STMicroelectronics NV (NYSE: STM), one of the global leaders in semiconductor technology, reported its first-quarter financial results for the period ending March 29, 2025. The company also provided non-GAAP metrics, with additional details found in the Appendix. The company posted first-quarter revenue of $2.52 billion, a gross margin of 33.4%, operating income of $3 million, and net income of $56 million, equivalent to $0.06 diluted earnings per share.
Jean-Marc Chery, President & CEO of STMicroelectronics, noted that the company’s revenue for the first quarter aligned with the midpoint of its guidance, driven primarily by higher sales in Personal Electronics. However, revenues from the Automotive and Industrial segments were below expectations. The gross margin for the quarter came in slightly lower than anticipated, mainly due to changes in the product mix. Year-over-year, the company saw a significant decline, with net revenues falling 27.3%, operating margin dropping to 0.1% from 15.9%, and net income decreasing by 89.1% to $56 million.
Despite these challenges, Chery highlighted an improvement in the company’s book-to-bill ratio, particularly in the Automotive and Industrial segments, which showed positive performance. Looking forward to the second quarter of 2025, ST expects net revenues to reach $2.71 billion, marking a 16.2% decline from the previous year but a 7.7% sequential increase. The company anticipates a gross margin of around 33.4%, although it will be impacted by approximately 420 basis points of unused capacity charges.
Chery also reaffirmed ST’s capital expenditure plans for 2025, which remain in the range of $2.0 billion to $2.3 billion, with a primary focus on reshaping the company’s manufacturing footprint. He emphasized that while the first quarter of 2025 marked the lowest point, ST remains committed to driving innovation and enhancing the competitiveness of its product portfolio. The ongoing program to optimize manufacturing and reduce global costs is on track, with the expectation of achieving substantial annual savings by 2027.
In the first quarter of 2025, STMicroelectronics reported net revenues of $2.52 billion, reflecting a significant year-over-year decline of 27.3%. This drop was primarily due to a decrease in sales to OEMs, which fell by 25.7%, as well as a 31.2% decline in sales through distribution channels. On a sequential basis, net revenues decreased by 24.2%, though this was slightly better than the mid-point of the company’s guidance for the quarter.
The company’s gross profit for the period totaled $841 million, representing a 41.7% decrease compared to the same quarter last year. Gross margin stood at 33.4%, which was 40 basis points below guidance and 830 basis points lower than in Q1 2024. This decline was primarily attributed to a shift in product mix, as well as increased unused capacity charges, which negatively impacted the company’s profitability.
Operating income for the first quarter dropped drastically by 99.5%, falling to just $3 million, compared to $551 million in the same period last year. As a result, the operating margin decreased to 0.1%, down from 15.9% in Q1 2024. Excluding impairment charges and restructuring costs, operating income stood at $11 million for the quarter, offering a slightly more positive view of the company’s underlying operations.
Breaking down the performance by segment, the Analog, Power & Discrete, MEMS, and Sensors (APMS) product group saw a 23.9% drop in revenue, with operating profit plunging by 66.7% to $82 million. The Power and Discrete products segment, in particular, faced a sharp 37.1% revenue decline, turning from a positive operating profit of $77 million last year to a loss of $28 million in Q1 2025.
The Microcontrollers, Digital ICs, and RF Products (MDRF) product group also experienced challenging conditions during the quarter. The Embedded Processing segment saw a 29.1% decrease in revenue, with operating profit falling by 71.5% to $66 million. Similarly, the RF & Optical Communications segment reported a 19.2% drop in revenue, and operating profit in this segment decreased by 59.0%, ending the quarter at $43 million.
Net income for the quarter stood at $56 million, a dramatic decline from $513 million in Q1 2024. Consequently, diluted earnings per share (EPS) dropped to $0.06, compared to $0.54 a year earlier. Adjusting for restructuring and impairment charges, net income for the quarter was $63 million, or $0.07 per share, reflecting the impact of these non-recurring items.
STMicroelectronics’ cash flow from operating activities reached $574 million for the quarter, down from $859 million in Q1 2024. Despite the decline in operating income, free cash flow improved to $30 million, reversing the negative $134 million recorded in the same period last year. This represents a positive sign for the company’s ability to generate cash despite a challenging market environment.
Inventory at the end of the first quarter was $3.01 billion, up from $2.79 billion at the close of the previous quarter and from $2.69 billion in the first quarter of 2024. Days sales of inventory increased to 167 days, up significantly from 122 days in both the previous quarter and the same period last year. This suggests that ST is facing challenges in moving inventory as efficiently as in the past.
During the first quarter, ST paid out $72 million in cash dividends to shareholders. Additionally, the company repurchased $92 million worth of its own shares as part of its ongoing share repurchase program. These actions reflect the company’s commitment to returning value to shareholders despite the challenging financial environment.
ST’s net financial position remained solid at $3.08 billion as of March 29, 2025, though it was slightly lower than the $3.23 billion recorded at the end of 2024. The company’s total liquidity remained strong at $5.96 billion, with financial debt totaling $2.88 billion. These figures reflect the company’s continued ability to maintain a healthy balance sheet despite the recent challenges.
The company’s liquidity position indicates a strong foundation, providing it with flexibility to navigate through current market challenges. Additionally, ST’s efforts to manage its financial position, including careful control of debt and cash reserves, demonstrate its commitment to maintaining a robust financial structure moving forward.
STMicroelectronics’ overall performance in Q1 2025 highlights the challenges posed by a more difficult global market. However, the company’s focus on cost management, operational efficiency, and maintaining a solid financial position should help it weather the storm and prepare for future growth opportunities. As the year progresses, ST is likely to continue facing headwinds, but its strong liquidity and commitment to shareholder returns could provide stability.
Despite the difficult quarter, the company’s focus on innovation, strategic investments, and cost optimization positions it to potentially rebound as market conditions improve. The ongoing efforts to restructure and enhance operational efficiency could lead to a stronger performance in the future, though the timing of recovery remains uncertain.
On April 10, 2025, ST provided further details on its restructuring program, which aims to reshape its manufacturing footprint and resize its global cost structure. The company reaffirmed its target to achieve annual cost savings in the high triple-digit million-dollar range by the end of 2027.
For the second quarter of 2025, ST expects net revenues to reach $2.71 billion, reflecting a sequential increase of 7.7%. However, this forecast comes with a potential variance of plus or minus 350 basis points, indicating some fluctuation could occur depending on market conditions.
The company projects a gross margin of 33.4% for Q2, with a potential variance of plus or minus 200 basis points. This forecast takes into account potential changes in product mix, pricing, and operational efficiencies that could influence profitability.
Additionally, ST’s financial guidance assumes an exchange rate of $1.08 = €1.00 for the second quarter. This forecast also incorporates the impact of existing hedging contracts, which are intended to mitigate potential risks from currency fluctuations during the period.
At STMicroelectronics, we are a team of 50,000 innovators shaping the semiconductor industry. We partner with over 200,000 customers and thousands of suppliers to create products and solutions that address global challenges. Our technologies drive smarter mobility, efficient energy management, and the development of cloud-connected autonomous systems. ST is committed to achieving carbon neutrality by 2027, along with transitioning to 100% renewable electricity for all our operations.
