Press Release: STMicroelectronics Reports Q3 2026 Financial Results
PR No: C3419C
STMicroelectronics Reports Q3 2026 Financial Results
-- Q326 net revenues at $3.76 billion -- Gross margin at 37.3% -- Operating income at $367 million (non-U.S. GAAP1 operating income at $429 million) -- Business outlook at mid-point: Q426 net revenues of $4.15 billion and gross margin of 39.0%
Geneva, October 29, 2026 -- STMicroelectronics N.V. ("ST") (NYSE: STM), a global semiconductor leader serving customers across the spectrum of electronics applications, reported U.S. GAAP financial results for the third quarter ended September 26, 2026. This press release also contains non-U.S. GAAP measures (see Appendix for additional information).
ST reported third quarter net revenues of $3.76 billion, gross margin of 37.3%, operating income of $367 million, and net income of $291 million or $0.31 diluted earnings per share (non-U.S. GAAP(1) operating income of $429 million, and non-U.S. GAAP(1) net income of $344 million or $0.37 diluted earnings per share).
Jean-Marc Chery, ST President & CEO, commented:
-- "Q3 net revenues came above the mid-point of our business outlook range, driven by higher revenues in CECP and Personal Electronics. Gross margin was above the mid-point of our business outlook range." -- "On a year-over-year basis, Q3 net revenues increased 17.9%. Q3 gross margin was 37.3%, operating margin was 9.8% and net income was $291 million. On a non-U.S. GAAP1 basis operating margin was 11.4% and net income was $344 million." -- "During the quarter, demand increased further supported by strong bookings and improving visibility, while inventory in distribution continued to track below our standard target. Together, these indicators confirm the continued ongoing recovery and secular growth across the markets we serve." -- "Our fourth quarter business outlook, at the mid-point, is for net revenues of $4.15 billion, increasing about 10.5% sequentially and about 24.7% year-over-year. Gross margin is expected to be about 39.0%, including about 40 basis points of unused capacity charges." -- "The mid-point of this outlook translates into full year 2026 revenues of about $14.5 billion, representing a 22.8% year-over-year increase. Beyond the cyclical recovery across our end markets, the year-over-year growth is supported by ST's company specific growth drivers, including AI datacenters and LEO satellite communication. Gross margin is expected to be about 36.4%, non-U.S. GAAP1 gross margin is expected to be about 36.6%, representing an improvement of 270 basis points versus FY25." -- "In an environment where demand remains well above supply, we continue to expand capacity aligned with ST's strategic roadmap. We remain focused on improving profitability consistent with our intermediate financial model. This is driven by our company-specific growth drivers and the execution of our company-wide program to reshape our manufacturing footprint and resize our global cost base."
Quarterly Financial Summary
U.S. GAAP (US$ m, except per share data) Q3 2026 Q2 2026 Q3 2025 Q/Q Y/Y -------------------------------- ------- ------- ------- ------- ------- Net Revenues $3,757 $3,487 $3,187 7.7% 17.9% -------------------------------- ------- ------- ------- ------- ------- Gross Profit $1,401 $1,215 $1,059 15.3% 32.2% -------------------------------- ------- ------- ------- ------- ------- Gross Margin 37.3% 34.8% 33.2% 250 bps 410 bps -------------------------------- ------- ------- ------- ------- ------- Operating Income $367 $187 $180 96.4% 104.5% -------------------------------- ------- ------- ------- ------- ------- Operating Margin 9.8% 5.4% 5.6% 440 bps 420 bps -------------------------------- ------- ------- ------- ------- ------- Net Income $291 $222 $237 31.2% 22.8% -------------------------------- ------- ------- ------- ------- ------- Diluted Earnings Per Share $0.31 $0.24 $0.26 29.2% 19.2% -------------------------------- ------- ------- ------- ------- ------- Non-U.S. GAAP(1) (US$ m, except per share data) Q3 2026 Q2 