After reporting a 25% year-on-year revenue decline in the second quarter, STMicroelectronics has revised its sales outlook for 2024 downward for the second time.
ST reported revenue of US$3.23 billion for the second quarter of 2024, down 6.7% sequentially and 25.3% year on year, with gross margin falling to 40.1% from 41.7% in the previous quarter and 49.0% during the same time in 2023. The operating margin for the quarter dropped to 11.6%, down from 15.9% in the first quarter and 26.5% a year ago.
"Second-quarter net revenues were above the midpoint of our business outlook range driven by higher revenues in Personal Electronics, partially offset by lower than expected revenues in Automotive. Gross margin was in line with expectations," said Jean-Marc Chery, ST president and CEO.
"During the quarter, contrary to our prior expectations, customer orders for Industrial did not improve and Automotive demand declined," Chery continued.
ST's Analog, Power & Discrete, MEMS, and Sensors (APMS) product group reported mixed results in the second quarter of 2024 in comparison to the previous year's quarter. The Analog products, MEMS, and Sensors (AM&S) segment experienced a 10.0% decrease in revenue, while the Power and Discrete (P&D) products segment witnessed a 24.4% decline in revenue.
The Microcontrollers segment of ST's Microcontrollers, Digital ICs, and RF products (MDRF) division saw a 46.0% decline in revenue, while the Digital ICs and RF products (D&RF) segment experienced a 7.6% decrease. ST's MCU product line consists of microprocessors, connected security products (including EEPROM), and general-purpose and automotive MCUs. Its D&RF products comprise automotive ADAS, infotainment, RF, and communications solutions.
Cautious outlook for 3Q24
ST expects a modest sequential growth of 0.6% in third-quarter revenue, reaching US$3.25 billion at the midpoint. Nevertheless, this indicates a decline of 26.7% compared to the previous year.
The gross margin for the third quarter is expected to be about 38%. "We will now drive the Company based on a plan for the financial year of 2024 with revenues in the range of $13.2 billion to $13.7 billion. Within this plan, we expect a gross margin of about 40%," according to Chery.
It is worth mentioning that ST's revised revenue and margin forecasts for 2024 have been cut from US$14-15 billion and 41-43%, respectively. In January, the chip vendor estimated its sales for 2024 at US$16.9 billion.
