• STMicro expects 2023 revenue of $17.0 billion-$17.8 billion, representing a 5%-10% growth over 2022.
• Silicon carbide (SiC) substrate manufacturing facility in Catania will fulfill the continuing demand as Silicon Carbide (SiC) in EVs is growing substantially.
• In 2023, revenue from SiC is expected to be around $1.2 billion, with a significant portion of its substrates internally sourced by 2024.

STMicro’s Q1 2023 net revenue rose 19.8% YoY to reach $4.25 billion, primarily driven by strong demand from the automotive and industrial segments and partially offset by lower revenue in personal electronics. Revenue from factory automation, robotics and building control grew while new orders normalized. STMicro will have a significant portion of its substrates internally sourced by 2024 as it continues to ramp up silicon carbide front-end device production in its Singapore facility. The company’s gross margin improved to 300bps YoY and 220 bps QoQ in Q1 2023 driven by favorable pricing and improved product mix, net of hedging, but was partially offset by an increase in manufacturing input costs.

• Automotive: The automotive sector has maintained its momentum helped by a surge in EV adoption and semiconductor integration. STMicro has secured multiple design contracts for SiC, silicon MOSFETs, onboard charging MCUs and zonal controller solutions from several electric vehicle manufacturers. STMicro won several design contracts in vehicle dynamics, airbags and anti-theft applications, as well as SPC5 microcontrollers for vehicle body control in the legacy automotive sector. The legacy automotive sector remains dynamic for now, as silicon integration continues to grow. 

• Industrial: The industrial segment experienced a surge in demand, driven by the digitalization of devices and the need for improved power and energy efficiency. STMicro secured several design contracts in the industrial sector, offering system solutions that consist of power discrete, power management and STM32 microcontrollers for use in renewable energy applications, multi-product solutions for smart meters, smart grid applications, intelligent power switches, motor drivers, industrial sensors and secure solutions for applications such as industrial automation, asset tracking and server power supplies. STMicro has also introduced the MCU Edge-AI Developer Cloud which includes an online benchmarking service for Edge-AI models on STM32 boards.

• Personal Electronics: STMicro's products, such as NFC controllers, secure elements, wireless charging, MEMS sensors and time-of-flight sensors have been chosen by leading smartphone and wearable device manufacturers. In the communications and computer equipment sector, STMicro has secured several design contracts for LEO satellites, as well as for computer peripherals including secure solutions, time-of-flight sensors, microcontrollers and ASICs for communications infrastructure.

Segment Revenue

1. Automotive and Discrete (ADG): Q1 2023 revenue of $1,807 million, up 43.9% YoY in both automotive and power discrete segments.
2. Analog, MEMS & Sensors (AMS): Q1 2023 revenue was $1,068 million, with a marginal decrease of 0.9% YoY in analog, MEMS and imaging segments.
3. Microcontrollers & Digital ICs (MDG): Q1 2023 revenue was $1,368 million, increasing 13.2% year-on-year growth in both microcontrollers and RF communications segments.

• Forecast: Net revenue for Q2 2023 is projected to be around $4.28 billion indicating a 0.8% QoQ increase, with a possible deviation of 350 basis points. Moreover, the projected revenue for FY2023 is expected to be $17.0 billion-$17.8 billion, reflecting 5%-10% YoY growth, primarily driven by the automotive and industrial sectors.

• Demand and Supply: The high demand for the automotive, industrial power and energy sectors persisted in Q1 2023, propelled by the continued integration of semiconductors and the normalization of orders from the factory and automation sectors. However, at the end of Q1 2023, inventory was at $2.87 billion compared with $2.15 billion in the year-ago quarter. The days of sales in inventory at the end of the quarter were 122, compared with 104 days in Q1 2022. The automotive segment witnessed a surge in demand across all regions, primarily due to the growing use of semiconductors and inventory replenishment. The backlog has now extended to about six quarters at the mid-point of 2023 which is higher than usual but remains consistent with the diverse end-market segments. 

• Capex and Investment: Capex stood at $1.09 billion in Q1 2023, up from $840 million in the year-ago quarter. The company plans to invest about $4.0 billion with 80% of the investment directed towards the expansion of the 300mm wafer production and the continued ramp up of SiC front-end device manufacturing in Catania and Singapore. The company also intends to increase its back-end manufacturing capacity in Morocco and China.

Conclusion

STMicro is making significant progress by capitalizing on its impressive portfolio and benefiting from the strong demand in the automotive sector despite the supply chain constraints. The partnership between STMicro and Global Foundries is expected to increase the production capacity to 620,000 wafers annually by 2026. Additionally, STMicro has signed a multi-year supply contract with ZF to provide silicon carbide for its modular inverter architecture which is scheduled to commence production in 2025. To further diversify its raw material procurement, STMicro is implementing smart technology to reduce the cost of the solution at the substrate level.