2026 Q3 2025 Q/Q Y/Y -------------------------------- ------- ------- ------- ------- ------- Gross Profit $1,401 $1,229 $1,059 14.0% 32.2% -------------------------------- ------- ------- ------- ------- ------- Gross Margin 37.3% 35.2% 33.2% 210 bps 410 bps -------------------------------- ------- ------- ------- ------- ------- Operating Income $429 $269 $217 59.3% 98.0% -------------------------------- ------- ------- ------- ------- ------- Operating Margin 11.4% 7.7% 6.8% 370 bps 460 bps -------------------------------- ------- ------- ------- ------- ------- Net Income $344 $291 $267 17.9% 28.7% -------------------------------- ------- ------- ------- ------- ------- Diluted Earnings Per Share $0.37 $0.31 $0.29 19.4% 27.6% -------------------------------- ------- ------- ------- ------- -------
Third Quarter 2026 Summary Review
Net Revenues by Reportable Segment(2) Q3 Q2 Q3 (US$ m) 2026 2026 2025 Q/Q Y/Y -------------------------------------------- -------- -------- -------- ------- ------- Analog products, MEMS and Sensors (AM&S) segment 1,560 1,426 1,434 9.4% 8.8% -------------------------------------------- -------- -------- -------- ------- ------- Power and discrete products (P&D) segment 477 464 429 2.8% 11.3% -------------------------------------------- -------- -------- -------- ------- ------- Subtotal: Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group 2,037 1,890 1,863 7.7% 9.4% -------------------------------------------- -------- -------- -------- ------- ------- Embedded Processing (EMP) segment 1,212 1,147 976 5.7% 24.1% -------------------------------------------- -------- -------- -------- ------- ------- RF Optical Communications (RFOC) segment 504 445 345 13.4% 46.2% -------------------------------------------- -------- -------- -------- ------- ------- Subtotal: Microcontrollers, Digital ICs and RF products (MDRF) Product Group 1,716 1,592 1,321 7.8% 29.9% -------------------------------------------- -------- -------- -------- ------- ------- Others 4 5 3 - - -------------------------------------------- -------- -------- -------- ------- ------- Total Net Revenues $3,757 $3,487 $3,187 7.7% 17.9% -------------------------------------------- -------- -------- -------- ------- -------
Net revenues totaled $3.76 billion, representing a year-over-year increase of 17.9%. Year-over-year net sales to OEMs and Distribution increased 10.2% and 38.8%, respectively. On a sequential basis, net revenues increased 7.7%, 150 basis points better than the mid-point of ST's guidance.
Gross profit totaled $1.40 billion, representing a year-over-year increase of 32.2%. Gross margin of 37.3%, increased 410 basis points year-over-year, mainly due to lower unused capacity charges and better product mix.
Operating income increased from $180 million in the year-ago quarter to $367 million. ST's operating margin increased on a year-over-year basis to 9.8% of net revenues, compared to 5.6% in the third quarter of 2025. Operating income included $55 million impairment, restructuring charges and other related phase-out costs for the quarter, mainly reflecting charges related to the execution of our company-wide program to reshape our manufacturing footprint and resize our global cost base and $7 million purchase price allocation (PPA) effects from the acquisition of NXP's MEMS sensor business. Excluding these items, non-U.S. GAAP(1) Operating income stood at $429 million in the third quarter (or 11.4% non-U.S. GAAP(1) operating margin).
By reportable segment, compared with the year-ago quarter:
In Analog, Power & Discrete, MEMS and Sensors (APMS) Product Group:
Analog products, MEMS and Sensors (AM&S)(2) segment:
-- Revenue increased 8.8% mainly due to MEMS and, to a lesser extent, Analog and Imaging. -- Operating profit decreased by 0.6% to $219 million. Operating margin was 14.1% compared to 15.4%.
Power and Discrete products (P&D) segment:
-- Revenue increased 11.3%. -- Operating results decreased from a loss of $67 million to a loss of $81 million. Operating margin was -17.1% compared to -15.6%.
