On Wednesday, STMicroelectronics (NYSE: STM), the computer chip maker, pushed back its long-term financial targets, saying its future remains bright but a downturn in its key automotive and industrial markets is dragging on into 2025.
ST, one of Europe’s largest semiconductor firms, now expects to hit annual revenue of $20 billion and an operating margin above 30% by 2030, instead of 2027 as previously forecast.
CEO Jean-Marc Chery told investors in Paris the company will remain the biggest seller of energy-efficient silicon carbide chips. The company expects to benefit from parts of the artificial intelligence boom, with power chips for data centers and ‘edge’ AI in electronic devices.
2025 will be a “transition year,” Chery said, even though he expects strength in industrial and personal electronics markets in the second half.
Analysts said this was to be expected after earlier warnings.
“The reiteration of ST’s financial targets today confirms our view that the current weakness the company is going through is cyclical, not structural,” brokerage Stifel said in a note.
STMicroelectronics (NYSE: STM) shares, down 51.68% year-to-date, dropped 1% to trade at $24.30 in the afternoon.
The company detailed plans to save hundreds of millions by 2027, with workforce reductions from attrition and early retirement, and no factories shuttering in the near term.
Chery said unpredictable government policies have stressed the company, leading to “distortions” such as firms double booking and holding excess capacity, and over-investment.
The U.S. and Europe have joined China in subsidizing their semiconductor sectors, with STMicroelectronics (NYSE: STM) a beneficiary of aid in Europe. However, Chery expects capital spending to decline over the next three years.
