STMicroelectronics raised its data-center revenue forecasts and pointed to a significant manufacturing restructuring that could add more than 400 basis points to gross margin over time, investors heard at Citi's Global TMT Conference on Wednesday.
Chief Financial Officer Lorenzo Grandi said third-quarter gross margin came in at 37 percent, weighed by about 70 basis points in inventory-unloading charges and roughly 50 basis points related to ongoing reshaping costs. The reshaping plan itself — which includes closing two 200 mm and two 150 mm silicon carbide fabs by late 2027 or early 2028 — is expected to deliver more than 400 basis points of improvement in the longer run. STMicroelectronics' long-term gross margin target remains in the mid-40s range.
The company also lifted its data-center outlook, now projecting revenue above $1 billion in 2026 and "well over" $2 billion in 2027. Grandi broke down data-center sales roughly 80 percent to MDRF products — connectivity-flow offerings including silicon photonics, microcontrollers and BiCMOS EIC — and about 20 percent to APMS products covering thermal and power flow. Power-flow solutions for the 800 V architecture portfolio used in AI data centers, meanwhile, are expected to begin contributing meaningful revenue sometime after 2028.
Silicon carbide, a cornerstone of STMicroelectronics' power-semiconductor push, is on track for 2026 revenue of €1.01 billion, up from double-digit growth already seen in 2025. Pricing in that segment is expected to stay flat to slightly higher through 2026 and 2027, with input-cost inflation largely offset by cost increases, Grandi said. Reshaping costs should become marginal by mid-2025.
Grandi also highlighted the strength of the company's satellite business, which is nearing €1 billion in annual revenue. Cumulative satellite revenue is expected to come in well above €3 billion over the next three years, with Starlink and SpaceX together accounting for roughly 90 percent of STMicroelectronics' market share in that segment.
Supply-demand imbalances remain a defining feature of the current cycle. Industrial lead times reached up to 50 weeks for some products, yet microcontroller channel inventory — including the popular STM32 line — was only 12 to 13 weeks, described as below normal levels. With demand outstripping capacity, "you may have the opportunity to increase price," Grandi said.
He added that long-term agreements covering one to three years give the company visibility into sustained top-line growth as it moves through 2027 and beyond.
STMicroelectronics shares have surged 101 percent year to date and 55 percent over the prior six months. The stock yields about 0.59 percent and has seen uninterrupted dividends for 28 consecutive years. Analyst price targets range from $52 to $98, implying potential upside of roughly 41 percent from the session's close.
