Q2 2025 STMicroelectronics NV Earnings Call

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Moira: Ladies and gentlemen, welcome to the STMicroelectronics second quarter 2025 earnings release conference call and live webcast. I am Moira, the call's call operator. I would like to remind you that all participants will be in listen-only mode and the conference has been recorded.

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Jerome Ramel: At this time, it's my pleasure to hand over to Jerome Ramel, EVP Corporate Development and Integrated External Communications. Please go ahead. Thank you, Maira.

Speaker Change: The conference must not be recorded for publication or broadcast at this time. It's my pleasure to hand over to Jaron raml EVP, corporate development, and integrated external Communications. Please go ahead.

Jerome Ramel: Thank you, everyone, for joining our second quarter 2025 Financial Results Call.

Moira: Hosting the call today is Jean-Marc Chéry, ST President and Chief Executive Officer. Joining Jean-Marc on the call today are Lorenzo Grandi, President and CFO, and Marco Cassis, President, Analog Power and Distribute, MEMS and Censor Group, and Head of STMicroelectronics Strategy, System Research and Application and Innovation Office.

Myra: Thank you Myra. Thank you, everyone, for joining, your 7 quarter 2025 Financial results. Call hosting the call today, and chief executive officer.

Moira: These live webcasts and presentation materials can be accessed on each investor relation web. A replay will be available shortly after the conclusion of this.

John Mark: Joining John Mark on the call today are Lorenzo grandi president and CFO and Marco Cassis. Credited analog power on discrete me and sensor group and head of micro Electronics, strategy, system, research, and application, and Innovation office.

John Mark: This live webcast and presentation, material can be accessed on SG investor relation website.

Moira: This call will include forward-looking statements that involve risk factors that could cause ST results to differ materially from management expectations and We encourage you to review the safe harbor statement contained in the press release that was issued with the results this morning, and also in STMO's recent regulatory filing for a full description of this risk package.

John Mark: Every player will be available shortly after the conclusion of this call.

John Mark: This call will include 4 looking statements. That involve risk factors that could cause STD results to J, refer materially for management expectation and plans.

Moira: Also, to ensure all participants have an opportunity to ask questions during the Q&A session, please limit yourself to one question and a brief follow-up.

We encourage you to review the Safe Harbor statement contained in the press release. That's what issued with the results this morning. And also in estim most recent regulatory feeling filings for a full description of this risk factors.

Gianmarco Bonacina: Now I'd like to turn the call over to Jean Marchéry, ST President and CEO. Thank you, Jerome. Good morning, everyone. And thank you for joining us for our Q2 2025 earnings conference call. I will start with an overview of the second quarter, including business dynamics. I will then hand over to Lorenzo for the detailed financial overview and will then comment on the outlook and conclude before answering your questions. So starting with Q2. We delivered revenues at $2.77 billion. $56 million above the midpoint of our business outlook range. with automotive slightly below our expectations, which was customer specific.

John Mark: Also to ensure all participants have an opportunity to ask question during the Q&A session, please limit yourself to 1 question and a brief follow-up.

John Mark: Now I'd like to turn the call over to Jeanne Sherry SD president and CEO.

Thank you. Good morning, everyone. And thank you for joining SD for our Q2 2025 earnings conference School.

I will start with another view of the second quarter including business Dynamics.

John Mark: I will then hand over to Lorenzo for the detailed Financial overview.

Lorenzo: And with them comment on the Outlook and conclude before answering your questions.

Lorenzo: so, starting with Q2,

We delivered revenues at 2.77 billion.

Lorenzo: 566 million above the midpoint of our business Outlook range.

With Automotive slightly below our expectations.

Lorenzo: Which was customer specific.

Gianmarco Bonacina: more than offset by higher revenues in personal electronics and industrial. gross margin of 33.5% was in line with the midpoint. of our business are too great. Let's now discuss our business dynamics during Q2. in automotive. During the quarter, we grew revenues about 14% sequentially. driven in particular by Asia-Pacific, excluding China, and the Americas. Our booktube dealer came back. below parity driven by some specific customer banner. While the current situation on trade and tariffs is creating uncertainty on the level of car production, we confirm that Q1 was a low point for automotive revenues. We expect sequential growth in the third quarter versus the second quarter.

Lorenzo: More than offset by higher revenues, in personal electronics and Industrial.

Lorenzo: Margin of 33.5% was in line with the midpoint.

Lorenzo: Of our business or 2 range.

Lorenzo: Let's now discuss our business Dynamics during Q2.

Lorenzo: In Automotive.

Lorenzo: During the quarter, we grew revenues about 14% sequentially.

Driven in particular buyer as their Pacific exploding China.

Lorenzo: As the America.

Our book to bill came back.

Lorenzo: Below. Parity driven by some specific customer Dynamics.

Lorenzo: While the current situation on Trend and Paris is creating uncertainty on the level of car production, we confirm that q1 was a low point for automotive revenues.

Lorenzo: We expect sequential growth in the third quarter versus the 7 quarter.

Gianmarco Bonacina: During the quarter, we continued to execute our strategy for car electrification. We had wings with both silicon carbide and silicon devices, and modules for multiple new DC-DC converters and onboard chargers designed. as well as with our smart power and smart fuel solutions for electric vehicle power systems. In a continuing challenging automotive market environment, we remain focused on building our pipeline of business and solid execution of our roadmaps, in power and discrete, for Carly. In car digitalization, we saw further traction with our portfolio of automotive microcontrollers. We are making good progress in executing our roadmap with many new products set to launch in 2025 and 2026 across our ARM-based Stellar and STL32A product families.

during the quarter, we continue to execute our strategy for car electric

Lorenzo: We had winds with both silicon carbide and silicon devices and modules for multiple new dcdc convertor and onboard charger designs.

Lorenzo: As well as with our smart power, and smart, true solutions for electric vehicle Power Systems.

Lorenzo: In the continuing challenging Automotive Market of enrollment. We remain focused on building our pipeline of business and solid execution of our road maps in power and discreet for car electrician.

Lorenzo: In car digitalization, we saw further traction with our portfolio of automotive microcontrollers.

Lorenzo: We are making good progress in executing our road map with many new products set to launch in 2025 and 2026 across. Our are based stellar and STL 32A product feminist.

Gianmarco Bonacina: We are also continuing to see strong design in momentum globally with both large-scale OEMs and Tier 1 suppliers. One significant win in Q2 was for a one-box braking system by a leading electric vehicle maker in China.

Lorenzo: We are also continuing to see strong design in momentum globally with both large scale oems and Tier 1 suppliers.

1 significant win in Q2, was for a 1 box, braking system by a leading electric vehicle maker in China.

Gianmarco Bonacina: Moving to legacy applications. Well, we have a broad portfolio of application specific products based on our smart power technologies and leading position in multiple domains, such as airbags, door zones and lighting solutions. A notable win here was a high-volume airbag solution with a world leader in automotive electronic safety systems. The Third Generation of a Long-Term Partnership. With our automotive-grade sensors, we continue to see strong design momentum and opportunities. With in the quarter included name sensors for HEDAS, airbag control, and infotainment systems. as well as an imaging sensor for in-cabin monitoring. There are also a growing number of opportunities for sensors to improve the driving experience with applications such as road noise cancellation, occupancy monitoring, and seat position sensors.

Lorenzo: Moving to Legacy applications.

Lorenzo: where we have a broad portfolio of application specific products based on our smart power Technologies and leading position in multiple domains

Lorenzo: Such as airbags those Zone and writings Solutions.

Lorenzo: A notable win here was a high volume, airbag solution with a world leader in automotive, electronic Safety Systems.

Lorenzo: The third generation of a long-term partnership.

Lorenzo: With our Automotive, great sensors. We continue to see strong design.

Lorenzo: And opportunity.

With in the quarter included name sensor for headers.

Lorenzo: Are by control and infotainment systems.

Lorenzo: As well as an Imaging sensor for incoming monitoring.

Lorenzo: There are also a growing number of opportunities for Sound Source to improve the driving experience with application.

Such as road noise, cancellation, occupancy monitoring and seat position sensors.

Gianmarco Bonacina: in industrial. Q2 revenues were above expectations, with strong sequential growth and continued year-over-year improvement. confirming that Q1 was the bottom. I would also like to highlight that specifically for general purpose microcontrollers. We are back to year-on-year growth. In terms of months of inventory distribution overall, we are now back to a normal situation in China, close to normalization in other Asian countries, and improving but still above normal in other geographies. In Q2, our book-to-bill ratio remained above 1, and bookings continued to increase sequentially, supporting our expectation of further sequential growth in the third quarter compared to the second quarter.

Speaker Change: In industrial.

Speaker Change: Due to revenues were above expectations with strong sequential growth and continued your barrier Improvement.

Speaker Change: Confirming, that q1 was a bottom.

I would also like to highlight that specifically for general purpose, microcontroller.

Speaker Change: We are back to year on year growth.

Speaker Change: in terms of months of inventory distribution overall, we are now back to a normal situation in China, close to normalization in other Asian countries and improving but still above normal in other geographies,

Speaker Change: In Q2 our book to build Rio in above 1 and bookings continue to increase sequentially supporting our expectation of further. Sequential growth in the third quarter, compared to the second quarter.

