STMicroelectronics forecasts $4.15bn quarter as AI data centres lift demand

STMicroelectronics expects fourth-quarter revenue of $4.15bn, up about 10.5% on the third quarter and above analysts’ forecasts. The Franco-Italian chipmaker says AI data centres and satellite makers are adding to a wider recovery in chip demand.

Third-quarter revenue rose 17.9% to $3.76bn, ST said on Thursday in its earnings statement . Operating income excluding one-off charges nearly doubled to $429m. Analysts polled by LSEG had expected $400.5m, Nathan Vifflin and Fabrizio La Rocca reported for Reuters .

“In an environment where demand remains well above supply, we continue to expand capacity aligned with ST’s strategic roadmap,” chief executive Jean-Marc Chery said in the statement.

The midpoint of the forecast puts full-year revenue at about $14.5bn, up 22.8%. ST names AI data centres and low-Earth-orbit satellite links as its own growth drivers.

Chery told analysts that ST now expects about $1.3bn in data centre revenue this year, Reuters reported. In July, it had forecast more than $1bn. He said silicon photonics chips, which use light to move data between servers, drove most of the demand. ST kept its 2027 goal of well above $2bn.

The earnings statement itself did not carry the new figure. Writing early on Thursday, Citi analyst Pavan Daswani said there was no update to the data centre outlook, Bloomberg reported.

Revenue in ST’s RF and optical communications unit rose 46.2% to $504m. Journalists asked Chery whether heavy AI spending can last. He said the data centre business depends on the biggest cloud companies, not the smaller neoclouds .

The business is “much more related to the top five hyperscalers than the neo-cloud business”, Chery said, according to Reuters.

Gross margin rose to 37.3% from 33.2% a year earlier. A better product mix and less idle factory capacity helped. ST expects about 39% in the fourth quarter.

Supply is tight and input costs are rising, so ST is raising prices on some products, finance chief Lorenzo Grandi said, Reuters reported. Chery said ST now plans equipment, materials and chemicals three to four years ahead. A push for “sovereign” supply chains free of China, Taiwan or the US makes that planning more complex, he said.

Chery told investors he has accepted a supervisory board proposal to stay on as chief executive for another year, Christina Kyriasoglou reported for Bloomberg. Shareholders will vote on it at the 2027 annual meeting. In February, the board hired a headhunter to find his successor, according to Corriere della Sera, as cited by Bloomberg.

In a separate announcement , ST named Remi El-Ouazzane chief technology officer and Marco Cassis chief strategic officer. Both changes take effect on 1 January 2027.

ST shares barely moved in Paris on Thursday morning, Bloomberg reported. The results follow a strong week for chipmakers riding AI demand. Samsung posted record profit on Thursday, and SK Hynix’s profit jumped on Wednesday. Rival Infineon committed €1.1bn to an Austrian plant on Tuesday.