STMicroelectronics, a global semiconductor leader, has reported a sharp drop in its financial performance for the first quarter of 2025.

The company recorded net revenues of $2.52 billion for Q1 2025, a steep 27.3 per cent decrease compared to the $3.47 billion posted in the same quarter last year. Gross profit dropped by 41.7 per cent to $841 million, while operating income nosedived 99.5 per cent year-on-year to just $3 million. Net income also plummeted by 89.1 per cent to $56 million, translating to earnings per share of $0.06 – down from $0.54 in Q1 2024.

ST CEO Jean-Marc Chery described the quarter as "the bottom": "While we see Q1 2025 as the bottom, in the current uncertain environment we are focusing on what we can control."

The Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group saw revenues fall by 28 per cent year-on-year to $1.47 billion. Within that, the Power and Discrete products segment reported the sharpest decline, with revenue plunging 37.1 per cent and turning in an operating loss of $28 million.

In the Microcontrollers, Digital ICs and RF products (MDRF) Product Group, revenues declined by 26.5 per cent to $1.05 billion. Embedded Processing suffered a 29.1 per cent drop in revenue, while RF & Optical Communications fell by 19.2 per cent.

Margins under pressure

ST’s gross margin dropped to 33.4 per cent, down from 41.7 per cent a year earlier, largely attributed to product mix issues and unused capacity charges. Operating margin collapsed to 0.1 per cent, compared to 15.9 per cent in Q1 2024.

The company also reported higher inventory levels, with days sales of inventory increasing to 167 days – a significant jump from 122 days in the same period last year.

Cautious optimism for Q2

Looking ahead, STMicroelectronics expects second-quarter revenues of approximately $2.71 billion, representing a 7.7 per cent sequential increase but still down 16.2 per cent year-on-year. The gross margin is projected to remain at 33.4 per cent, with further impact expected from unused capacity charges.

Despite the earnings slump, ST maintains a solid financial footing with a net financial position of $3.08 billion and total liquidity of $5.96 billion. Free cash flow turned positive at $30 million, compared to negative $134 million in Q1 2024.

The company continued returning value to shareholders, paying out $72 million in dividends and executing a $92 million share buy-back in the quarter.

ST’s second-quarter results are scheduled for release on 24th July 2025.