Gianmarco Bonacina: During the quarter, we made strong progress with our designing activity for our power and analog portfolio across a range of applications. These included power systems, industrial fans and drives, motor control, wire goods, solar inverters, air conditioning, metering, and power for data servers. Full Detail Servers We announced that we are working closely with NVIDIA on a new high-power-density DC-DC architecture for AI data centers that will operate at 800 volts DC. This will enable higher power density, more compact designs, and a lot less cabling and metal ports. To deliver the needed solutions, ST is putting together a combination of its most advanced technologies, enabled by silicon material, silicon carbide, and gallium nitride as well as smart power processes like BCD using galvanic isolation.

Speaker Change: During the quarter, we made strong progress with our designing activity for power and analog portfolio across a large of applications.

Speaker Change: These included, the Power Systems, industrial fans and drive motor control. Why Goods solar inverters air conditioning metering and power for data servers

Speaker Change: So that does serve us.

Speaker Change: We are not that we are working closely with Nvidia on a new high. Power City dcdc architecture for AI data centers that will operate at 800 volt DC.

Speaker Change: This will enable higher power City, more compact designs, and a lot less cabling and metal ports.

Speaker Change: To deliver the needed solution. St is putting together a combination of its most Advanced Technologies enabled by silicon material silicon, carbide and gallium nitride, as well as smart power processes like BCD using galvanic isolation.

Gianmarco Bonacina: Our portfolio of industrial sensors also gains momentum in applications like container tracking, white goods, and livestock monitoring. Moving to Embedded Processing, our SCM32 microcontrollers have continued to gain traction with the broad developer community. The use of our software ecosystem continues to grow strongly and we are now close to 1.5 million unique users on a 12-month rolling basis versus the 1.3 million unique users for 2024. As mentioned earlier, in Q2, we were back to year-over-year growth for general-purpose microcontrollers. with both sequential and year-over-year growth in the IT. This confirms the strength of our product portfolio and our global ecosystem.

Speaker Change: Our portfolio of industrial sensors. Also again, momentum in application like container tracking, why goods? And livestock monitoring

Speaker Change: moving to embedded processing. Our stm32 microcontrollers have continued to gain traction with the broad developer community,

Speaker Change: Use of our software ecosystem continues to grow strongly and we are no close to 1.5 million unique users on the 12 months. Rolling basis versus the 1.3 million unique users for 2024.

as mentioned earlier in Q2, we work back to your area growth for general purpose, microcontrollers

With both sequential and year-over-year growth in the items.

Speaker Change: This confirms the strength of our product portfolio and our Global ecosystem.

Gianmarco Bonacina: In personal electronics and to a lesser extent in communication equipment and computer peripherals, Q2 revenues were above our expectations. We continue to be excited by growth opportunities in our engaged customer programs driven by both increased content in personnel electronics and the expanding Low Earth Orbit Satellite Mapping.

Speaker Change: For lesser extent in communication equipment and computer peripherals.

Speaker Change: Q2 revenues were above our expectations.

Speaker Change: We continue to be excited by growth opportunities in our longest customer programs driven by both increased content in personal electronics, and the expanding low earth orbits Market.

Gianmarco Bonacina: In terms of corporate development activities, at the end of May, we held our annual general meeting of shareholders. All proposed resolutions were approved by the shareholders. for Sustainability. We have received two notable recognitions for our public commitments, reporting and environmental and social performance. ST has been recognized in the Time Wars Most Sustainable Companies list for the second consecutive year. We have been ranked 25th most sustainable company globally and 1st in the electronics, hardware and equipment category. We have also been recognized for leadership on climate and water security by the Global Environmental Non-Profit CDPR. with a place on each A list.

Speaker Change: In term of.

Speaker Change: Meeting of shareholders.

Speaker Change: All proposed resolution were approved by the shareholders.

Speaker Change: For sustainability.

Speaker Change: We have received 2 not recognition for our public commitment, reporting and environmental and social performance.

Speaker Change: St has been recognized in the time world's most sustainable companies list for the second consecutive year.

We have been wronged 25th, most sustainable company globally and first in the electronics hardware and Equipment category.

Speaker Change: We have also been recognized for leadership on climate and water security.

Gianmarco Bonacina: for tracking climate change and a rating of A- for water security.

Speaker Change: By the Global Environmental nonprofit CDP with a place on its a list.

Speaker Change: For tracking climate change and the rating of a minus for water security.

Lorenzo Grandi: Now, over to Lorenzo, who will present our key financial figures. Thank you, Gianmarco, and good morning, everyone. Let's start with a detailed review of the second quarter. starting with the revenues on a year-over-year basis. by reportable sex. Analog product MEMS and SENSO was down 15.2%, mainly due to a decrease in analog, to lesser extent a decrease in imaging, while MEMS grew double digit. Power and discrete products decreased 22.2%. Embedded processing revenues declined 6.5% mainly due to custom processing. RF and optical communication declined 17.9%. Bye and Maw. Automotive declined by about 20%. industrial by about 8% while personal electronic communication equipment in computer peripherals each declined by about 5%.

Speaker Change: No over to Lorenzo, we will present our key financial figures.

Speaker Change: Thank you, remark, and good morning, everyone.

Speaker Change: Let's start with a detailed review of the second quarter.

Speaker Change: Starting with the revenues on a year or a year basis.

Speaker Change: My report about segments, analog product mes and sensor was down 15.2%. Mainly due to a decrease in analog

Speaker Change: To lesser extent a decrease in imaging a while, Ms. Grew double digit.

Power and discreet product decreased 22.2%.

Speaker Change: Embedded processing, revenues decline, 6.5% mainly due to custom processing.

Speaker Change: S and Optical communication declined, 17.9%?

Speaker Change: By End Market.

Speaker Change: Automotive decline by about 24%.

Speaker Change: Industrial by about 8%. A while, personal electronic economic, communication equipment, and computer, peripheral each decline by about 5%,

Lorenzo Grandi: year over year sales to OEMs decrease 15.3% and 12% to distribution. On a sequential basis, all segments contributed to the group.

Speaker Change: Year-over-year sales to oems decrease 15.3% and 12% to distribution.

Speaker Change: On a sequential basis. All segments contributed to the growth.

Lorenzo Grandi: Embedded Processing, Power Indiscreet, and RF and Optical Communication reported double-digit growth, respectively 14.1%, 12.9%, and 10.1%. analog products MEMS and Sensor, also due by 5.9. All our end markets grew, led by industrial, up by about 15%. followed by automotive, up by about 14%.

Speaker Change: Embedded processing power in discrete and ref an optical communication, reported double-digit growth respectively, 14.1% 12.9, and 10.1%.

Speaker Change: Analog products men's and sensor also do by 5.9%.

Speaker Change: All our end markets grew led by industrial up by about 15%.

Lorenzo Grandi: with Communication Equipment, Computer Peripheral and Personal Electronics up, respectively, about 6% and 3%.

Speaker Change: Followed by Automotive up by about 14%.

Speaker Change: With communication equipment, computer peripheral, and personal electronic app, respectively about 6% and 3%.

Lorenzo Grandi: Turning now to profitability. Gross profit in the second quarter was 926 million dollars. decreasing 28.5% on a year-over-year basis. Gross margin was at 33.5%, decreasing 660 basis points. here over here, mainly due to unfavorable product mix. lower manufacturing efficiency and, to a lesser extent, higher unused capacity charge. Total Net Operating Expenses excluding restructuring amounted to 869 million dollars in the second quarter. in line with our expectations and declining 6% on a year-over-year basis. For the third quarter of 2025, we expect Netopex to stand at about 860 million. slightly decreasing quarter on quarter despite the negative currency effect.

Speaker Change: Turning now to profitability.

Gross profit. In the second quarter was 926 million.

Speaker Change: Decreasing in 28.5% on a year over year basis.

Speaker Change: Gross margin was a 33.5% decreasing 660 basis points.

Speaker Change: Mainly due to unfavorable product mix.

Speaker Change: lower manufacturing efficiency and to a lesser extent higher and use capacity charges

Speaker Change: total net operating expenses.

Excluding restructuring amounted to 869 million in the second quarter.

Speaker Change: In line with our expectations and the declining 6% on a year over year basis.

Speaker Change: For the third quarter of 2025, we expect a net of tax to stand at about 8 6 0.

Lorenzo Grandi: Reflecting our ongoing cost discipline. and the first benefits of the resizing of our global cost. As a reminder, these amounts are net of other income and expenses and exclude restructuring.

Speaker Change: Slightly decreasing quarter on quarter, despite the negative currency affect.

Speaker Change: Reflecting our ongoing cost discipline.

Speaker Change: And the first benefits of the resizing of our Global cost days.

Speaker Change: As a reminder, this amounts are net of other income and expenses and exclude restructuring.

Lorenzo Grandi: In the second quarter, we reported a $133 million operating loss, which included $190 million for impairment, restructuring charges, and other related phase-out costs. Reflecting impairment of assets and restructuring charges predominantly associated with the previously announced company-wide program to reshape our manufacturing footprint. and resize our global cost. excluding these non-recurring items. which is mostly non-cash, Q2 non-US GAAP operating margin was 2.1% positive. with analog MEMS and sensor at 7.5%, power indiscreet at minus 12.5%. Embedded Processing 13.5 and RF Optical Communication at 17.9%.

In the second quarter, we reported a 133 million dollars operating loss.

Speaker Change: 190 million for impairment, restructuring charges and other related. Phase out cost.

Speaker Change: Reflecting impairment of asset and restructuring charges. Predominantly associated with the previously announced companywide program to reshape our manufacturing footprint.

And resize, our Global cost base.

Speaker Change: Excluded this no recurring item.

Speaker Change: Which is mostly non-cash, Q2 non us, gaap operating margin was 2.1% positive.

