STMicroelectronics NYSE: STM reported first-quarter 2026 net revenues of $3.1 billion, supported by stronger-than-expected results in personal electronics engaged customer programs and in communications equipment and computer peripherals, while also closing its acquisition of NXP’s MEMS sensor business during the quarter.
Jean-Marc Chery, ST’s president and CEO, said Q1 revenue included about $40 million from the acquired NXP MEMS sensor business. Excluding that contribution, Chery said net revenues were above the midpoint of the company’s outlook range on a sequential basis. Gross margin was 33.8%, or 34.1% excluding purchase price allocation (PPA) impacts tied to the acquisition.
Q1 results: mix and bookings highlighted amid acquisition-related cash use
Chery said the company saw “strong booking momentum during Q1 with book-to-bill well above one across all end markets and regions,” adding that the quarter’s demand did not show signs of pull-ins. He also said inventories in distribution had continued to decline and were “now normalized,” while inventory on the balance sheet increased slightly.
Free cash flow was negative in the quarter due largely to the acquisition payment. Chery reported free cash flow of -$720 million, “including $895 million cash out related to the payment of our acquisition of NXP’s MEMS sensor business.” CFO Lorenzo Grandi reported free cash flow of -$723 million, compared with $30 million in the year-ago quarter, also citing the acquisition cash outflow.
On profitability, Grandi said gross margin improved 40 basis points year-over-year to 33.8% due mainly to “lower unused capacity charges and better product mix,” but declined 140 basis points sequentially. He added that Q1 gross margin included about 50 basis points of negative impact from a non-recurring cost related to manufacturing reshaping programs, and he said that headwind is expected to remain at a similar level over the rest of the year.
ST reported Q1 operating income of $70 million, which included $71 million of impairment, restructuring charges and other related phase-out costs tied to the company’s manufacturing footprint and cost-base reshaping program, as well as $30 million of PPA effects. Excluding those items, Grandi said non-US GAAP operating income was $171 million, for a 5.5% non-US GAAP operating margin.
Net income was $37 million, compared with $56 million a year earlier. Diluted EPS was $0.04 versus $0.06 in the prior-year quarter, while non-US GAAP diluted EPS was $0.13, according to management.
End-market performance: communications strength offsets seasonal personal electronics and softer auto
Chery described mixed sequential performance across end markets in Q1, with a notable upside in communications equipment and computer peripherals. Automotive revenue declined 10% sequentially but increased 15% year-over-year, which Chery characterized as “the return to year-over-year growth.” He pointed to design momentum across electric, hybrid, and traditional vehicles, including onboard chargers, DC/DC converters, powertrain functions, and vehicle control electronics.
Industrial revenue decreased 1% sequentially and improved 26% year-over-year, with Chery citing design wins across industrial automation and robotics, building automation, power systems, healthcare, and home appliances. He also highlighted a collaboration with NVIDIA to integrate ST sensors, microcontrollers, and motor control solutions with NVIDIA’s robotics ecosystem, aimed at helping developers build humanoid robots and other “physical AI systems.”
Personal electronics revenue fell 14% sequentially due to seasonality in engaged customer programs, but rose 21% year-over-year as ST’s content increased, Chery said. Communications equipment and computer peripherals revenue rose 3% sequentially and 41% year-over-year, and Chery said the segment was above the company’s expectations.
Grandi provided segment detail, noting year-over-year growth in Analog, MEMS and Sensors (up 23.2%), Embedded Processing (up 31.3%), and RF & Optical Communications (up 33.9%), while Power & Discrete decreased 1.8% year-over-year. On a sequential basis, all reportable segments declined except communications end market, with decreases led by Analog products, MEMS and Sensors (down 9.1%) and RF & Optical Communications (down 9%).
AI infrastructure, cloud engagements, and photonics ramp emphasized
Management repeatedly framed 2026 and 2027 as years of expanding AI-infrastructure revenue, spanning power, control, and optical interconnect technologies. Chery reiterated that ST expects data center revenue “to be nicely above $500 million for 2026 and well above $1 billion for 2027.”
