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The annual financial reports of the two original IC manufacturers are announced: “cold air” cannot stop the counter-cyclical expansion

The Lunar New Year has passed, and the majority of “IC people” have re-entered a busy working state. Just as winter turns to spring, the financial reports of major IC companies have also been released one after another. Earlier, ST and TI two major original financial reports have been announced. As the recognized “weather vane” of the electronics industry, their financial performance and latest developments not only reflect the reality of lower overall demand, but also reveal the hidden industrial opportunities in the down cycle.

ST: Stable growth, dual-handed layout for automotive and general use

Last year, the wind direction of the semiconductor industry turned sharply, but ST still achieved performance surpassing. In the fourth quarter of last year, ST’s revenue was US$4.42 billion, a year-on-year increase of 24.4%; net profit was US$1.25 billion, a year-on-year increase of 66.4%; last year, ST’s revenue was US$16.13 billion, an increase of 26.4% over the previous year; net profit was 39.6 billion U.S. dollars, an increase of 98%, and a gross profit margin of 47.3%, an increase of 5.6 percentage points.

Source: ST official financial report

Specific to each business, the automotive and discrete device division (ADG) benefited from the increase in product sales, with operating profit increasing by 117.9% to US$470.2 million, and operating profit margin rising from 17.6% in the previous year to 27.7%.

The Analog, MEMS and Sensing segment (AMS) saw an increase in sales of image sensors last year, while sales of analog and MEMS devices decreased. The final operating profit increased by 2.4% to $345.6 million, and the operating profit margin was 25.8%, compared with 27.0% in the previous year. The ratio has changed little.

The MCU and Digital IC Group (MDG) benefited from increased sales of MCU and RF radio frequency devices, and the final operating profit increased by 56.6% to 495.3 million US dollars. Operating margin was 35.8%, a significant increase from 29.5% in the previous year.

It can be seen from the above that the driving force for the growth of ST’s performance is mainly automotive electronics, and the decline in sales of analog and MEMS devices is also constantly sounding the alarm. The impact of the slump in consumer electronics will be more serious than previously expected. The poor destocking efficiency of the industry will also worsen the expectations of analog chips, which are recognized as more “cold resistant”. How to deal with these potential difficulties, ST’s recent measures have given relevant answers.

First of all, the opportunity for automotive chips still needs to be grasped. This year ST will increase capital expenditure by 16% to US$4 billion, mainly for increasing 12-inch wafer and SiC semiconductor production capacity. Such a “counter-cyclical layout” move makes people think of Samsung, and the pursuit of 12-inch wafers is quite a shadow of TI.

In addition to making a big attack, ST is also optimizing its product portfolio. At the beginning of January, it released a new entry-level 32-bit controller STM32C0 series, which is intended to replace the cost-sensitive applications for the original 8-bit and 16-bit machines. And now ST’s 8-bit machines and 16-bit machines are basically not listed as “not recommended for new designs”.

It can be seen that ST not only focuses on automotive applications, but also optimizes product lines for basic applications, which is also the key to continuously increasing profit margins. Especially in today’s domestic market with major alternatives, ST’s investment in basic applications will also play an important defensive role.

TI: A turning point emerges, countercyclical investment does not hesitate

The extension of inventory adjustment in the industrial chain has begun to affect the analog industry, as can be seen from the turning point in TI’s performance. In the fourth quarter of 2022, TI’s revenue was US$4.67 billion, a year-on-year decrease of 3%; net profit was US$1.96 billion, a year-on-year decrease of 8%. But fortunately, the annual revenue increased by nearly 10%, exceeding the US$20 billion mark, and the net profit also increased by 12.6% over the previous year.

Source: TI official financial report

TI’s hidden worries are reflected in the first year-on-year decline in the fourth quarter of last year after two years. In this regard, TI stated that demand in all end markets except automobiles was weak. Based on the reality, TI expects its revenue in the first quarter of this year to be between US$4.17 billion and US$4.53 billion. Compared with the US$4.905 billion revenue in the same period last year, even if the high value is taken, there will be a decrease of about 7.6%. It can be regarded as an inoculation to the outside world.

However, TI has not slowed down the pace of expansion. Last year, TI added two 12-inch fabs into production, including the RFAB2 plant in September and the LFAB plant in December, which shows that TI is not worried about the problems caused by “oversupply”. After all, TI currently maintains a $8.7 billion In terms of operating cash flow, the gross profit margin of nearly 70% is also the highest among analog manufacturers. With such an accumulation in the upward period, it is indeed very confident to do counter-cyclical expansion. Especially in the case of analog second brother ADI is also expanding production, it is more necessary for TI to constantly achieve self-transcendence.


According to the statistics of Gartner, a well-known industry organization, the total size of the semiconductor industry in 2022 has exceeded 600 billion US dollars, but compared with the slight increase of only 1% in 2021, it does make the establishment of this new high seem a bit weak. The recovery of consumer demand has not met expectations, which has already indicated that this year will be a year of adjustment and accumulation. A surge in industry size and then a fall back into the $500 billion range looks set to become a reality.

Judging from the financial reports of the two original manufacturers of ST and TI, automotive electronics is almost the only growth point, and the inventory adjustment of the consumer industry chain has not met expectations, which will pose a challenge to relatively strong fields such as simulation. In the view of IC Trading Network, the changes reflected in the financial reports of the two major manufacturers are worthy of attention, and the impact of this round of down cycle has exceeded previous expectations. The unprecedented headwind will be a critical moment for enterprises to compete for resilience.