STMicroelectronics reports the legacy automotive and industrial market were softer than expected, but imaging drives sequential quarterly growth.
Announcing its Q2 2019 results today, STMicroelectronics said it returned to sequential growth thanks to its specialized imaging sensors, as well as from RF products in end-modules, silicon carbide MOSFETs and digital automotive. However, the global slowdown in car registrations has impacted its legacy automotive market.
ST’s Q2 2019 net revenue was $2.17 billion, which is up 4.7% quarter on quarter but down 4.2% compared to the same quarter last year. Despite the automotive market turmoil, Jean-Marc Chery, president & CEO of STMicroelectronics said he was expecting 15.3% sequential growth for the third quarter, which some analysts noted is a record quarterly growth figure for ST in recent years.
On image sensing, Chery said ST had at least an imaging sensor and/or MEMS device in all of the top 10 smartphones currently on the market. He added, “We had multiple wins for motion and pressure sensors in the flagship models from many of the world’s top smartphone and wearable manufacturers. We also continued to earn design wins and ramp shipments for our time of flight sensors, analog products and RF products for 4G front-end modules.”
On 5G, ST is seeing a positive trend of demand acceleration for 5G smartphones in Asia, and more broadly won multiple ASIC designs for 5G infrastructure, 5G smartphones and Wi-Fi routers.
The industrial market also softened in Q2 for ST, the result of inventory corrections at distributors for its analog portfolio and general-purpose microcontrollers. But Chery said he expects this correction to be over in the third quarter, based on positive signs it started seeing in March for point-of-sales distributors worldwide, except in Europe. Chery highlighted a number of design wins in industrial, including metering and digital power solutions for LED lighting and power supply, as well as in industrial power and energy management with numerous design wins for power discretes.
Opposing dynamics in automotive
Chery made a point of highlighting the soft automotive market and its two opposing dynamics — the declining legacy market, and the growing market for car electrification and digitalization. Globally, car registrations were down around 7% in the first half of 2019, while China specifically saw a decline of around 12%; Europe also deteriorated in the demand for legacy automotive products.
He said, “The car industry is going through an important transition, from combustion engine cars to hybrid and electric cars.” Chery added that this change will be even more pronounced in the next few quarters and that ST is well positioned to address this.
ST had a number of design wins in car electrification during Q2, including a key component in an EV inverter application, as well as MOSFETS and power modules. It also had a number of designs in on-board charging applications at American, Korean and Chinese car makers and Tier 1s. For silicon carbide products, it continued to increase revenues and design-in activities, with 33 ongoing programs for both automotive and industrial, putting it on track for $200 million revenue this year.
Highlighting the megatrends going into 2020, Chery said he is confident that the automotive market will improve, though not at the pace that they expect and certainly not getting back to normal. “But digitalization of the car will grow, so the industry will come out of this and recover.” On industrial, he said the rollout of factory automation was not as expected and will be pushed out. However, on 5G, he commented that deployment will continue to accelerate in 2020.