Chipmaker STMicroelectronics reported a significant slump in its second-quarter financial results for 2024, amid challenging market conditions. The company reported net revenues of $3.23 billion, a 25.3% decrease from the same quarter last year. Gross profit fell by 38.9% to $1.30 billion, with the gross margin dropping to 40.1% from 49.0% in Q2 2023. Operating income also saw a steep decline, plummeting by 67.3% to $375 million.
STMicroelectronics President and CEO Jean-Marc Chery attributed the revenue decline to several factors. “Q2 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,” Chery said. “First half net revenues decreased 21.9% year-over-year, mainly driven by a decrease in Microcontrollers and Power and Discrete segments.”
The company’s operating margin decreased to 11.6%, down from 26.5% in the previous year. Net income for the quarter was $353 million, a significant drop from $1.00 billion in Q2 2023.
The Analog, Power & Discrete, MEMS, and Sensors (APMS) product group reported mixed results. Revenues in the Analog products, MEMS, and Sensors segment decreased by 10.0%, while Power and Discrete products saw a 24.4% decline in revenue. The Microcontrollers, Digital ICs, and RF products (MDRF) product group experienced a 46.0% revenue decrease in the Microcontrollers segment, and a 7.6% decrease in the Digital ICs and RF products segment.
Cuts full-year outlook
STMicroelectronics provided a cautious outlook for the third quarter. The company expects net revenues of $3.25 billion, reflecting a slight sequential increase of 0.6%. However, this represents a year-over-year decrease of 26.7%. The gross margin is projected to be around 38%.
Chery acknowledged the challenges ahead, noting, “During the quarter, contrary to our prior expectations, customer orders for Industrial did not improve and Automotive demand declined. We will now drive the Company based on a plan for FY24 revenues in the range of $13.2 billion to $13.7 billion. Within this plan, we expect a gross margin of about 40%.”
Despite the revenue decline, STMicroelectronics reported a net cash flow from operating activities of $702 million. The company’s free cash flow stood at $159 million. ST also highlighted its efforts to return value to shareholders, with $73 million paid in cash dividends and an $88 million share buy-back during the second quarter.
The company’s net financial position was $3.20 billion as of June 29, 2024, reflecting total liquidity of $6.29 billion and total financial debt of $3.09 billion.