Speaker Change: With the analog, Ms, and sensor at 7.05% Power in discrete minus 12.3%, embedded processing, 13.5 and a rest Optical communication, a 17.9%.

Lorenzo Grandi: Q2 2025 Net Income was a negative $97 million compared to a positive $353 million in the year ago quarter. Diluted earnings per share were a negative at $0.11 compared to a positive of $0.38. Excluding the previously mentioned non-recurring items, non-U.S. debt, net income, and diluted earnings per share were respectively a positive $57 million and a positive 0.06 dollars. Net cash from operating activities decreased 49.6% in Q2 to $354 million on a year-over-year basis. Second quarter net capex was at $465 million. compared to the $528 million in Q2.

Speaker Change: Q2 255, net income.

was a negative and 97 million compared to a positive 353 million in the year ago quarter,

Speaker Change: Diluted earnings per share where a negative 0.11 compared to a positive of 0.38 dollars.

Speaker Change: A screw in the previously mentioned not recurring items. Non us. Gaap net, income and diluted earnings per share were respectively a positive, 57 million and a positive 0.06.

Speaker Change: Net cash from operating activities. Decreased 49.6% in Q2 to 354 million on a year-over-year basis.

Speaker Change: Second quarter. Net capex was 465. Million

Speaker Change: Compared to the 528 million in Q2 24.

Lorenzo Grandi: Free cash flow was a negative $152 million in the second quarter compared to a positive $159 million in the year ago quarter. Inventory at the end of this quarter was 3.27 billion. compared to $2.81 billion in Q2 2020. Day sales of inventory at quarter end was 166 days. and slightly above our expectations.

Speaker Change: Free cash flow was a negative 152 million in the second quarter compared to a positive 159 million dollars in the year ago quarter.

Speaker Change: Inventory, at the end of this quarter was 3.27 billion.

Speaker Change: Compared to 2.81 billion in Q2 24.

Speaker Change: They says of inventory at quarter end was 166 days.

Speaker Change: And slightly above our expectation.

Lorenzo Grandi: May lead you to Karen Simpson. compared to the 167 days for the previous quarter and to 130 days in the year-ago quarter. We expect days of inventory to significantly decrease in the third quarter compared with the second quarter. Cash dividends paid to stockholders in Q2'25 totaled $81 million. In addition, ST executes a share buyback of $92 million. ST maintains its financial strength. with a net financial position that remains solid at $2.67 billion as of June 28, 2025, reflecting total liquidity of $5.63 billion and a total financial debt of $2.96 billion.

Speaker Change: Mainly due to currency impact.

Speaker Change: compared to the 167 days for the previous quarter and to 130 days in the year ago quarter

We expect the days of inventory to significantly decrease in the third quarter, compared with the second quarter.

Speaker Change: Cash dividends paid to stockholders in Q2, 255 total, 81 million, in addition, SD execute a shared by backs of 92 million.

Speaker Change: Maintain its Financial strength with a net financial position that remain solid at 2.67 billion as of June 28th, 2025 reflecting total liquidity of 5.63 billion dollars and a total financial debt of 2.96 billion

Gianmarco Bonacina: Now back to Gianmarco, who will comment on our outlook. Thank you, Lorenzo. Let's move to our business outlook for Q3 2025. So we are expecting Q3 2025 revenues at 3.17 billion dollars plus minus 350 basis points. At the midpoint, our Q3 net revenues will increase 14.6% sequentially, and decrease by 2.5% year-over-year, with all end markets, but automotive, back to year-on-year growth. We expect our gross margin to be about 33.5% plus minus 200 basis points, including about 340 basis points of unused capacity charges. compared to the second quarter. Gross margin is also impacted by about 140 basis points of negative sea control impact, resulting mainly from currency effect and from the start of the non-recurring costs related to our manufacturing reshaping program.

Speaker Change: Now, back to Jamaica. Who will comment on our Outlook?

Speaker Change: Thank you. Lo, let's move to our business outlook for Q3 2025.

Speaker Change: So we are expecting Q3 25.

Speaker Change: At the midpoint, our Q3 net revenues will increase 14.6% sequentially and decrease by 2.5% year-over-year.

Speaker Change: With all end markets but Automotive back to your on your growth.

Speaker Change: we expect our gross margin to be about 33.5% plus minus 200 basis points, including about 340 basis points of unused capacity charges

Speaker Change: Reshaping program.

Gianmarco Bonacina: This business outlook does not include any impact for potential further changes to global trade tariffs compared to the current situation. For the full year 2025, we plan to maintain our net capex plan between 2 and 2.3 billion dollars, mainly to execute the reshaping of our manufacturing footprint.

This business Outlook does not include any impact for potential further changes to global trade tariffs compared to the current situation for the full year 2025. We plan to maintain our net capex plan between 2 and 2.3 billion mainly to execute the reshaping of our manufacturing footprint.

Gianmarco Bonacina: To conclude. We expect Q3 revenues to show solid sequential growth driven by the cyclical recovery and our engaged customer programs. This will enable a continued year-over-year improvement. Our priorities remain supporting our customers to designing our products, accelerating new product introduction and executing our company-wide program to reshape our manufacturing footprint and resize our global cost base. Finally, I confirm we are executing our plan to deliver annual cost savings in the high triple million dollar range. Exiting 2027.

Speaker Change: To conclude.

Speaker Change: We expect you to revenue to show solid sequential growth driven by a cyclical recovery and our engage customer programs.

This will enable a continued your over year Improvement.

Speaker Change: Our priorities remain supporting our customers to designing our products accelerating new product introduction, and executing our company y program to reshape our manufacturing footprint and resize. Our Global course base,

Speaker Change: finally, I confirm we are executing our plan to deliver annual cost Savings in the I triple million dollar range

Operator: Thank you and we are now ready to answer your questions. We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star and one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question.

Speaker Change: Exiting 2027.

Speaker Change: Thank you and we are now ready to answer your questions.

Operator: In the interest of time, please limit yourself to one question only. Anyone who has a question or a comment may press star and one at this time.

Speaker Change: We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment, may press star and 1 on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question in the interest of time. Please limit yourself to 1 question. Only, anyone who has a question or a comment may press star and 1 at this time

Janardan Menon: The first question comes from the line of Janardan Menon from Jefferies, please go ahead. Hi, hi, thanks for taking the question. Yeah, my question is mainly on gross margin. I was, could you just pull out the one off? effect from your manufacturing reshaping program in your Q3 gross margin guidance. And then I was wondering whether you could comment on how you expect gross margin to evolve into subsequent quarters. I mean… Sales are growing and utilization levels are growing. So how would you expect, what would be the various puts and takes that you would expect in gross margin evolution beyond Q3?

January: The first question comes from the line of January from Jeffrey. Please go ahead.

Speaker Change: Hi. Hi. Thanks for taking the question.

Speaker Change: Yeah, my question is mainly on gross margin. Um, I was uh, could you just uh pull out the 1 off? Um, effect from your manufacturing uh, reshaping program in your Q3 gross margin guidance.

Speaker Change: And um, and then I was wondering whether you could comment on how you expect gross margin to evolve into subsequent quarters. I mean

Speaker Change: Sales are growing and utilization levels are growing. Um, so how would you expect what what would be the various puts and takes that you would expect in gross margin Evolution uh Beyond uh Q3 thank you.

Gianmarco Bonacina: I take the question. Thank you for the question, Jonathan. But in terms of the gross margin of Q3, first of all, I want to clarify the gross margin. But pricing are not collapsing. Let's say pricing are in line with what was our expectation. So at the midpoint of our sequential basis-gross margin, it is negatively impacted, as we said, by this 140 basis point that is resulting mainly from currency effect and to a lesser extent from the start of non-recurring costs related to our manufacturing and shipping program. You ask me, more or less, to size, I would say that in this 140 basis point around, 20% of these 140 is related to the reshaping of the manufacturing, let's say, Please, this negative impact is offset by the lower weight of unused capacity charges in Q2 was 370 basis point impact, in Q3 is more in the range of 340 basis point, and some improving manufacturing efficiency, even if we have to remind you that in Q3 this efficiency is still suboptimal.

Speaker Change: I take the question, thank you for the questions, Ron H. But uh in term of a gross margin of of Q3. Uh first of all, I want to to clarify the gross margin but pricing are not collapsing. Let's say pricing are in line with what was our expectation.

So at the midpoint of our sequential basis, gross margin is negative impacted. As we said by this 140 basis point, that is resulting mainly from currency effect and to a lesser extent from the start of no recurring costs are related to our manufacturing, the shipping program, you asked me more or less at 2 size. I would say that in this 140 basis point around

Speaker Change: 20% of this, 140 is related to the rating of the manufacturer. In let's say program.

Gianmarco Bonacina: We have some basis point that is related to the fact that we have not yet, let's say, at the best our efficiency. The combination of price and mix, I would say that is pretty neutral to the gross margin on a sequential basis. Let's see. So these are the main drivers, I would say, that are impacting our gross margin in the third quarter. But irrespective to what is the expectation moving forward, directionally... Based on the current level of EURUSD that we say is spotting the range of 1.17, that in Q4 should bring us in an effective rate that is in the range of 1.15 for EURUSD.

Speaker Change: Please this negative impact is offset by the lower weight of a new capacity charges in Q2, or 370 basis point impact in Q3, is more in the range of 340 basis point, and some improving and Manufacturing efficiency. Even if we have to remind you that in Q3, this efficiency is still suboptimal. We have a, some basis point that is related to the fact that the we have not yet let's say at the best our efficiency.

Speaker Change: The combination of price and mix. I would say that is pretty neutral to the gross margin on a sequential basis.

