The semiconductor shortage will continue next year, "at a minimum", said ST's CEO Jean-Marc Chéry.
Benefiting from buoyant demand globally, STMicroelectronics’ 2021 second-quarter net revenues and gross margin came in at the high-end of its business outlook range.
The second-quarter net revenues totaled $2.99 billion, up 43.4% year-over-year. The gross margin of 40.5% and operating margin of 16.3% improved from 35.0% and 5.1%, respectively. And the net income rose to $412 million.
For the first-half of fiscal year 2021, ST’s net revenues totaled $6.01 billion, up 39.1% year-over-year, and the group’s gross margin was 39.7%. The net income amounted to $776 million.
During the group’s second quarter earnings conference yesterday (July 28), Jean-Marc Chéry, CEO of STMicroelectronics, commented, “During the second quarter, we were again operating with a backdrop of strong demand, stretching the global supply chains. We have continued to work closely with our customers across all verticals and channels to adapt to this difficult allocation situation.”
The good performance was driven by the double-digit revenue growth in all product groups, except for the RF Communications sub-group. Year-over-year, ST registered:
. +48.2% for the Automotive and Power Discrete Group (ADG)
. +62.3% for the Analog, MEMS and Sensors (AMS) Group
. +22.3% Microcontrollers and Digital ICs Group (MDG)
In a Q&A session, Chéry said he does not expect the radiofrequency subgroup’s revenues to improve in the next quarter. “Q3 will still be a difficult year”, but in “Q4 we will start seeing a significant improvement.”
$12.5 billion in revenues
Considering strong economic indicators, ST slightly raised the revenue outlook for fiscal year 2021, from about $12.1 billion, plus or minus $150 million, to about $12.5 billion, plus or minus $100 million. This revenue guidance would translate into “a year-over-year increase of 22.3% versus our prior plan of 18.4% growth at the midpoint,” said Chéry.
Asked to comment on the revenue guidance upgrade, Lorenzo Grandi, president of Finance, Infrastructure and Services and chief financial officer, STMicroelectronics, said it is “a combination” of factors. First, volumes are higher. Second, the gross margin is improving, especially in microcontrollers. Third, prices are slightly higher than “we were expecting.”
For the third quarter, at the midpoint, ST expects net revenues to be about $3.2 billion, representing year-over-year and sequential growth of 20.0% and 7.0%, respectively. Gross margin is expected to be about 41.0%, representing a year-over-year and sequential increase of 500 basis points and 50 basis points, respectively. Grandi expects gross margin to remain strong and sees the market “very, very” positively moving forward.
$2.1 billion in capex
ST said it plans to invest about $2.1 billion in capex to support the strong market demand and its strategic manufacturing initiatives. More precisely, Chéry said, “We will start receiving equipment in Agrate at the end of the year, and Agrate 300mm will start contributing to ST’s revenue by Q4 2022.”
He added, “As soon as we saw the market upturn in December, we decided on an expansion of Crolles. Starting in the first quarter of next year, we will be capable of increasing the capacity of Crolles well above 9,000 wafers per week. We will fully saturate the 8-inch fab in Singapore. […] From an infrastructure point of view, we know exactly where we can add equipment and we have booked all the slots. Now the challenge is how we allocate to verticals, regions, and customers.”
200mm SiC wafers
Earlier this week (July 27), ST announced it had manufactured the first 200mm silicon carbide (SiC) bulk wafers for prototyping next-generation power devices from its facility in Norrköping, Sweden. Asked when ST plans to move to mass production, Chéry indicated, “when our fab is set up in Catania, […] at the end of 2023-2024.”
But, he continued, “We will start on 8 inch before, mainly sourcing from Cree. We will start on diodes next year and start on transistors in 2023. Then, we will source internally, transferring this 200mm technology to our Catania infrastructure. In Catania, we will have a mix between 150mm and 200mm, because it will take time to have everything converted to 200mm.
This article was originally published on EE Times Europe.