STMicroelectronics hosted its highly anticipated Capital Markets Day on 20th November in Paris. The event, webcast live outlined the company’s roadmap for sustainable and profitable growth, reaffirming its strategic goals and financial ambitions. The company reiterated its commitment to achieving over $20 billion in revenue by 2030, supported by an intermediate financial model targeting $18 billion in revenue and an operating margin of 22-24% by 2027-2028. Below is excerpt
Reshaping Manufacturing for Long-term Success
Jean-Marc Chery, ST’s President and CEO emphasized ST’s plans to optimize its Integrated Device Manufacturer (IDM) model, which it views as a critical competitive advantage. The model encompasses full control of the value chain, including process development, chip design, wafer fabrication, assembly, testing, and customer support.
Key initiatives include:
- Accelerating 300 mm capacity at manufacturing sites in Crolles and Agrate.
- Expanding 200 mm Silicon Carbide production in Catania and Chongqing.
These advancements aim to improve supply chain resilience, drive innovation, and enhance efficiency. ST’s cost base resizing initiative and manufacturing reshaping program are expected to deliver substantial savings, contributing to the company’s operating margin goals.
Sustainability at the Core
ST reaffirmed its strong commitment to sustainability, with ambitious goals to achieve carbon neutrality for scope 1 and 2 emissions and partially for scope 3 by 2027. Additional initiatives include:
- Transitioning to 100% renewable energy sourcing by 2027.
- Fostering collaborative programs and partnerships to advance carbon neutrality across its ecosystems.
Strategic Vision
ST’s growth strategy is anchored in three transformative markets:
- Smart Mobility: Driving the evolution of automotive and transportation technologies.
- Power & Energy: Enabling efficient energy solutions for a sustainable future.
- Cloud-connected Autonomous Things: Empowering connected devices with cutting-edge technologies.
He emphasized the company’s role as a key enabler of smarter, safer, and more sustainable industries. “Our strategy stems from long-term enablers, and we remain committed to delivering differentiating solutions that power transformative technologies,” Chery said.
Outlook
- ST remains on track to grow approximately twice as fast as its Served Available Market (SAM).
- The company’s $20 billion+ revenue goal and above 30% operating margin ambition for 2030 remain unchanged.
- Intermediate targets for 2027-2028 include $18 billion in revenue and a 22-24% operating margin.
By leveraging its robust IDM model, innovative technology portfolio, and sustainable practices, STMicroelectronics is positioned to lead the transformation of global industries towards a smarter, safer, and more sustainable future.
Analog, Power & Discrete, MEMS and Sensors (APMS) Group
STMicroelectronics highlighted the strategic advancements and market leadership ambitions of its Analog, Power & Discrete, MEMS and Sensors (APMS) Group. Under the leadership of Marco Cassis, President of the group, ST is leveraging its Integrated Device Manufacturer (IDM) model and proprietary technologies to lead in Smart Mobility, Power & Energy, and Intelligent Things markets.
Driving Growth with Intelligent Things
ST’s APMS Group is targeting growth at twice the pace of its Served Available Market (SAM) in the Intelligent Things segment. The group’s strategy includes:
- Technology leadership: As the #1 European IDM in optical sensing technology, ST continues to develop advanced MEMS and imaging platforms alongside its unique Bipolar-CMOS-DMOS (BCD) technology.
- Customer intimacy: Collaborations with market leaders ensure tailored solutions, deep engineering expertise, and bespoke applications.
- Differentiated products: ST offers the industry’s broadest sensor portfolio, a robust library of reusable analog and sensing IP, and embedded edge AI solutions, enabling applications across diverse sectors.
Building on Proprietary Manufacturing Strength
The APMS Group’s manufacturing strategy underscores its ability to scale with customer demands:
- Front-end and back-end capacity: Proprietary technology ensures scalable, EU-based front-end capacity, including advanced 300 mm fabs.
- Agility and reliability: This in-house manufacturing capability enables rapid ramp-up aligned with customer requirements.
Growth Focus Areas
Smart Mobility
ST is doubling its growth rate versus SAM, capitalizing on its leadership in Silicon Carbide technology and vertically integrated manufacturing. This wide-ranging portfolio supports the global electrification trend.
Power & Energy
The group is focused on achieving growth in line with SAM, leveraging its extensive analog IP, product portfolio, and application expertise to serve markets spanning industrial, automotive, and consumer sectors.
Intelligent Things
The APMS Group is driving innovation by embedding intelligence into sensors and leveraging industry-leading MEMS technologies. Key efforts include:
- Expanding applications enabled by sensors and edge AI.
- Maintaining leadership in traditional segments while capitalizing on emerging trends.
- Broadening its product portfolio to capture increased market share.
Sustained Innovation and Market Partnerships
ST’s APMS Group remains committed to continuous investments in technology and product development. Strategic partnerships with market shapers allow ST to stay ahead of trends, delivering both standard and custom solutions that meet specific application needs.
Marco Cassis emphasized the group’s mission, stating, “By combining cutting-edge technologies, strong customer relationships, and in-house manufacturing capabilities, we are uniquely positioned to lead the transformation of Smart Mobility, Power & Energy, and Intelligent Things markets.”
With a clear focus on innovation, sustainability, and market differentiation, ST’s Analog, Power & Discrete, MEMS and Sensors Group is set to drive long-term growth and reinforce its leadership in the semiconductor industry. Lorenzo Grandi, President and Chief Financial Officer of STMicroelectronics, shared the company’s financial strategy and outlook, reaffirming its long-term ambition of surpassing $20 billion in revenue. While this goal is now expected to be achieved by 2030, ST has outlined an intermediate financial model to drive progress in the coming years.
Key Financial Milestones
- Intermediate Revenue Target
- ST projects revenues of approximately $18 billion by 2027-2028, supported by its innovative product portfolio and robust end-market exposure.
- The company remains confident in its ability to grow at twice the rate of its Served Available Market (SAM).
- Gross Margin Optimization
- ST aims for a gross margin of 44-46% by 2027-2028, bolstered by manufacturing efficiencies and cost optimization.
- The company expects to further improve this figure, targeting a gross margin of ~50% by 2030.
- Free Cash Flow (FCF) Growth
- Improved profitability and reduced capital intensity will drive an FCF-to-revenue ratio of 20% by 2027-2028.
- By 2030, the FCF-to-revenue ratio is projected to exceed 25%.
Manufacturing Efficiency and Cost Reshaping
ST’s financial performance will benefit significantly from the company’s ongoing reshaping of its manufacturing footprint, which includes:
- Enhanced efficiency through investments in advanced 300 mm fabs and expanded Silicon Carbide capacity.
- Cost base resizing initiatives expected to deliver substantial savings by 2027, contributing to long-term margin improvements.
Commitment to Innovation and Market Leadership
ST’s financial roadmap is underpinned by its strong innovation capabilities and diverse product portfolio, which are strategically aligned with high-growth markets such as Smart Mobility, Power & Energy, and Intelligent Things.
Lorenzo Grandi highlighted the company’s resilience and strategic focus, stating, “We are well-positioned to achieve our intermediate and long-term financial goals through a combination of manufacturing efficiency, innovation, and market leadership. These efforts will deliver sustainable growth and shareholder value.”
Long-Term Outlook
While the $20 billion revenue target has been postponed, STMicroelectronics remains steadfast in its ambition to achieve this milestone with a gross margin above 50% by the end of the decade. The company’s disciplined financial strategy and investment in cutting-edge technologies are expected to drive continued success.
