Auto Sector’s Abrupt Recovery Taxed Chips Supply Everywhere: ST CEO

First-quarter global demand “continued to accelerate” in all the semiconductor end markets STMicroelectronics serves, “following the already faster and stronger than expected restart of demand” that began in 2020's Q3, said CEO Jean-Marc Chery on a Q1 call Thursday. “In automotive, the rebound from Q4 2020 was much faster than anticipated, and it has caused supply chain constraints across the entire semiconductor industry.”

The automotive rebound “was, and remains, broad-based, across all customers,” said Chery. The abrupt increase in the volume of cars being produced is driving the demand surge, as is “the replenishment of inventories across the automotive supply chain,” he said. A third factor is the semiconductor “content increase related to digitalization and electrification, as well as higher content in traditional cars, driven by accessories,” he said.

Q1 automotive demand “remained strong, with our bookings well above our current and planned manufacturing capacity,” said Chery. “Booking visibility is now extending to about 18 months.” In car digitalization, “we are focused on technologies and solutions for driver assistance and autonomous driving,” plus connected car communications “and embedded processing solutions supporting new domain controller or zone server car architectures,” he said.

In ST’s personal electronics sector, smartphones “more than ever” are an “essential source of social connection and streaming services for entertainment, fitness, gaming and music,” and 5G consumer adoption “remains the main driver for smartphones growth moving forward,” said Chery. ST also experienced persistently strong Q1 demand for other connected devices, including wearables, tablets, hearables, true wireless stereo headsets and game consoles, he said. Its two “strategic objectives” in personal electronics are to pursue “high-volume smartphone applications with differentiated products or custom solutions,” and address “high-volume applications,” such as smartwatches, he said.

ST’s Q1 revenue grew 35.2% to $3.02 billion, said Chery. “All product groups contributed to this growth, on continued acceleration of demand globally,” he said. In Q2, at the midpoint of its outlook, ST expects revenue to increase about 39% year over year to about $2.9 billion, he said. Driving the growth are “strong dynamics in all end markets we address,” he said. ST newly plans to invest about $2 billion in capital expenditures “to support the strong market demand and our strategic initiatives,” he said.