Speaker Change: Let's see. So these are the main drivers. I would say that are impacting our gross margin in the third quarter but irrespective to what is the expectation moving forward? Directionally.

Gianmarco Bonacina: We should see a nice improvement in respect to Q3, driven by less unused capacity charges. Enhanced Manufacturing Efficiency partially, of course, upset by weaker US dollars. Clearly, in Q4, gross margin will depend ultimately on the level of revenues and where it will be positioned, let's say, the euro-dollar. At this stage, it's a little bit more difficult to be more specific than that.

Speaker Change: We should see a nice Improvement in respect to Q3 driven by Les, unused capacity charges.

Speaker Change: Enhanced manufacturing efficiency.

Speaker Change: Partially, of course offset by weaker US dollar.

Speaker Change: Clearly in Q4 gross margin will depend ultimately on the level of revenues and, uh, where it will be position. Let's say the Euro dollars,

Speaker Change: At this stage is a little bit more difficult to be more specific than that.

Janardan Menon: Do you have any visibility on Q4? Would you at this stage expect that your revenue further improve in Q4 or is it too early to call that? We expect our revenue in Q4 to grow sequentially. And that's it.

Speaker Change: And so you do have any visibility on Q4, would you at this stage? Expect that your Revenue further improve in Q4, or is it too early to call that?

Speaker Change: Yeah, we expect our Revenue in Q4 to grow sequentially.

Operator: Thank you. Thank you, Janardan.

Understood, thank you.

Joshua Buchalter: Next question, please. The next question comes from Joshua Buchalter from TD Cohen. Please go ahead. Hey guys, thank you for taking my question. There's obviously a lot of uncertainty out there given the geopolitical environment. I was wondering if you could maybe speak to any potential changes in your customers' order patterns or the prospect of any potential customers who could have been pulling in parts. Have you seen any changes downstream? Thank you.

Speaker Change: Thank you D. Next question, please.

Joshua Halter: The next question comes from Joshua halter, from TD Cohen, please go ahead.

Joshua Halter: Hey guys, thank you for taking my question. Um

Joshua Halter: Because obviously a lot of uncertainty out there given the geopolitical, um, environment. I was wondering if you could maybe speak to any potential changes in your customers order patterns, or, or or the prospect of any presidential customers who are could have been pulling in Parts. Have you seen any changes Downstream? Thank you.

Gianmarco Bonacina: When we see our dynamic from the beginning of the year, basically, the good news is that in Q3, all our, let's say, verticals will grow sequentially and year on year, except the automotive specific to one customer. And I would have been delighted that Q3 would have been the starting point, but we are about minus 2% year over year, which is 80 million US dollars. Be aware that 90% of this US$80 million gap versus the turning point is in fact intangible. It is a capacity fee reservation from carmakers that has decreased by US$70 million.

Speaker Change: Bobby when when when we see our our from the beginning of the year basically about the good news that in Q3 all our let's say verticals will grow uh uh sequentially and year and barrier or except the automotive specific to 1 customer and I would have been delighted that Q3 would have been the turning point but we are about minus 2% your barrier which is 80 million US dollar.

Gianmarco Bonacina: So from a product perspective, customer demand, we are basically at the turning point, which is very positive.

Gianmarco Bonacina: Well, now about our customer engaged programs and our market. In person electronics, in computer equipment, communication equipment, computer peripheral, basically, okay, we have no, no, no surprise, no chance. Well, in industrial, you know, that is more fragmented, it is distribution. Well, clearly, now we are in the upcycle. Well, will the speed of the turning point, okay, will depend on the macroeconomics.

Speaker Change: Well, be aware that 90% of this 80 million US dollar Gap. Versus a turning point is, in fact, intangible it is a capacity reservation from car maker that has decreased by 70 million. So, from product perspective, customer demand we are basically at the turning point, which is very positive.

Speaker Change: Now, now about

Speaker Change: Our customer on this programs and our Market in person Electronics in computer equipment. Uh, communication equipment computer peripheral basically, okay. We have, no, no, no surprise, no change.

Gianmarco Bonacina: Automotive. Automotive, okay, what is the situation we have to manage and acknowledge? Well, we know that basically, in front of us, we have a market of 90 million vehicles. out of which 30 million vehicles are battery electrical vehicles and hybrid electrical vehicles. The challenge we have managed all together is that the competition landscape, the mix inside the automotive market, is much, much less stable than two, three years ago. Why? Because there is a strong dynamic between Chinese competition, European changing mind about electrical car, America as well, and so on. So we are not protected time to time, quarter to quarter, to have one customer-specific change.

Speaker Change: Well, in Industry, you know, that is more fragmented. It is distribution, more clearly. Now we are in the upcycle but will the speed of the Turning Point? Okay, will depend on the macroeconomy.

Speaker Change: More automotive automotive. Okay. What is the situation? We have to manage and acknowledged but we know that basically in front of us, we have a market of 90 million vehicles,

Speaker Change: Out of which 30 million vehicles are battery, electrical vehicle and hybrid electrical vehicle.

Speaker Change: The challenge, we have managed all together. Is that the competition landscape? The mix inside the automotive Market is much, much less stable than 2 3 years ago, why? Because there is a, a strong dynamic between Chinese competition. European changing mind about electrical car America as well, and so on, so we are not protected

Speaker Change: Time to time quarter.

Gianmarco Bonacina: And this is what happened clearly in Q2 and is confirmed in Q3.

Gianmarco Bonacina: So this is only this automotive market we have to pay attention. What we make us confident moving forward is the strength of our product portfolio, clearly our large customer base. And I repeat, in automotive, in Q3, we grow sequentially, not yet year over year, but in Q4 we will grow again sequentially.

This is what happened clearly in Q2 and is confirmed in Q3 well. So this is only this Automotive Market, we have to pay attention

Speaker Change: Well, what we make us confident moving forward is a strength of our product portfolio. Clearly our large customer base and I repeat in Automotive in. Q3 we go sequentially, not yet a year over year, but in Q4, we will grow again.

Joshua Buchalter: Okay, but you did not observe any pollens in the in the June quarter? No. Okay, thank you.

Speaker Change: Okay, but you, you did not observe any Poland in the in the June quarter.

Speaker Change: No.

Joshua Buchalter: And then for my follow up, I got a few inbounds from investors regarding the Mobileye founding relationship with TSMC. When that came out earlier in the month, could you maybe speak to, you know, which parts you're still providing? And maybe realize the IQ five and six are on seven nanometer, you know, how we should expect that customer to trend over the next few years. And maybe speak to the engagement there. Thank you.

Speaker Change: To Tread over the next few years. Uh, and and maybe speak to the engagement there. Thank you.

Gianmarco Bonacina: It is well known we use the technology of TSMC starting IQ5 generation, but IQ5, IQ6 and IQ7, ST did the design, and all the enablement and the support, the engineering support, so from this announcement, we don't expect any surprise from our revenue for the next 3-5 years, at least . Got it. Thank you. Appreciate the call. Thanks, Josh.

Speaker Change: No it is. It is well known. We use the technology of TMC, starting a iq5 generation but iq5 IQ 6 and iq7 St. Okay. Did the design and all let's say the the enablement and and the and the support, okay? The engineering support. So from this announcement, okay? We don't expect any surprise from our revenue for the next 3. 5 years, at least,

Operator: Next question, please.

Speaker Change: got it. Thank you. Appreciate the caller. Thanks, Josh. Next question, please.

Francois Bouvigny: The next question comes from the line of Francois Bouvigny from UBS, please go ahead. Thank you very much. So my question would be, Jean-Marc, you know, early June, I believe you said that you would reach at least the midpoint of the guidance in Q2. And I guess when you said that you had in mind to do better than just roughly in line like you did today, and then you said you would maybe, without tariff, grow year over year, and now you're getting for minus 2.5% year over year. So what happened since early June? I mean, it seems that things deteriorated.

Speaker Change: The next question, come from the line of Franco Vinny from UBS. Please go ahead.

Gianmarco Bonacina: And if I understand correctly, is it only a customer program? And just trying to understand what happened since June for, because it seems a bit short of what maybe you would have hoped. I just want to understand the moving part.

Franco Vinny: Thank you very much. So my question would be Jean Marc, you know, early June. Um, I believe you said that you would reach at least the midpoint, uh, of the guidance in Q2 and I guess, when you said that you had in mind to do better than than, than just roughly in line like like, uh, like you did today and then you said, you would maybe without tariff grow year over the year and now you're getting from minus 2.5% year-over-year. So what happened since early June? I mean, it seems that things that are rated. Um, and if I understand correctly, is it only a customer program.

Gianmarco Bonacina: Thank you. Well, thank you for your question. I anticipated it a little bit in my former answer. Well, look at facts. What is the dynamic on your growth, for example? So Q1 was minus 27%, Q2 minus 40% and we land close to zero, so minus 2% basically in Q3 at the midpoint of our guidance. So it's $18 million gap. Well, I repeat, this $18 million for your consideration, because what is important is customer demand, product, volume, so the flow of product. Well, 90% of this gap is related to intangible. Well, yes, intangible is revenue, but it is not, okay, flow of product.

Franco Vinny: And uh, just trying to understand what happens in June for because it seems a bit short of what maybe you would have hoped. Um, I just want to understand the moving part. Thank you.

Franco Vinny: Well, thank you for your question. Uh, know, I I anticipated it a little bit in in my former answer. Uh,

Franco Vinny: Well, look at facts. Uh, what what is the dynamic? Uh honor. Your your over your growth for St.

