ST raises forecasts after bumper Q2

July 29, 2021 // By Peter Clarke
ST raises forecasts after bumper Q2
A strong increase in sales and profitability at European chip giant STMicroelectronics has led the company to raise its annual capital expenditure and full year sales forecasts.

The results exceeded analysts' expectations and were attributed to strong global demand, in particular from automotive and mobile phone customers. As a result of the good second quarter ST raised the estimate for the full year from $12.1 billion to $12.5 billion and raised the capex budget to $2.1 billion from $2.0 billion.

The second quarter sales were $2.99 billion, up 43.4 percent on the same quarter a year before, although flat with the 1Q21. The company made a net income of $412 million, up from just $90 million in the 2Q20. ST was one of the companies that reportedly raised prices at the beginning of 2021 in response to the chip shortage (Report: Chipmakers raising prices 10 to 20 percent).

"First half net revenues increased 39.1 percent year-over-year, driven by growth in all product groups, except the RF Communications sub-group. Operating margin was 15.5 percent and net income $776 million," said Jean-Marc Chery, CEO of STMicroelectronics, in a statement.

In terms of ST's three business groups, it was the analog, mixed-signal and sensors group that performed best with sales up 62.3 percent compared with a year before. The automotive and discrete group followed with a 48.2 percent annual uplift. The microcontrollers and digital group still enjoyed a rise of 22.3 percent. The AMS group is highly seasonal and is probably enjoying a ramping of sales for a round of smartphone introductions in the fall.

The forecast for the third quarter was set at $3.20 billion, which would produce a year-over-year increase of 20.0 percent.

"We will now drive the company based on a plan for FY21 revenues of $12.5 billion, plus or minus $100 million, a year-over-year increase of 22.3 percent at the mid-point. This growth is expected to be driven by strong dynamics in all the end markets we address and our engaged customer programs. Our capex plan will now be about $2.1 billion for 2021, said Chery.

Related links and articles:

News articles:

ST sales boom on strong demand, hits $12bn run-rate

Report: Chipmakers raising prices 10 to 20 percent

ST pushes back $12bn target, looks to $15bn

STMicroelectronics charts path to $12bn

'Exit interview' with Carlo Bozotti of STMicroelectronics

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