By Nathan Vifflin
Jan 29 (Reuters) - STMicroelectronics forecast first-quarter revenue slightly above market expectations on Thursday as its main markets showed signs of recovery, but warned restructuring
costs would recur after it booked a $141 million hit in the fourth quarter.
Shares of the Franco-Italian group rose up to 5% in early trading and were 2.2% higher by 1115 GMT.
"We are entering 2026 with better visibility than entering 2025, with the inventory correction in distribution progressively improving," CEO Jean-Marc Chery said in an investor call.
STMicro's core markets – automotive, industrial and consumer electronics – cooled in the years after the pandemic, as demand normalized, inventories swelled and customers pulled back on orders.
It reported fourth-quarter net income of $125 million, below market expectations of $222 million and the year-ago result of $369 million. Without the impairment charge, net income would have been $266 million.
BETTER TRENDS AHEAD
STMicroelectronics forecast first-quarter revenue of about $3.04 billion, above last year's figure of $2.71 billion. Analysts were expecting $2.99 billion on average, according to LSEG data collected ahead of the earnings report.
"Slightly better than expected fourth-quarter results and an above seasonal first-quarter guidance are good signs that the group is seeing better trends," analyst Stephane Houri from ODDO BHF said in an emailed comment to Reuters.
Unlike Nvidia's AI accelerators or Samsung's in-demand memory chips, STMicro makes the less glamorous workhorses of electronics – microcontrollers and power-management components that translate real-world signals into data and manage power in everything from Apple's iPhones to Tesla's electric vehicles.
RESTRUCTURING COSTS SPREAD ACROSS 2026
STMicro is also facing a painful and contested shake-up of its European manufacturing footprint, moving output away from legacy fabs in France and Italy and concentrating investments in newer, more advanced sites.
Finance chief Lorenzo Grandi told Reuters that some cost impacts would be felt in every quarter of 2026. "The fourth quarter definitely is on the high side," he added.
The company had already booked an impairment related to restructuring costs in July, which marked its first net income loss in more than a decade.
Grandi told investors that operational charges would significantly decline during the year, which should work as a driver for gross margin improvement through 2026.
(Reporting by Nathan Vifflin in Gdansk; Editing by Matt Scuffham and Milla Nissi-Prussak)