Franco Vinny: So q1, why is minus 27% Q2 minus 40%?

Franco Vinny: And we learn close to minus 200. So, minus 2%, basically, in, in Q3 at the midpoint of our guidance, so it's 80 million US dollar Gap.

Franco Vinny: Well, I repeat, uh, this 18 million US dollar for your consideration because what is important is

Gianmarco Bonacina: It is not measuring the capability of ST to address its addressable market. So this is a positive point. Well, I would have expected, okay, to compensate this 90% of intangible, but a stronger dynamic, okay, on automotive. Well, unfortunately, okay, we have one customer-specific change in the forecast of Q3 that prevents us to move to this position. Well, but on automotive, again, the sequential growth in Q3 will be pretty solid because, well, we expect, okay, let's say a high single digit growth in automotive in Q3 and we will grow again in Q4. So, yes, there is one customer-specific, but nothing related to the overall market dynamic.

Franco Vinny: customer demand product volume. So the flow of of product. Well, 90% of this Gap is related to aible well, yes. But it is not okay. Flow of product, it does not a measuring the capability of St to address its addressable market. So this is a positive point but I would have expect. Okay, to compensate this uh 90% of Anibal by a stronger Dynamic okay or not automatic but unfortunately, okay we have

Franco Vinny: 1 customer specific change in the forecast on Q3 that prevents us to move to this position. Well, but on Automotive again, the sequential growth in Q3 will be pretty solid, uh, because more, we expect, okay, let's say a single digit growth in Automotive in Q3. And we will go again in Q4.

Gianmarco Bonacina: I repeat what I said a few minutes ago. Now, we have to acknowledge that for a while, we will have in front of us an automotive market moving forward, growing. Again, 90 million vehicles, at least one-third is related to a mix of battery-based, electrical, and hybrid electrical, but with competition landscape changing in a very dynamic way. Well, we have to manage and we are not protected time to time to have one customer-specific. And, yes, okay, not at the level of our expectation. Well, this we can manage, but this is a situation we have to face that is completely different than a few years ago.

Gianmarco Bonacina: So I, of course, regret to not be on the turning point of Q3, but again, I repeat, 90% of the gap is intangible. The rest is really customer-specific.

Franco Vinny: So yes, there is 1 customer specific but no thing related to the overall Market Dynamic. I I repeat what I say a few minutes ago, now we have to acknowledge that for a while. We will have in front of us, an automotive Market moving forward and growing again, 90 million vehicle, at least 1, third, is related to a mix of battery based electrical and hybrid electrical. But with competition landscape changing at a very Dynamic way but we have to manage and we are not protected time to time to have 1 customer specific and yes. Okay. Not at the level of our expectation but this we can manage but this is a situation. We have to face that is completely different than a few years ago.

Gianmarco Bonacina: The good news is industrial personal electronics. Computer, Peripheral and Communication Equipment grow significantly year over year. Automotive grow significantly on a sequential basis. And we grow again in two phases.

So I uh, of course regret, okay to not be uh, on the turning point of Q3. But again, I repeat 90% of the Gap is in tangible. The rest is really customer specific.

Franco Vinny: The good news is industrial personal electronics.

Computer peripheral and communication equipment, grow significantly over year, Automotive grow significantly on the sequential basis and we go again in Q4.

Francois Bouvigny: That's very helpful. Thank you, Jean-Marc.

Francois Bouvigny: And just to clarify, this customer change, is it a market share shift? I mean, is it structural? Or is it just an order or inventory or forecast adjustments? Is it temporary or longer term? It is absolutely not a market share loss. It is specific to the customer. I cannot comment. But I am pretty sure that long term this customer will recover. Got it.

Franco Vinny: That very helpful. Thank you so much. And just to clarify, this customer change. Is it a market share?

Shift. I mean, is it a structural? Or is it just an order?

Franco Vinny: Or inventory or forecast adjustments, is it a temporary or or or a longer term? It is absolutely not a market share loss. It is specific to the customer, I cannot comment, but I am pretty sure that long-term this customer will recover.

Operator: Thank you very much.

Sandeep Deshpande: Next question, please. The next question comes from the line of Sandeep Deshpande from J.P. Morgan. Please go ahead. Yeah, hi, thanks for letting me on. My question is regarding Q4. You mentioned, Gianmarco, that you will grow sequentially in Q4.

Franco Vinny: Got it. Thank you very much. Thank you. Next question, please.

The next question comes from the line of some deep dish Panda from JP Morgan. Please go ahead.

Gianmarco Bonacina: But will you, based on what you see today, will you be able to grow year on year in Q4 across the board at the company, you know, excluding some of these issues you've had in Q3, based on what you see today? And I mean, following up on your earlier response, do you see an impact in this guidance from the new US rules on EVs, etc., which could have an impact on silicon carbide or any of your other business? Well, thank you, Sandeep, for the question. What I can, the fact we have in our hand is that the backlog that is positioned on Q4 today.

Speaker Change: Yeah, hi. Thanks for letting me on my question is regarding Q4 you mentioned Gene, Mark that, uh, you will grow sequentially in Q4 but will you, uh, based on what you see today? Will you be able to grow year on year, in Q4 across the board at the company? Uh, you know, including some of these issues you've had in Q3, uh, based on what you see today, and I mean, following up on your earlier response. Um, do you see an impact? Uh, in this guidance, from the, the new US rules on EVS, Etc. Which, which could have an impact on silicon carbide or any of your other businesses? Thank you.

Speaker Change: Well, thank you. Uh, some new product for the question. Um,

Gianmarco Bonacina: If we compare exactly at the same date, the quarter of Q3, it is showing a significant sequential growth. So if the booking of Q3, because I repeat, okay, we are also facing market situation that are turning up from a cyclical point of view, but also the visibility is pretty short. Well, it is clear that if we have a booking dynamic in Q3 on a similar path of what we have seen in Q2 and in Q1, we should expect in Q4 to grow sequentially, and then, okay, to be at the turning point or very close to the turning point.

Speaker Change: What, what I can the fact we as in our hand is that the backlog that is positioned on Q4, uh, today. Uh, if we compare exactly at the same date, uh, the quarter of Q3, it is showing a significant second growth.

Speaker Change: So, if the booking or Q3 because I repeat, okay, we are also spacing Market situation that are turning up from a cyclical point of view, but also the visibility is pretty short.

Speaker Change: But it is clear that if we have a booking dynamic in Q3, on a similar path of what we have seen in Q2 and in q1. Well we should expect in Q4 to go sequentially more and then okay to be

Gianmarco Bonacina: But again, this is the mechanics, okay, we are following. So yes, we expect to grow sequentially in Q4, taking into account the portfolio. And under the assumption, we will see a booking dynamic. Similar of what we have seen in Q1 and Q2.

Speaker Change: At the turning point or very close to the turning point. But again, this is the the mechanics, okay. We are we are, we are following so, so yes, we expect to go sequentially, uh, in Q4, taking into account the portfolio and under the assumption. We will see a booking dynamic.

Gianmarco Bonacina: Finally, okay, we should be in position to go year over year in Q4, but again, we will not be protected against something specific a customer that decides, okay, to decrease inventory because he wants to prefer, okay, to protect 2026. So we are not protected this singularity, okay, with some customer. Overall, it means what? It means the trend is positive, the dynamic is positive, STs come back on a growth trajectory, but the overall environment and specifically the market of automotive is not strong enough to generate, okay, a buffer of backlog in order to absorb all the variation.

Speaker Change: Similar of what we have seen in, q1 and Q2.

Gianmarco Bonacina: So altogether, of course, we have to communicate very carefully and accurately to monitor this dynamic. So this is the point.

Gianmarco Bonacina: The other point of the question was. What was the second part? Yeah, the point of the The other part of the question was on whether any of the dynamics you're seeing in Q3 and then beyond are to do with the new U.S. tax bill, which has implications on easy Now it is nothing significant specific to this point again what we are acknowledging and reviewing our mid-plan on silicon carbide and electrical vehicles. is a dynamic. I guess everybody has acknowledged and understood that compared to three years ago, in 2025, the volume of electrical cars is basically 5 million cars less than was forecasted five years ago.

Finally, okay, we should be in position to go the other way in Q4. But again, we will not be protected against something specific. A customer that decide, okay? To decrease inventory because he want to prefer, okay? To protect 2026. So we are not protected this circularity okay, with some customer. But overall, I mean, what means the trend is positive. The dynamic is positive St. Come back on the gross trajectory, but the overall environment and specifically, the market of Automotive is not strong enough to generate, okay, buffer of backlog in order to absorb all the variation. So, all together, of course, we have to communicate a very carefully and accurately to monitor this Dynamic. So this is the point. The other point of the question,

Speaker Change: Was.

Speaker Change: What was the second part?

Speaker Change: The other part of the question was on whether any of the Dynamics, you're seeing in Q3, and then beyond are to do with the new US tax bill which has implications on EVS.

Speaker Change: No is nothing. If you can specific to this point again what what we are acknowledging and and reviewing our meat plan, on the on silicon carbide and electrical vehicle,

Gianmarco Bonacina: So what is important is to look at the trend. Then the second trend is a mix between battery-based and hybrid vehicles. So we have to understand, okay, with all the set of regulation constraints that worldwide are implemented, and then the competition of the Chinese carmaker, all this trajectory on growth will move. And this is what matters for us in order to design our manufacturing capacity. What I can say on silicon carbide, the main important for us now is to close the six-inch as fast as we can, start the eight-inch, adjust the capacity to the market demand, and we confirm that we strongly believe that we can keep 30% market share on this market.

