STMicroelectronics NV Earnings - Q4 2025 Analysis & Highlights
STMicroelectronics NV's Q4 2025 earnings call highlighted a return to year-over-year revenue growth, with a focus on strategic growth drivers in Automotive, Industrial, Personal Electronics, and Communication Equipment & Computer Peripherals. The company discussed its financial performance, including revenue, gross margin, and EPS, alongside capital expenditure plans and sustainability commitments. Management also provided an outlook for Q1 2026 and addressed market dynamics and competitive positioning.
Key Financial Results
Q4 2025 revenues were $3.33 billion, exceeding the midpoint of the business outlook range.
Gross margin for Q4 2025 was 35.2%, also above the midpoint of the business outlook range, primarily due to a better product mix.
Diluted earnings per share (EPS) was $0.11, excluding impairment, restructuring charges, and other related phase-out costs, but included negative one-time tax expenses impacting $0.18 per share.
Q4 revenue marked a return to year-over-year growth.
Full year 2025 net revenues decreased 11.1% to $11.8 billion.
Full year 2025 gross margin was 33.9%, down from 39.3% in 2024.
Full year 2025 diluted EPS was $0.53, excluding impairment, restructuring charges, and other related phase-out costs.
Net loss for Q4 2025 was $30 million, including $163 million in one-time non-cash income tax expenses.
Q4 2025 diluted EPS was negative $0.03, compared to $0.37 in the year-ago quarter.
Operating income for full year 2025 stood at $175 million, compared to $1.68 billion in 2024.
Non-US GAAP operating margin for full year 2025 was 4.7%, excluding $376 million for impairment, restructuring charges, and other related phase-out costs.
Business Segment Results
Analog products, MEMS and Sensor segment grew 7.5% year-over-year, mainly driven by Imaging.
Power and Discrete products segment decreased by 31.6% year-over-year.
Embedded Processing revenues were up 1.2% year-over-year, with higher revenues in General Purpose and Automotive Microcontrollers offsetting declines in Connected Security and Custom Processing products.
RF & Optical Communication segment grew 22.9% year-over-year.
Communication Equipment & Computer Peripherals and Personal Electronics end markets both grew by about 17% year-over-year.
Industrial end market grew by about 5% year-over-year, while Automotive decreased by about 15%.
Sequentially, Power and Discrete was the only segment to decrease by 3.9%.
RF & Optical Communication led sequential growth, up 30.5%, while Embedded Processing and Analog products, MEMS and Sensor were up 3.9% and 1.1% respectively.
Communication Equipment & Computer Peripherals led sequential growth by end market, up 23%.
Industrial was up 5% sequentially, and Automotive was up 3%, while Personal Electronics declined 2%.
Automotive represented about 39% of total 2025 revenues, Personal Electronic about 25%, Industrial about 21%, and Communication Equipment/Computer Peripheral about 15%.
Q4 non-US GAAP operating margin for Analog product, MEMS and Sensor was 16.2%, Power and Discrete was negative 30.2%, Embedded Processing was 19.2%, and RF & Optical Communication was 23.4%.
Capital Allocation
Net CapEx for full year 2025 was $1.79 billion.
Free cash flow for full year 2025 was $265 million positive.
Cash dividends paid to stockholders in 2025 totaled $321 million.
Share buybacks in 2025 totaled $367 million.
Net CapEx for 2026 is planned at about $2.2 billion to support capacity additions and the manufacturing reshaping plan.
Industry Trends and Dynamics
Automotive revenues declined year-over-year but showed continued improvement in trend.
Industrial revenues were better than expected, with inventories in distribution further decreasing and normalizing.
Personal Electronics revenues were above expectations, reflecting seasonality.
Communication Equipment & Computer Peripherals revenues were up 23% sequentially, better than expected.
The low-Earth orbit satellite business continued to progress with shipments ramping to the second largest customer.
2025 was a challenging year for end markets, characterized by inventory correction in Automotive and Industrial.
The second half of 2025 saw gradual improvement in revenue trends and a return to year-on-year growth in Q4.
