be bucking the industry trend by beating analyst expectations and delivering revenues towards the upper end of guidance, driven by demand from the automotive and industrial segments, the company said.

While others in the semiconductor business have reported weaker orders and declining profits, the Switzerland-based company saw net revenue for Q4 2022 of $4.42 billion, up 24.4 percent over the same period last year and 2.4 percent up on the previous quarter. Profit was $1.25 billion versus $750 million.

For the full year, revenue increased by 26.4 percent to $16.13 billion when compared with 2021, and net income reached $3.96 billion, almost double the $2.0 billion reported by STMicroelectronics for 2021.

President and CEO Jean-Marc Chery said on the company's earnings call the results were "driven by strong demand in Automotive and Industrial, and our engaged customer programs." However, all three of the semiconductor maker's product groups contributed to the growth, he added.

For the full year, the Automotive and Discrete Group (ADG) saw an increase in revenue of 38.4 percent, while the Microcontrollers and Digital ICs Group (MDG) grew 29.1 percent and the Analog, MEMS, and Sensors Group (AMS) increased by 7 percent.

As a chip designer and contract manufacturer, STMicro supplies chips to both Apple for the iPhone line and to carmaker Tesla for its electric vehicles.

But ST has racked up other wins in next-generation electric vehicle designs, Chery claimed, including Hyundai, which has chosen STMicro's Acepack Drive SiC-MOSFET Gen3-based power modules for its latest EV generation.

Looking ahead, Chery said he was expecting revenue for the first quarter to reach $4.20 billion, an increase of 18.5 percent over the same period last year, but down by 5.1 percent sequentially, meaning the company is not totally immune from the semiconductor industry downcycle.

For the full calendar year, STMicro is forecasting revenues in the range of $16.8 billion to $17.8 billion, representing a growth range of somewhere between 4 percent and 10 percent over 2022.

"We will continue to execute our strategy, with a strong focus on Automotive and Industrial as a broad range supplier, and a selective approach in Personal Electronics and Communications Equipment and Computer Peripherals," Chery said.

The company plans to invest about $4 billion in capex throughout this year, mainly to upscale its 300mm wafer fabrication and silicon carbide manufacturing capacity, he added.

"We continue to lead in silicon carbide," Chery claimed, saying that STMicro has now moved to high volume production of its third generation of this technology for multiple automotive customers, and it expects to ramp up production of the fourth-generation transistors in the second half 2023.

The exec also claimed that STMicro is on track to achieve its carbon neutrality and renewable energy goals by 2027, as the company announced in December 2020.

One key contributor to this plan was the adoption during 2022 of a district cooling system in Singapore, he said, the location of the company's largest wafer fabrication site. "We expect to eliminate 30 percent of the site's carbon emissions on completion."

Last year, STMicro announced a joint venture with another semiconductor manufacturer, GlobalFoundries, to build a wafer fabrication facility adjacent to STMicro's existing 300mm plant in Crolles, France. The fab is expected to come online in 2026 and produce chips for carmakers and the telecoms industry. ®

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