STMicroelectronics recently reported its third-quarter revenue, and its results topped the estimate it offered back in July by 9 percent. The chipmaker said its growth is due to surging demand for its automotive, personal electronics, and microcontroller products.
The Geneva, Switzerland-based company also offered a forecast for the fourth-quarter that anticipates meaningful year-over-year growth.
ST’s Expectation Beating Q3 results
In the previous period, ST generated $2.66 billion in revenue, which represents 4.4 percent growth year-over-year. Three months ago, the firm offered guidance that it would only make $2.45 billion during Q3. In addition, Wall Street believed it would only bring in $2.26 billion in sales.
Jean-Marc Chery, ST’s president and CEO, said the appeal of the company’s products helped it outpace internal and external expectations.
On a sequential basis, the chipmaker recorded significant increases in its automotive (17 1.1 percent), analog component (59.8 percent), and microcontroller (11.2 percent) group revenue. The manufacturer also saw annual sales upswings in the latter two categories of 3 and 18.6 percent.
Like many vehicle semiconductor makers, the firm’s business suffered as a result of the coronavirus pandemic. The global health crisis temporarily suspended transport production and negatively affected consumer behavior, which curtailed end-market interest in its offerings. But ST has seen a bounce back in demand for its core products in Q3 along with its fellow automotive sector providers NXP Semiconductors and Xilinx.
The company’s gross income also received a boost because some of its high profile clients have been doing well recently. As a component vendor for Tesla and Apple, the vendor likely saw a sales increase as both corporations ramped up their manufacturing efforts last period to meet strong demand.
Growth Continuing in Q4
For the December quarter, ST predicts it will sell $2.99 billion in products, which represents quarter-over quarter-growth of 12 percent and an annual expansion of 8.72 percent. The company believes it will take in $9.97 billion for full-year 2020, a year-over-year improvement of 4.3 percent.
Citi analyst Amit Harchandani said the firm’s Q4 forecast beats Wall Street’s projection by around 9 percent.
ST explained it anticipates sales growth from all of its segments, aside from its radiofrequency communications unit. That indicates the chipmaker’s partners intend to manufacturer a lot of products heading into 2021.
The manufacturer also believes its growth phase will be strong enough to help it weather Huawei’s loss. Last month, the U.S. Department of Commerce issued new rules to penalize firms for selling certain technology to the Chinese corporation without its authorization. Chery said his company has abided by the new regulations, and its Q4 outlook accounts for the loss of the telecom’s business.
ST’s ability to not just maintain but grow its income despite losing a consistent customer indicates it will exit 2020 in good shape.