STMicroelectronics now expects to make about $1.3 billion this year from chips sold into AI data centres, chief executive Jean-Marc Chery told analysts on 29 October, as the company reported third-quarter revenue of $3.76 billion, up 17.9% on a year earlier.
The figure matters because ST is best known for car and industrial chips, which are only now recovering from a long slump. Its results release credits “company specific growth drivers, including AI datacenters and LEO satellite communication” for much of the year’s growth, and adds that demand “remains well above supply”. The Geneva-based company joins Samsung and SK hynix in reporting a quarter shaped by AI spending, though from a very different part of the market.
Optics and satellites drove the quarter
ST’s own newsroom release shows gross margin of 37.3%, up 410 basis points on a year ago, and operating income of $367 million. Net income was $291 million, or $0.31 a share. Excluding restructuring and acquisition costs, operating income was $429 million and earnings were $0.37 a share.
The fastest growth came from the segment that makes radio-frequency and optical communication chips. Its revenue rose 46.2% to $504 million, with an operating margin of 26.2%. By end market, communications equipment and computer peripherals, the category that holds data-centre and satellite sales, grew 64% on a year earlier and 14% on the previous quarter, according to ST’s prepared call remarks. Industrial revenue rose 40% and automotive 5%, while personal electronics fell 4%.
Not everything improved. The power and discrete segment, which includes silicon carbide, lost $81 million, and ST booked $55 million of charges for closing older factories and cutting costs.
The data-centre number has moved three times since June
ST has been raising its data-centre figure all year on its own channels. On 2 June it said it expected about $1 billion in 2026, against “nicely above $500 million” before. In its July results the figure became “above $1 billion”. Now the scripted remarks put it at “about $1.3 billion”, driven mainly by silicon photonics chips, electronic ICs, microcontrollers and power products.
The 2027 target in those remarks is still “well above $2 billion”, the same wording as in July, on the condition that “the current dynamic continues”. In the question-and-answer session, Chery went a little further, saying next year would be “well above the doubling this number”, according to Investing.com’s transcript of the call. He said ST would give a 2027 figure and an indication for 2028 in January.
Rémi El-Ouazzane, who runs the microcontroller and RF business, told analysts that ST was “probably the only at scale 12-inch SiPho player shipping right now”, referring to silicon photonics made on 300mm wafers, and that it planned to increase that capacity about fourfold year on year. On satellites he said the business would most likely be “capacity gated than demand gated” next year.
Q4 guidance points to a 25% jump
For the fourth quarter ST guides to revenue of $4.15 billion, plus or minus 350 basis points, which would be up about 10.5% on the third quarter and 24.7% on a year earlier. Gross margin should be about 39%. That would put full-year revenue at about $14.5 billion, up 22.8%.
On the call, Chery said the order backlog was “well above $20 billion”, with orders running at more than twice shipments overall. ST paid $83 million in dividends and bought back $91 million of shares in the quarter, and free cash flow was $351 million.
Optics, not cars, now sets ST’s pace
The interesting shift is where ST’s growth now comes from. For years its results moved with European carmakers and industrial customers. This quarter the strongest numbers were in optical and RF chips sold to cloud and satellite customers, and management spent much of the call on silicon photonics rather than electric vehicles.
That gives ST a stake in the same bottleneck that Corning described earlier this week: moving data between AI chips, which TSN has called the quiet bottleneck of the AI build-out. ST’s advantage, as it tells it, is manufacturing scale on 300mm wafers. The risk is that this is a capacity race, and ST’s own executives say supply, not demand, is the constraint.
The numbers also need some care. A $1.3 billion data-centre business is still under a tenth of ST’s expected $14.5 billion in revenue, and the steady upgrades since June rest on customer engagements ST does not name. Meanwhile margins are still well below the 44-46% ST targets, and the bigger gain from factory closures is not expected before late 2027.
ST reports fourth-quarter results on 28 January 2027, when it has promised a firm data-centre number for next year.
Sources
- STMicroelectronics, “STMicroelectronics Reports Q3 2026 Financial Results”, ST newsroom, 29 October 2026
- STMicroelectronics, Q3 2026 results release via GlobeNewswire, 29 October 2026
- STMicroelectronics, Q3 2026 earnings call prepared remarks (PDF), investors.st.com
- @ST_World, post on X, 29 October 2026
- Investing.com, “Earnings call transcript: STMicroelectronics posts revenue beat in Q3 2026”, 29 October 2026
- STMicroelectronics, “STMicroelectronics raises its revenue ambition for Data Centers amidst continued strong demand for AI infrastructure”, 2 June 2026
- STMicroelectronics, “STMicroelectronics Reports Q2 2026 Financial Results”, 23 July 2026
Related stories
- Samsung’s Q3 Profit Hits KRW 107.4trn, First Tech Firm Over 100trn
- SK hynix Tops 100 Trillion Won in Quarterly Revenue for the First Time
- Corning Says Gen AI Fibre Sales More Than Doubled in the Third Quarter
Follow @tsnmediahub on X for breaking AI news as it happens.
Follow on X