Sandeep Deshpande: Different path two, three years ago, for sure, but, okay, we're adapting ourselves, and silicon carbide mid-term, okay, will be a growth driver of the company. Thank you. Do you have any follow-up, Sandeep? Yes, no, I'm fine, thank you. Thank you.

Speaker Change: Allow manufacturing capacity, what I can say in silicon carbide. The main important for us now is to close the 6 inch as fast as we can start the 8 in, adjust the capacity to the market demand. And we confirm that. We strongly believe that we can keep 30% market share on this Market different paths. 2, 3 years ago, for sure. But okay, we adapting ourselves and second carbide. Midterm. Okay, will be a call driver of the company.

Speaker Change: Thank you. You have any follow-ups on it.

Speaker Change: Yes, no, I'm fine. Thank you.

Operator: Next question, please.

Speaker Change: Thank you. Next question, please.

Stephane Houri: The next question comes from the line of Stephane Houri from Odo BHF, please go ahead. Yes, good morning, everyone. I have two questions. The first one is about the comments you made earlier about the gross margin. and the impact of the forex if the dollar stays at this level. I take this question, thank you for this question. Clearly, let's say what are the drivers that we do expect in Q4 to substantially, let's say, help a sequential increase in our growth margin. On one side, clearly, we were expected that our unused capacity charges will decline in respect to what we have in Q3.

The next question comes from the line of Stefan. Yuri from Adobe bhf, please go ahead.

Speaker Change: Yes. Um, good morning everyone. Um have 2 question first 1 is um is is is is about the the comments you made earlier about the gross margin. I think you use the term, nice gross margin Improvement and to be expected in Q4. Uh and I just wanted maybe to to come back on the the results for that. And and also the, uh, the impact of the of the Forex if uh, if the dollar stays at this level and I have a follow-up. Thank you.

Lorenzo Grandi: This is expected. Q3, I have to say that if you compute the unused capacity charge in million dollars, let's say you see that in Q3 at the end is similar to the one that we had in Q3. This is due to the fact that in Q3 we will, let's say, put stronger control on our inventory. We do expect to achieve something in the range, in terms of days, for our inventory, 140. So it means that at the end, unloading charges still are significant during this quarter, will decrease in the next quarter, in Q4. The other element that you have to take in mind is that Q3 is still impacted by a negative efficiency.

Speaker Change: I take these questions on that. Thank you for this question. Clearly let's say what are the drivers that we do expect in Q4 to uh substantially? Let's say, help a sequential increase in in our growth Management on 1 side. Uh clearly we expected that our unused capacity charges will decline in respect to what we have in Q3.

Lorenzo Grandi: Yes, from our manufacturing. Yes, it is improving when we look at, let's say, the sequential dynamic moving from Q2 to Q3, but still is not at the optimal level. We will continue to improve in Q4. So this means that this is another driver that will help, let's say, the improvement of our gross margin in the next quarter. But this is assuming that, let's say, the exchange rate will stay substantially similar to the one that we have today. Clearly, there will be some.

Speaker Change: Uh, this is a expected. Q3 I have to say that if you compute the new capacity, charging million dollars, let's say you see that in Q3 at the end, a similar to the 1040 days. So means that that at the end and look into addresses are still are significantly in during the this quarter will decrease in the the next quarter. Thank you for uh, the other the other element that you have to take in mind, is that Q3 is still impacted by a negative H efficiency. Yes. From our manufacturing. Yes. Is improving when we look and let's say,

Speaker Change: Uh, this sequential Dynamic uh uh moving from Q2 to Q3, but still it's not at the optimal level. We will continue to improve in the in Q4. So this means that this is another driver that will help. Let's say uh the Improvement of our cross matching in in in the next quarter. But this is assuming that uh let's say the exchange rate will stay substantially similar to the 1 that we have today. Uh clearly that will be some

Speaker Change: Negative impact because uh they they impact of our Edge in policy will be a little bit lower than what we have. Let's say in the current quarter,

Gianmarco Bonacina: Unknown Attendee, Sara Russo, Remi El, Fabio Gualandris, Simone Coles, Didier Scemama, Unknown Attendee, Sara Russo, Remi El, Fabio Gualandris, Simone Coles, Didier Scemama, Thank you very much, and the follow-up is about the... Industrial Market. & Food Security Office, Coventry, Canada Well, first of all, you know that a significant part of the industrial market for us is done through the distribution. So, what is positive is POS, so the sales of our distributors increase in Q2, both sequentially and year-on-year, and our POPs were below the POS. So we are seeing a dynamic where the revenue recognition, we have the POPs below the POS, the POS is growing both sequentially and year-on-year.

But at the end, let's say most of the negative impact of the exchange rate has been already reflected in the in the in the Q3 gross margin. So this will not be unless there is still another big movement in the air. You should not be. Let's say another element. Assuming I repeat that we stay more or less at the level of the spot that we have today. So these are the dynamic that we see moving from a Q3 to Q4, for our course margin. So some improvement related to this impacts.

Speaker Change: Thank you. Thank you very much. Um, and and the follow-up is about the, the, the industrial Market because we talked a lot this morning about the the, the weakness of uh, of Automotive revenues compared to the expectations. But I just wanted to uh to to understand what, what, what is the driver for the for the recovery in in Industrials. Uh, is it, you know, inventory replenishment pulled in pulled in sorry or or real demand behind that. And um, yeah, if you can give some car, that would be helpful. Thank you.

Speaker Change: Market for us is done through the distribution.

Gianmarco Bonacina: So inventory and distribution are going to a normalization, I have to say, in Asia-Pacific, excluding China, back totally to normal in China, and still a bit higher than normal, okay, in India and America. But the dynamic is, again, industrial distribution, POS growing both sequentially and year-on-year, POP, as I described, below the POS. So it is not inventory replenishment, it is real demand. Then after, from other OEMs, pretty fragmented, clearly the growth is driven by a more smart industrial for us, and in a lesser extent for power and energy. But we don't see, I repeat, also, this is the opportunity, I say that, any effect of pulling on industrial, especially from China, for ST.

Speaker Change: Uh, so what is the positive is POS? So the, the sales of our distributor increase, uh, in Q2 both sequentially and year on March were below the POS. So we are seeing a dynamic where, the revenue recognition we have. The pop is below the POS, the POS is growing both, secondly and other areas. So inventory at distribution are going to normalization. I have to say, in Azure Pacific, excluding China back totally to normal in China, more and still a bit higher than than normal, okay? In in year in America, but the dynamic is again, industrial distribution. Posos growing both sequentially. Any other year pop as I described below the Key West so it is not inventory replenishment.

It is real demand.

But then after from the other OEM pretty fragmented, clearly the growth is driven by more smart industry all for us and in a lesser extent for our energy uh more we don't see. I repeat also, this is the opportunity, I say that any effect of pulling on Industrial especially from China.

Gianmarco Bonacina: So there is zero pulling in China from Chinese customers or distributors for ST, so we are immune against that. And as far as products are related, one of the main drivers, which is very encouraging to use, is a general purpose. The General Purpose microcontroller, again, went back to both sequential growth and year-over-year ratings, so showing the strength of our portfolio and ecosystem. Today, it is not the same case on General Purpose Analog. Why? Because on General Purpose Analog, we have still some other inventories that we are controlling with our POP, and PowerDiscrete a little bit similar.

Speaker Change: So there is zero pulling in China from Chinese customer or distributor, for St. So we are in use again that

Speaker Change: And as far as products are related, 1 of the main driver, which is very encouraging news, is a general purpose.

Speaker Change: The general purpose, microcontroller again, went back to both sequential growth and year-over-year. It is uh, so showing the strength of our portfolio and ecosystem,

Gianmarco Bonacina: So this is basically the key driver of the industrial market. Distribution, because of POS and demand. Then the smart industrial, lesser extent, power energy. From product, it is a General Purpose microcontroller, and in a less extent, for sure, General Purpose Analog and PowerDiscrete, because still some other inventories that we are controlling. So we control our POP.

Speaker Change: Well, today it is not the same case on general purpose analog. Why? Because in general, purpose analog, we have a skill. Some over inventory that we are controlling with our pop more and, and and power discrete a little bit similar.

Speaker Change: So so this is basically the key driver of the industrial Market distribution because the Pooh is the demand. Then the smart and the 3 less extent power energy from product. It is a general purpose microcontroller. And in a less extent, for sure, general purpose analog and Power in discrete because still some of our inventory that we are controlling. So we control our PP,

Gianmarco Bonacina: Thank you very much. Thank you, Stephane.

Gianmarco Bonacina: Next question, please. The next question comes from the line of Gianmarco Bonacina from Banca Acros. Please go ahead. Yes, good morning. A couple of questions. The first one is on gross margin again.

Speaker Change: Okay, thank you very much. Thank you. Stefan next question, please.

John Mark: The next question comes from the line of John, Marco, bonacina from bangka across. Please go ahead.

Gianmarco Bonacina: I think early June, Gianmarco, you said that when the company will reach again 3.6 to 3.8 billion, that could be about 600 business point improvement, I guess over the level of Q2 or Q1, I'm not sure. So given the euro dollar now is approaching 120, can we expect this level of improvement maybe going into next year or the year after could be a little bit lower, so maybe 400 to 500 business point?