Chery said ST expanded its strategic engagement with Amazon Web Services through a “multi-year, multi-billion-dollar commercial engagement” aimed at enabling new high-performance compute infrastructure for cloud and AI data centers, covering “a broad range of semiconductor solutions.” He also cited multiple design wins for silicon and silicon-carbide-based power solutions, an expansion of ST’s 800 VDC AI data center power conversion portfolio with 12V and 6V architectures “in collaboration with NVIDIA,” and the start of high-volume production for ST’s silicon photonics-based PIC100 platform used by hyperscalers for optical interconnect.
In the Q&A, Chery told analysts that optical connectivity is beginning to contribute, noting that since Q1 it has been “mainly through the high-performance microcontroller,” with more contribution from photonics and BiCMOS expected next. Later, responding to questions about upside and constraints, he said demand for 2026 and 2027 is “unconstrained” and above the company’s current targets, but ST must ramp installed capacity and add more capacity in the second half to fulfill as much demand as possible.
Marco Cassis, president of the Analog, Power & Discrete, MEMS and Sensors Group, said ST has expanded its power portfolio over the past year to cover “from grid up to driving the GPUs,” spanning silicon, silicon carbide, new packages, and gallium nitride (GaN). Cassis said GaN is “important for the 800 volts,” with sockets expected to “come to life during this year and next year,” and he said the positioning should translate into revenues in 2026 “but mainly during 2027.”
NXP MEMS acquisition, pricing, and 2026 outlook
On the NXP MEMS sensor acquisition, Chery said the acquired technology is “highly complementary” and strengthens ST’s automotive sensor business, with integration progressing as planned. Cassis said the combination is expected to accelerate design-in and design-win opportunities, pointing to NXP’s accelerometer positioning and ST’s capabilities in six-axis sensing. He said the acquired business had grown at “low single-digit growth,” consistent with safety applications in automotive, and said ST expects that growth to accelerate.
On pricing, Grandi said the company previously expected low- to mid-single-digit price declines, but the environment has improved, with “some selected price increase” and an updated view for a “very low single-digit” price decline overall. In response to follow-up questions, Grandi said pricing was “quite neutral” in the Q1-to-Q2 gross margin dynamic, with mix and lower unused capacity charges as positives, partially offset by temporary manufacturing inefficiencies tied to footprint reshaping.
For Q2 2026, Chery guided to revenues of $3.45 billion plus or minus 350 basis points, implying 11.6% sequential growth and 24.9% year-over-year growth at the midpoint. Gross margin is expected to be about 34.8% plus or minus 200 basis points, including about 100 basis points of unused capacity charges; non-US GAAP gross margin is expected around 35.2%.
Grandi said Q2 non-US GAAP net operating expenses are expected between $950 million and $960 million, driven by calendar effects, startup costs, and an incremental month of NXP MEMS operating expenses. For full-year 2026, he said ST now expects like-for-like net operating expenses to rise mid- to high-single-digit year-over-year, versus a prior expectation for a low single-digit increase; including the acquisition and exchange-rate effects, net OpEx is expected to be up low double-digit year-over-year. Despite that, Grandi said the OpEx-to-sales ratio in 2026 is expected to “materially” decline versus 2025.
Chery said that despite macroeconomic uncertainty, ST saw improving demand and expects Q2 revenues “well above average seasonality” along with higher gross margin. He added that the company expects 2026 revenue to show double-digit growth, driven by both engaged customer programs and new AI programs.
Separately, Chery said ST will host a dedicated call on May 4 focused on its low-Earth-orbit satellite opportunity, where the company aims to achieve “well above $3 billion cumulative revenues over the period 2026 to 2028.”
About STMicroelectronics NYSE: STM
STMicroelectronics is a global semiconductor company headquartered in Geneva, Switzerland, formed through the 1987 merger of SGS Microelettronica and Thomson Semiconducteurs. The company designs, develops and manufactures a broad range of semiconductor products and solutions that serve multiple end markets worldwide. ST's offerings span from basic components to integrated systems, emphasizing energy-efficient and high-performance devices for modern electronics.
Product categories include microcontrollers (notably the widely used STM32 family), analog and mixed-signal ICs, power MOSFETs and power-management devices, MEMS and sensors, image sensors, and discrete semiconductors.
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