How ST’s Year Growth Plan Clicked in Q1 of 2021 – An Analysis!

Niloy Banerjee June 8, 2021

2 minutes read

Driven by strong dynamics in all end markets and addressing successful engaged-customer programs, STMicroelectronics expects strong growth ahead in FY21. In an official press release, ST reported net revenues of $3.02 billion and net income of $364 million for the first quarter ended April 3, 2021.

Earlier in a report, the Geneva-based company, whose top clients include leading smartphone manufacturers and automakers, said it now expected full-year revenues to be around $12.1 billion, a threshold it had previously postponed to 2023.

Sharing a statement on the report, Jean-Marc Chery, STMicroelectronics President & CEO, commented, “In the first quarter of 2021, net revenues increased by 35.2% year-over-year. All product groups contributed to this growth, on the continued acceleration of demand globally”.

ST logged a gross profit increase of 38.9% year-over-year because of lower unloading charges, manufacturing efficiencies and improved mix partially offset by negative currency effects.

Alongside, the company aims investments of $2 billion to meet booming orders for chips worldwide, which manufacturers throughout the sector have been unable to meet.

Below let’s have a look at the overall performance and growth segments for ST in Q1 2021:

STMicroelectronics recorded higher net sales in all product groups except the RF Communications (former “Digital”) sub-group.
Net sales to OEMs and Distribution increased 21.4% and 76.2%, respectively giving a stronghold for the company in Q1.
Microcontrollers and Digital ICs group marked 29pc creating $886M of the company’s revenue.
ST’s automotive and discrete group saw a healthy 35pc of its revenue share with revenue of $1,043M.
Whereas, Analog, MEMS & Sensor group (AMS) revenues charted $1,083M in which the company has been leading with a major 36pc gain.

The automotive and Power Discrete products and Microcontrollers segment increased sequentially but a partial decrease in Personal Electronics products was mentioned.

ST’s Q1 2021 net operating expenses closed at $735M which counted the company’s 24.4% of revenues.

The solid capital structure of ST showcased a solid position from a capital, liquidity, and balance sheet perspective.

Below infographic shares March 2020 to March 2021 capital structure:

Below an extensive look at ST’s Automotive Division Group’s (ADG) key achievements and milestones during this period:

Recognition for Silicon Carbide devices in applications such as traction inverters and on-board chargers.
Wins with high voltage MOSFETs, VIPower products and 32-bit automotive microcontrollers for car electrification applications.
Won sockets in electric vehicle designs with legacy automotive products for domains such as body & convenience and infotainment.
Additional awards for our Stellar 28nm FD-SOI automotive microcontrollers and for our SPC5 32-bit automotive MCUs.
Expanded automotive sensor business with motion sensors in GNSS and navigation units. Ramped global shutter image sensor for an EV maker

Below are the highlights of ST in the Industrial segment for Q1 2021:

The company unveiled the new extreme low-power STM32U5 series, with advanced performance and cybersecurity features.
Announced new STM32 Bluetooth Low Energy devices and the first STM32 Wireless Microcontroller Module
Design wins for Silicon Carbide, high voltage MOSFETs, and IGBT in a variety of industrial applications.
Received awards for analog products in metering, motion control, factory automation and home appliances.
ST expanded its business in sensors for industrial applications with design wins for motion sensors and time-of-flight solutions.

Compared to other categories and segment, Personal Electronics growth was moderate, though in this category ST has made some major announcements, below are the highlights:

ST gets recognition for smartphones with motion sensors, multi-zone time-of-flight ranging sensors, wireless charging, touch display controllers, and secure solutions.
Designs in True Wireless Stereo headsets, smartwatches, bracelets and smart shoes with sensors, analog, power products and microcontrollers.
Laser Scanning for Augmented Reality (LaSAR) Alliance for augmented reality eyewear application open for new members.
Signed an agreement with a technology specialist to jointly develop ultra-compact, low-power laser-beam scanners

Also worth mentioning ST’s Communications Equipment, Computers & Peripherals category which received: Multiple RF-CMOS ASIC awards for telecommunication infrastructure and also won sockets for time-of-flight and motion sensors for laptops and Chromebooks.

ST Q2 2021 Expectations:

STMicroelectronics in Q2 2021 expects $2.9B, increasing Y/Y by 39% targeting growth across all product groups.

Conclusion

Accumulatively, ST certainly posted better-than-expected revenue and profits for the first quarter of 2020 leaving off a Refinitiv IBES estimate of $2.92 billion.