STMicroelectronics (STM) Barclays 23rd Annual Global Technology Conference summary

Market review and outlook

• Automotive and industrial sectors experienced significant inventory corrections in early 2025, but normalization and sequential growth resumed from Q2 onward.

• Book-to-bill ratio is above parity, indicating positive booking trends and improved visibility for 2026 compared to the previous year.

• Backlog levels have improved year-over-year, though not yet at pre-COVID levels.

• No further inventory corrections are expected, and Q1 2026 is anticipated to follow normal seasonality.

Financial performance and margin dynamics

• Gross margin for 2025 is expected to average around 33.8%, impacted by over $400 million in unloading charges.

• Significant reduction in unloading charges and improved manufacturing efficiency are expected to positively impact margins in 2026.

• Product mix improvements, especially in microcontrollers and analog, should support margin recovery, though FX and lower capacity reservation fees are headwinds.

• Gross margin improvement is anticipated to be more significant in the second half of 2026.

Operating expenses and cost management

• Ongoing OpEx resizing aims for $300–$360 million in savings versus 2024, with 2025 savings exceeding $100 million.

• Slight increase in total expenses is expected due to startup costs for new facilities and FX impacts, despite continued cost control.