Tuesday, May 10, 2022

An International Equity holding: STMicroelectronics NV ADR RegS (STM, $37.64): “ST(MEMS)” By: Kevin Igoe, AIM Student at Marquette University

 STMicroelectronics NV ADR RegS (STM, $37.64): “ST(MEMS)”

By: Kevin Igoe, AIM Student at Marquette University

Disclosure: The AIM International Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it, and I have no business relationship with any company whose stock is mentioned in this article.


  • STMicroelectronics NV ADR RegS (NYSE: STM) designs, develops, manufactures, and markets products, which offers discrete and standard commodity components, application-specific integrated circuits, full custom devices and semi-custom devices for analog, digital and mixed-signal applications.
  • STM has seen a variety of wins in their automotive segment through new microcontrollers and power modules.
  • STM intends to target industry leaders within the industrial industry with leading-edge products adapted to their needs. 
  • STM is currently on track with their 2022 plans in revenues and CAPEX investments to sustain short- and long-term growth. 

Key points:  STM through Q1 2022 has earned designed wins with their power modules and module maker using Gen3 SiC MOSFET technology EV Traction Inverter applications.  What this technology does is help eliminate tail current during switching which results in faster operation, reduced switching loss, and increased stabilization.  Along with this effective use of new technology STM has also designed their next-generation stellar automotive MCU into a new zonal architecture for software-defined vehicles.     

In STM’s latest earnings presentation they explained for their industrial segment they ranked number one worldwide in general purpose microcontrollers for 2021.  While also introducing their first intelligent sensor processing unit with Gen3 MEMS.  MEMS is a process technology used to create tiny integrated devices or systems that combine mechanical and electrical components helping their products become more efficient and in return attractive to customers. Finally, STM has grown their sockets in various industrial applications helping them target the growing markets of renewable energy and power saving technologies.

STM has planned to invest about $3.4 to $3.6 billion in CAPEX to increase the production capacity and strategic initiatives.  The first of their investments being in their new industrialization line located in Italy.  Based on the strong demand from customers and planned future investments STM has a goal of revenues for 2022 to be in the range from $14 billion to $15 billion.  This target goal would mean a growth of about 17%.  After quarter one 2022 they have done $3.55 billion in revenue currently being on track with their projected growth for the current year.     

What has the stock done lately?

In the past week STM has seen an increase of 3.32% after releasing earnings for quarter one fiscal year 2022 on April 27th.  The company reported EPS of $0.79 and revenue of $3.55 billion beating estimates in both categories.  This could be the momentum boost the companies needed after decreasing 11.79% in the past month.     

Past Year Performance:

STM year to date has decreased 25.02%.  This has been closely related to the current semiconductor shortage that has been going on for the last year and a half.  The reduction in car sales has also impacted STM’s automotive segment operations.     

Source: FactSet

My Takeaway

I believe STM is well suited for the future with the semiconductor industry taking a large impact from implications relating to the Covid-19 pandemic.  Research has shown that the global semiconductor should grow about 10% through the end of 2022 proving there is growth opportunities for STM to potentially capitalize on.  With their impressive revenue in quarter one staying on track with management’s plan to reach about $14 billion in total revenue for 2022 and advancements being made in the automotive and industrial industries I believe STM has tremendous opportunities for growth. 

Source: FactSet