Speaker Change: Yes, good morning. Uh, a couple of questions, the first 1 is on gross margin again. I think early June, the March you said that, uh, when uh, uh, the company will reach again, 3.628 3.8 billion. That could be about 600. This is pointing Improvement I guess over the level of, uh, uh, Q2 or q1. I'm not sure. Uh, so given the euro dollar, euro dollar now is approaching 120. Uh, can we expect this level of improvement? Maybe going into next year or the year after could be a little bit lower, so maybe 400 to 500 basis points.

Lorenzo Grandi: Thank you for your questions, so I will pass to Lorenzo to answer them. Now, clearly, when when we were modeling our growth margin, if you remember, and we will say that the level of our, let's say, model, intermediate model, 18 billion dollars, We were modelling with an exchange rate in the range of 1.09, let's say. Clearly, when we are at this level, there is an impact that you see when we move from this 1.09 that substantially was the one of last quarter. Now we are moving to 1.15, we have an impact that we size between 120 and 140 basis points, including also some small adjustments.

Thank you for your question. So I attached to learn. So to answer

Speaker Change: No, clearly when when we were modeling our gross margin, if you remember, and we will say that the level of our, let's say, model intermediate model, 18 billion dollars.

We were modeling with uh, uh, an exchange rate, uh, in the range of 1.09. Let's say, uh,

Speaker Change: Clearly. Uh, when we we are at this level, there is an impact that uh, you see when we move from this 1, 09 that substantially was the 1 of uh of uh last quarter. Now, we are moving to 115. We have an impact that we sized between 120. We said 40 basis point, including all.

Lorenzo Grandi: Clearly, let's say, moving an exchange rate, the spot rate, this will worsen. Anyway, let's say, you have to consider that, yes, there is the negative impact of the effects, but still we have, let's say, some leverage, let's say, in terms of gross margin. Because today we are still impacted by a significant amount of annual charges, and when we will be at that level of revenues, this will substantially disappear. So we are talking about 340 basis points in Q3. Then you have also to consider that there is a negative impact related to the manufacturing efficiency that is not yet at the optimal, let's say, level.

Speaker Change: Small adjustment. Clearly let's say, moving an exchange rate at the spot rate, this will will will worsening. Anyway, let's say, you have to consider that.

Lorenzo Grandi: Then there is another impact that we need to consider that is somehow, let's say, impacting negatively our gross margin that we are not seeing an optimized. means that data, let's say, for instance, our, let's say, level of The overall industry that is at the end, let's say the one that is more creative to our gross margin, still stay at the level that is not the one that we should be in our, let's say, portfolio revenues, that is now more closer to 20-21% than the 25-26% that we do expect, let's say, in a more normal situation for our company.

Let's say in term, of course matching because today we are still impacted by significant amount of annual charge and when we will be at that level of revenues, this will substantially disappear. So we are talking about 340 basis points in Q3. Then you have also to consider that, there is a negative impact related to the manufacturing manufacturing efficiency. That is not yet at the, at the optimal. Uh, let's say 11. Then there is another impact that we needed to consider. That is somehow, let's say impacting negatively, our gross margin is that we are not seeing an optimized mix.

Speaker Change: means that let's say, for instance, our let's say 11 of

Lorenzo Grandi: So all these elements, we do expect that we will improve our gross margin. Clearly, let's say, it remains that the model was, let's say, done on FX that was 1-0-9, so we need also to see where the exchange rate. Thank you.

Speaker Change: All their own industry. That is at the end, let's say the 1 that is more creative to our gross margin still stay at the level. That is not the 1 that we should be in our let's say, for for the revenues, that is now more closer to 2021 percent and then the 25/26 percent that we going to expect. Let's say in a, in a, in a more normal situation for our company. So all these elements we do expect that we will improve our uh, gross margin. Clearly, let's say it remains at that. The model will

Speaker Change: Let's say done uh an effect that goes 1. So we need also to see where the exchange rate.

Gianmarco Bonacina: Just a quick follow-up, more strategically on China, because we read at the end of June an article in DigiTime saying that Chinese automakers are moving to align with government directives by planning to use, let's say, domestically developed and manufactured automatic chips. And the article mentioned that in case there was a choice between a fully China chip and one designed by a foreign firm but fabricated in China, many automakers will opt for the former.

Gianmarco Bonacina: So can you remind us roughly how much is your exposure in terms of sales to Chinese OEM Inter1? And we know that you have a strategy China for China.

Gianmarco Bonacina: So do you see this as, let's say, enough to, let's say, offset this potential headwind that this article was mentioning? Thank you.

Speaker Change: Thank you. Just a quick follow-up. More strategically on China because we're at the end of June and article in digit time, saying that Chinese are to Makers are moving to align with government directives by, uh, planning to use. Let's say domestically, uh, developed and manufactured automatic chips. Uh, and the article mentioned that in case, there was a choice between a fully China chip and 1 designed by Foreign firm at fabricated in China. Many automatics, how to make us will opt for the former. So can you remind us roughly, how much is your exposure in terms of sales to Chinese OEM enter 1 and we know that you have a strategy China for China. So do you see this? As let's say enough to let's say offset this potential headwind that this article was mentioning thank you.

Gianmarco Bonacina: for waiting to deliver the exact numbers. Yes, I confirm that we built our strategy, China for China, that I repeat is encompassing not only manufacturing localised but also design, application labs, customer support, competence centre, in order to be seen as a Chinese player, I have to say. This strategy is very active on power, so silicon carbide and microcontroller, and we do believe that it will be a strategy enabling ST to compete against local players, and to be perceived by official authorities as a local player. We are not proven that some specific company owned by the state, in fact, will apply strictly this kind of rules.

Speaker Change: Oh, where, where things to deliver the exact numbers? Yes, I confirmed that we, we we built our strategies China, for China that I repeat is, is encompassing. Not only manufacturing localized, but also

Speaker Change: Design application Labs, uh, customer support competence Center.

Speaker Change: Uh, in order. Okay, to be, uh, seen as a as a shiny player, I have to say,

Speaker Change: For this strategy is, uh, let's say very active on power so, silicon carbide, and microcontroller. And we do believe that, uh, will be a strategy, um, enabling St to compete against local player, okay? And and to be perceived by, uh, a future authorities as a, as a local player,

Well, we are not proven that some specific company.

Gianmarco Bonacina: But overall, our Chinese customers as a whole are pragmatic. If we offer them a supply chain, local application support, design, quality labs, reliability labs, they will manage us as local players. So we do believe our strategy will mitigate a lot this effect.

Owned by the state. In fact. Okay, uh, will apply strictly this kind of, of, of of rules but overall, okay, uh our Chinese customer as as as all are pragmatic.

Gianmarco Bonacina: Yes, again, if there is some specific company owned by the state, it will be difficult to prevent this kind of dynamics. Then about the exposure, our revenues to Chinese customers at quarter in China is in the range of, depends on the quarter of course, but is in the range between 13-14% of our total revenue. what we sell to the headquartered Chinese customers.

Speaker Change: Uh, if we offer them, uh, a supply chain local, um, application support, uh, design a quality Labs, uh, reliability Labs. Okay? They will, they will manage us as a local player, so we do believe our strategy, okay? Will mitigate a lot. Okay, this effect. Yes, again, if there is some specific company honored by the state, okay, we we

Speaker Change: Quarter, Chinese customer.

Gianmarco Bonacina: Okay, just for automotive, right? Ah, no, this is the total, but for automotives it's very similar. I would say that at the end, let's say, when you take automotive... Okay, 13% of 40x percent, okay. Thank you.

Speaker Change: Okay, just in for for automotive, right? Ah, no this is the total B for automotive is very similar. I would say that at the end, let's say when you take Automotive 13% of 40x percent, okay? Thank you. Thank you.

Lee Simpson: Next question, please. The next question comes from the line of Lee Simpson from Morgan Stanley. Please go ahead. Thanks for filling me in. Hi, Lee. Can you hear me? We can hear you now. Okay. Morning, everyone.

Thank you. Next question, please.

Lee Simpson: The next question comes from the line of Lee. Simpson from Morgan sunley. Please go ahead.

Speaker Change: Can you hear me?

Lee Simpson: ah,

Lee Simpson: we can hear you now.

Lee Simpson: So I just wanted to ask about general purpose microcontrollers and the pricing there. I did look from our channel checks as though things were very strong in April, stable in May, but somewhat erratic going through June. So I just wanted to get a sense for how you thought the pattern was for pricing on general purpose microcontrollers into the second half, and if indeed this might vary by region.

Lee Simpson: Okay.

Marco Cassis: And then the second question I had was really on the timing of readiness for the 800-volt DC-DC supply for the PSU. We are hearing that it's quite difficult to meet that spec as delivered by NVIDIA, and whether or not you had confidence that you could hit the full 800-volt supply. Thanks.

Lee Simpson: Morning everyone. So just wanted to ask about general purpose, my controllers and the pricing there. I did look from our Channel checks, so things were very strong in April stable and may but somewhat erratic going through June. So I just wanted to get a sense for how you thought the pattern was for pricing. On general purpose, my controllers into the second half and if indeed this might vary, uh, by region and then the second question I had was really on the timing of of Readiness for the 800 volt dcdc Supply uh for the PSU. Uh, we are hearing that it is it it's quite difficult to meet that spec uh as delivered by Nvidia. Uh and whether or not you had confidence that you could hit the full 800

Lee Simpson: Volt, uh, Supply. Thanks.

Lorenzo Grandi: Thank you for your questions, so Lorenzo will comment on the prize and I will let Marco to comment on the NVIDIA opportunity. On the pricing in general purpose microcontrollers, what I can tell you is that we see a low single-digit pricing path. I know we have not detected any strange behavior, I have to say, but clearly, let's say, maybe region by region, the dynamic is a little bit different. But at the end, I can confirm that, let's say, on the general purpose, this is what we see today, with nothing particularly, let's say, strange in terms of behavior.