In Microcontrollers, Digital ICs and RF products (MDRF) Product Group:
Embedded Processing (EMP) segment:
-- Revenue increased 24.1% mainly due to General Purpose MCU. -- Operating profit increased by 74.2% to $280 million. Operating margin was 23.1% compared to 16.5%.
RF Optical Communications (RFOC) segment:
-- Revenue increased 46.2%. -- Operating profit increased by 131.2% to $132 million. Operating margin was 26.2% compared to 16.6%.
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Press Release: STMicroelectronics Reports Q3 2026 -2-
Net income and diluted Earnings Per Share increased to $291 million and $0.31 respectively, compared to $237 million and $0.26 respectively in the year-ago quarter. In the third quarter of 2026 non-U.S. GAAP(1) Net income stood at $344 million and non-U.S. GAAP(1) diluted Earnings Per Share stood at $0.37.
Cash Flow and Balance Sheet Highlights
Trailing 12 Months
------------- -------- -------- --------- --------------------------------
Q3 Q2 TTM
(US$ m) 2026 2026 Q3 2025 Q3 2026 Q3 2025 Change
------------- -------- -------- --------- --------- --------- ----------
Net cash
from
operating
activities 1,020 502 549 2,730 2,158 26.5%
------------- -------- -------- --------- --------- --------- ----------
Free cash
flow
(non-U.S.
GAAP(1) ) 351 75 130 (40)(2) 136 -
------------- -------- -------- --------- --------- --------- ----------
Net cash from operating activities was $1.02 billion in the third quarter compared to $549 million in the year-ago quarter.
Net Capex (non-U.S. GAAP(1) ), was $643 million in the third quarter compared to $401 million in the year-ago quarter.
Free cash flow (non-U.S. GAAP(1) ) was positive at $351 million in the third quarter compared to positive $130 million in the year-ago quarter.
Inventory at the end of the third quarter was $3.25 billion, compared to $3.19 billion in the previous quarter and $3.17 billion in the year-ago quarter. Days sales of inventory at quarter-end was 126 days, same as the previous quarter and compared to 135 days for the year-ago quarter.
In the third quarter, ST paid cash dividends to its stockholders totaling $83 million and executed a $91 million share buyback, as part of its current share repurchase program.
ST's net financial position (non-U.S. GAAP(3) ) remained strong at $2.11 billion as of September 26, 2026, compared to $2.01 billion as of June 27, 2026, and reflected total liquidity of $5.31 billion and total financial debt of $3.21 billion. Adjusted net financial position (non-U.S. GAAP(1) ), taking into consideration the effect on total liquidity of advances from capital grants for which capital expenditures have not been incurred yet, stood at $1.81 billion as of September 26, 2026.
Following the exercise of the call option for the early redemption of ST's convertible debt due in 2027, bondholders exercised their conversion rights on the total of $750 million convertible bonds. ST settled the bond on a net-share basis, delivering $750 million in cash and about 4.2 million shares from treasury stock.
Business Outlook
ST's guidance, at the mid-point, for the 2026 fourth quarter is:
-- Net revenues are expected to be $4.15 billion, an increase of 10.5% sequentially, plus or minus 350 basis points. -- Gross margin of 39.0%, plus or minus 200 basis points. -- This outlook is based on an assumed effective currency exchange rate of approximately $1.14 = EUR1.00 for the 2026 fourth quarter and includes the impact of existing hedging contracts. -- The fourth quarter will close on December 31, 2026.
This business outlook does not include any impact of potential further changes to global trade tariffs compared to the current situation.
Conference Call and Webcast Information
ST will conduct a conference call with analysts, investors and reporters to discuss its third quarter 2026 financial results and current business outlook today at 9:30 a.m. Central European Time (CET) / 3:30 a.m. U.S. Eastern Time (ET). A live webcast (listen-only mode) of the conference call will be accessible at ST's website, https://investors.st.com, and will be available for replay until November 13, 2026.