Inventory correction in distribution is progressively improving.
The Automotive market for legacy applications is soft, but inventory correction is largely complete.
The Automotive market is changing in terms of mix (electrical, hybrid, thermal combustion engine) and car classification (middle and premium).
Industrial book-to-bill was well above parity, and POS (Point of Sale) was growing between low-teens and mid-teens.
Automotive book-to-bill was at parity, when adjusted for large, infrequent orders.
Inventory correction is expected to be largely complete by the end of Q2.
Competitive Landscape
Automotive design momentum progressed with design wins across electric and traditional vehicle domains, strengthening the company's position as a key supplier.
The acquisition of NXP's MEMS sensor business is expected to close in H1 2026 and will strengthen the company's leading position across the Automotive and Industrial segments.
The partnership with Sanan is progressing and will be a key success factor in competing in the Chinese market.
The company expects to return to its historical market share of about 23% by 2027 in Industrial General Purpose MCUs.
Macroeconomic Environment
The business outlook does not include any impact for potential further changes to global tariffs.
The Automotive market is influenced by competition in China, where more than half of vehicles produced are battery-based.
Growth Opportunities and Strategies
Automotive design wins included power semiconductors, smart power devices, automotive microcontrollers, analog, and sensors.
In Industrial, the portfolio of microcontrollers, sensing technologies, and analog and power devices is positioned to support industrial transformation trends and the need for physical AI.
Industrial design wins were seen across industrial automation and robotics, building automation, power systems, healthcare, and home appliances.
The company announced innovations at the STM32 Summit, including the first microcontroller built on an 18-nanometer process, next-generation wireless microcontrollers, and an updated suite of edge AI software tools.
In AI and data center infrastructure, the company is reinforcing its position to support demand for higher power density and energy efficiency.
Multiple design wins were secured for silicon and silicon carbide-based power solutions for next-generation AI compute architectures.
The company continues to work with customers to bring silicon photonics technology to market, contributing to demand for high-performance microcontrollers in pluggable optics.
Sustainability commitments for 2027 include carbon neutrality in Scope 1 and 2 emissions, focusing on Scope 3 emissions, and 100% renewable energy sourcing.
A major milestone was the launch of Singapore's largest industrial district cooling system at the Ang Mo Kio facility in Q4.
Automotive growth drivers include ADAS and silicon carbide power devices.
Sensors are seeing strong demand in MEMS and Imaging sensors.
In Industrial, the company is building on market share gains in 2025 and a roadmap of new product launches for 2026 for General Purpose MCUs.
In Personal Electronics, increased silicon content in engaged customer programs is expected to drive growth.
In Communication Equipment/Computer Peripheral, the company aims for $1 billion revenue before 2030 in AI and data centers, with $500 million in 2026, driven by cloud optical interconnect and power and analog for AI servers.
Low-Earth orbit satellites are expected to see continued revenue growth due to expanding customer base and new application penetration.
The company is positioned to address humanoid robotics with its broad portfolio, with an addressable bill of material of about $600 per system.
Financial Guidance and Outlook
Q1 2026 revenues are expected to be $3.04 billion, a decrease of 8.7% sequentially, plus or minus 350 basis points.
Gross margin for Q1 2026 is expected to be about 33.7%, plus or minus 200 basis points, including about 220 basis points of unused capacity charges.
Net OpEx for Q1 2026 is expected to be about $860 million, decreasing quarter-on-quarter.
The company is confident in its ability to grow organically in 2026.
Q1 gross margin is believed to be the lowest point in the year, with expectations for mild increases in Q2 and more significant increases in H2.
Q4 2026 gross margin is expected to be better than Q4 2025.
Unused capacity charges are declining in Q1 due to the reshaping of manufacturing infrastructure and will continue to reduce throughout the year.
Inventory days are expected to be around 140 days at the end of Q1, compared to 130 days at the end of 2025.
Net OpEx for 2026 is expected to have a low-single-digit increase, including the impact of hedging and a reduction in other income and expenses due to phase-out costs.