Speaker Change: Thank you for your question. So will come as the price, and I will let Marco to comment on the Nvidia opportunity.

Speaker Change: On the on the pricing in general purpose microcontroller, what I can tell you is that about we see really, let's say low single digit pricing part and know we we we have not detected.

Speaker Change: Any, any strange Behavior? I have to say, uh, but uh, clearly let's say maybe region by region at the dynamic is a little bit different. But, uh, at the end, I can confirm that. Uh, let's say, um, on the general purpose, this is the, the

Lorenzo Grandi: And, yes, you may have some sockets in which maybe there is a competition, a little bit more aggressive and so on. But at the end, I would say we are with a price in the range of low single-digit, that is what we have seen since the beginning of the year, nothing particularly.

Speaker Change: What we see today. We is nothing. A particularly let's say strange in term of Behavioral and yes you may have some socket in which maybe it is a competition, a little bit more aggressive and so on but but at the end I would say we are with a price in the range, low single digit. That is what we have seen since since the beginning of the year.

Speaker Change: A single particular in different.

Marco Cassis: So Marco... Yes, on the 800V, yes, you're right, sure, it is challenging in terms of specification, as you know, at least our proof of concept, which is in the hands of NVIDIA and on which we are working very close with them. It's a combination of different components, so you have the GAN, you have the SIC, you have the galvanic isolation drivers to drive the world overall. I'm confident, some of the components are more mature than others, so the wide bandgap materials are fine, we're still working to develop drivers, galvanic isolated, to make sure that the overall performance will be there.

Marco Cassis: It's a work in progress, so far so good, we have things to fix, but I think that I do not see real roadblocks at this stage that we cannot handle. Of course, it's a work in progress.

Speaker Change: So yes, you're right. Surely it is a challenging in terms of specification, as you know at least our proof of concept which is in hands of India and on which we are working very close with them is a combination of different, uh, components. So you have the gun, you have to seek. You have Albania isolation drivers to drive the, the world over all. Uh I'm confident. It's uh some of the components are more mature than others, so uh the white Bank Gap material are fine. We're still working to develop uh drivers galvanic is already to make sure that the overall performance will be there. It's a working progress.

Speaker Change: Uh, so far so good. We have things to

Speaker Change: To fix. But I I think that, uh,

Speaker Change: The wrong. I do not see, uh, real roadblocks at this stage that we cannot handle, of course. Uh uh, it's a working progress.

Marco Cassis: Just on that point, as a work in progress, it does seem to suggest this is maybe second half 26, early 27 as a sales impact rather than anything sooner? This is too early to say. It's a big change in terms of architecture. We will do everything we can to be as soon as possible ready to support. We are confident that we can. be part of the early adopters, but to early adopters. Thank you. Thank you, Lee.

Speaker Change: Just on that point. As a, as a working progress, it does seem to suggest. This is maybe second half 26 early, 27 as a sales impact rather than anything sooner.

Speaker Change: uh, this is, uh,

Speaker Change: Too early to say, it's, you know, it's a big change in terms of architecture, so, and, uh, we will do everything we can to be, as soon as possible ready to support. Uh, we are confident that we can, um, be part of, uh, of the early adopters, but, uh,

Speaker Change: too early to say,

Speaker Change: Very clear. Thank you. Thank you.

Operator: We have time for a very quick question for the last one.

Speaker Change: We have time for a very uh quick question for the last 1.

Sbastien Sztabowicz: The last question for today is from Sbastien Sztabowicz from Kepler Chevrolet. Please go ahead. Hello, everyone, and thanks for taking my question. Coming back to the inventories in the distribution channel, could you please quantify the level of inventories in the channel today? You were mentioning last quarter a bit less than two months of excess of inventory. I would be, I would be curious to know where we are today.

Speaker Change: The last question for today is from Sebastian, from Kepler. Please go ahead.

Sbastien Sztabowicz: The second one is linked to a pricing environment in China, and specifically on silicon carbide. We are seeing some price war raging between the EVOEM there. What do you see prices for silicon carbide building there? And do you have any kind of feasibility on your design that are expected to ramp in China on silicon carbide from 2026? Or it's too early to know what will be the pace of ramp of those designs.

Speaker Change: Could you please quantify the level of inventories in the channel today? You are mentioning last quarter a bit less than 2 months of excess of inventory. I would be, uh, I would say curve to know where we are today. And the second 1 is linked to a pricing environment in China and specifically our own silicon carbide. We are seeing some price War raging between the EU there. Who do you see prices for silicon carbide? Building there. And do you have

Lorenzo Grandi: Thank you.

Speaker Change: Any kind of visibility on your design that are expected to ramp in China and silicon carbide, from 2026 or is too early to know. What would be the base of front of those designs. Thank you.

Marco Cassis: Lorenzo will take the question on the channel inventory and Marco will comment on the silicon carbide in China. Yeah, in respect to the inventory, I would say that during Q3, our inventory and distribution has progressed in the right direction. It's true that when we were meeting, let's say in Q2, after our earnings release of the Q1 quarter, let's say our inventory in average was with an excess in the range of two months. Now I have to say that has declined at least by one month in average. So we are in average, let's say. with some excess of inventory is not across the board in the sense that now we see some families like, for instance, general purpose that are normalized in terms of inventory, especially in some regions that we are really at the normal level is even slightly before.

Speaker Change: Thank you. Lorenzo will take the question on the channel inventory. And Marco will will comment on the second car. Bye in China.

Lorenzo: Yeah. In in respect to the inventory, I would say that during Q3 our inventory in distribution as a progress in the right direction, uh, is do that when we were Met meeting, let's say in, in Q2, after our learning release of of the

Of the T1 quarter. Let's say our inventory in average, was with an excess in the range of 2 months. Now, I have to say that as a decline at least by 1 more thing, average, so we are in average, let's say,

Lorenzo Grandi: Maybe there is some difference region by region. Other families are suffering still a little bit more in terms of normalization of inventories, like in some product line in analog. But I would say that now the situation in distribution is getting in the right direction. We see now, let's say, the inventory moving down, let's say, and being, let's say, more in line with our target expectation. Still some excess, but moving in the right direction in terms of reduction.

Lorenzo: Seal with some excess of inventory is not across the board in the sense that now we see some families. Like, for instance, general purpose that are normalized in term of inventory, especially in some regions, we are really at the normal. Level is even slightly before. Uh, maybe there is some difference region by region, other family are suffering, still a little bit more in term of normalization of the inventories like in in some product line in analog. But I would say that now, the situation in distribution is getting in the right direction, we see. Now let's say the inventory, moving down, let's say and being, let's say more in line with our Target expectations, still some excess, but moving in the right direction in term of reduction,

Marco Cassis: On serum carbide for China. Yes, you're right. The price pressure in China on serum carbide is We are counteracting this, first of all, with accelerating the introduction of the new generations that are bringing advantages both in terms of performances and in terms of the size of the components. So Generation 4 is introduced, we are working for the Generation 5. Let's not forget that we have also a manufacturing footprint that is going to make us competitive also for that market, which means we are moving, as Jean-Marc was saying, from 60 to 80 inches and specifically in China we are going to have our manufacturing saloon that will start at the end of this year, beginning of next one.

Speaker Change: On see on carbide for China? Yes, you're right the price pressure in China so you can provide that is a strong price pressure but we are Contracting this first of all with accelerating the introduction of the new generations that are bringing advantages both in terms of performances. And in terms of they says all the components so generation of 4 is introduced, we're working for the generation of 5, let's not forget that we have also a manufacturing footprint that

Marco Cassis: We are addressing also, we are expanding, addressing not only the automotive but much more now also the industrial market. So all these components together should materialize in a growth on the Chinese market. Clearly the dynamics are strong, but I think we are pretty well equipped to counteract the dynamics that we've seen in the markets in China, for us it will be an important engine of growth in the years to come.

Speaker Change: Is going to make us competitive also for that market, which means uh we are moving as young Market was saying from 60 to 80 inches and specifically in China. We we are going to have our manufacturing Salon that we start the end of this year, beginning of next month.

Marco Cassis: I hope this answers your question. point of 25, okay, a year of growth for silicon carbon. Okay, thanks. Thank you. Thank you, Sebastian. Thanks, everyone.

Speaker Change: Uh, we are addressing also. Uh, we are expanding uh, addressing not only the automotive but much more now, also, we have the market. So all these components together should materialize in a growth in, on the Chinese market. Uh, clearly the dynamic are strong, but I think we are pretty well equipped to contract the Dynamics that we've seen. That market China for us is we've been important in of growth in the years to come

Please answer your question. Yeah, we anticipate 2026, okay, to be again.

Speaker Change: after the, the

Speaker Change: Point of 25. Okay, A year of growth for silicon carbide,

Speaker Change: Okay, thank you.

Operator: This concludes our call for today. If you have any further questions, please reach out to the investor relations team. Thank you very much. Thank you. Bye bye.

Speaker Change: Thank you. Thank you. Thank you, everyone. It's conclude our, uh, call for today. If you have any further questions, please reach out the investor relationship. Thank you very much.

Speaker Change: Thank you. Bye bye.

Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Corusco and thank you for participating in the conference. You may now disconnect your lines.

Operator: Goodbye.

Speaker Change: Ladies and gentlemen, the conference is now over. Thank you for choosing chorus call and thank you for participating in the conference. You may now disconnect your lines, goodbye.