Use of Supplemental Non-U.S. GAAP Financial Information
This press release contains supplemental non-U.S. GAAP financial information.
Readers are cautioned that these measures are unaudited and not prepared in accordance with U.S. GAAP and should not be considered as a substitute for U.S. GAAP financial measures. In addition, such non-U.S. GAAP financial measures may not be comparable to similarly titled information from other companies. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with ST's consolidated financial statements prepared in accordance with U.S. GAAP.
See the Appendix of this press release for a reconciliation of ST's non-U.S. GAAP financial measures to their corresponding U.S. GAAP financial measures.
Forward-looking Information
Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended) that are based on management's current views and assumptions, and are conditioned upon and also involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those anticipated by such statements due to, among other factors:
-- changes in global trade policies, including the continuation, adoption and expansion of tariffs and trade barriers and sanctions, that are affecting and could further affect the macro-economic environment and are adversely impacting and could further adversely impact the demand for our products; -- uncertain macro-economic and industry trends (such as inflation and fluctuations in supply chains), which are impacting and may further impact production capacity and end-market demand for our products; -- customer demand that differs from projections which may require us to undertake transformation measures that may not be successful in realizing the expected benefits in full or at all; -- the ability to design, manufacture and sell innovative products in a rapidly changing technological environment; -- changes in economic, social, public health, labor, political, or infrastructure conditions in the locations where we, our customers, or our suppliers operate, including as a result of macro-economic or regional events, geopolitical and military conflicts, social unrest, labor actions, or terrorist activities; -- unanticipated events or circumstances, which may impact our ability to execute our plans and/or meet the objectives of our research and development and manufacturing programs, which benefit from public funding; -- financial difficulties with any of our major distributors or significant curtailment of purchases by key customers; -- the loading, product mix, and manufacturing performance of our production facilities and/or our required volume to fulfill capacity reserved with suppliers or third-party manufacturing providers; -- availability and costs of equipment, raw materials, utilities, third-party manufacturing services and technology, or other supplies required by our operations (including increasing costs resulting from inflation); -- the functionalities and performance of our IT systems, which are subject to cybersecurity threats and which support our critical operational activities including manufacturing, finance and sales, and any breaches of our IT systems or those of our customers, suppliers, partners and providers of third-party licensed technology; -- theft, loss, or misuse of personal data about our employees, customers, or other third parties, and breaches of data privacy legislation; -- the impact of intellectual property claims by our competitors or other third parties, and our ability to obtain required licenses on reasonable terms and conditions; -- changes in our overall tax position as a result of changes in tax rules, new or revised legislation, the outcome of tax audits or changes in international tax treaties which may impact our results of operations as well as our ability to accurately estimate tax credits, benefits, deductions and provisions and to realize deferred tax assets; -- variations in the foreign exchange markets and, more particularly, the U.S. dollar exchange rate as compared to the Euro and the other major currencies we use for our operations; -- the outcome of ongoing litigation as well as the impact of any new litigation to which we may become a defendant; -- product liability or warranty claims, claims based on epidemic or delivery failure, or other claims relating to our products, or recalls by our customers for products containing our parts; -- natural events such as severe weather, earthquakes, tsunamis, volcano eruptions or other acts of nature, the effects of climate change, health risks and epidemics or pandemics in locations where we, our customers or our suppliers operate; -- increased regulation and initiatives in our industry, including those concerning climate change and sustainability matters and our goal to become carbon neutral in all direct and indirect emissions (scopes 1 and 2), product transportation, business travel, and employee commuting emissions (our scope 3 focus), and to achieve our 100% renewable electricity sourcing goal by the end of 2027; -- epidemics or pandemics, which may negatively impact the global economy in a significant manner for an extended period of time, and could also materially adversely affect our business and operating results; -- industry changes resulting from vertical and horizontal consolidation
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