STMicroelectronics (ST) recently released its third-quarter financial results. Revenue in 3Q reached US$3.19 billion with a net income of US$474 million. Despite being slightly lower than market expectations, the numbers reflect how the ongoing high demand in the global chip market is providing a positive price environment.
CEO of ST Jean-Marc Chery expects the current level of demand to continue until 2023.
ST's 3Q revenue increased by 19.9% year-on-year compared to the same period in 2020, according to reports from eeNew Analog and Electronics Weekly. The growth rate clearly slowed compared to the previous two quarters but still grew by 6.9% compared to 2Q and net income nearly doubled with an increase of 95.6%. While this is significantly lower than the previous quarter, it still shows a strong growth trend, as it is still a quarterly increase of 15.1% from the previous quarter's record high of US$412 million, indicating that it continues to benefit from the ongoing post-pandemic chip shortage.
Chery pointed out ST's third-quarter revenue performance was driven by strong global demand. However, due to the COVID-19 situation in Malaysia, production capacity in ST's manufacturing base decreased more than expected, resulting in lower-than-expected automotive business revenue in 3Q, offsetting 3Q revenue growth.
ST's net revenue grew 31.8% on year in the first nine months of 2021. Growth is mainly attributed to the growth of all product divisions with the exception of its radio frequency (RF) communications division.
ST's chip packaging production line in Muar, Malaysia, was greatly affected in the third quarter by the third wave of COVID-19 that resulted in lockdowns in the country and had a major impact on production capacity. As the situation worsened in July and August, the impact on the Muar plant was more serious than anticipated, as production lines were either partially or completely closed. However, production capacity returned to 100% in 3Q.
ST's fourth-quarter revenue is forecast to reach a new high of US$3.4 billion for quarterly growth of 6.3%, according to Chery. The gross margin in 4Q is expected to reach 43%. Revenue for the full year of 2021 is expected to reach US$12.6 billion, a growth of 23.3% compared to 2020.
Inventory at the end of the third quarter was US$1.97 billion, compared to US$1.93 billion for the same period in 2020. Day sales of inventory at the end of 3Q was 96 days compared to 103 for the same period in 2020.
Capital expenditure payments in the third quarter were equivalent to the previous quarter and amounted to US$437 million for an on-year growth of 37%.
Third-quarter revenue for ST's various product groups are as follows: US$1.01 billion for its Automotive Discrete Group (ADG) for an on-year growth of 18.1% and quarterly growth of 6.7%; US$1.27 billion for it Analog, MEMS and Sensors Group (AMS) for an on-year growth of 27.1% and quarterly growth of 25.2%; and a record-high revenue of US$920 million for its Microcontrollers and Digital ICs Group (MDG) for on-year growth of 12.9%.
Article translated by Eifeh Strom
