STMicroelectronics N.V. Citi’s 2026 Global TMT Conference
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traffic jam in the lifts. Good morning. I'm Pavan Daswani, Citi's European Tech Analyst, based in London, and we're extremely glad today to be joined by Lorenzo Grandi, CFO at STMicroelectronics. Lorenzo, thank you for joining us today.
You're welcome. Thank you to all of you.
Could we maybe start, I've got a few questions prepared, and then I'll pass it on to questions from the audience. Could we maybe start with the near-term demand trends? At the recent results, you talked about strong bookings across all end markets, a book-to-bill of close to 2 times, and improving visibility. Could you talk about what you have seen over the last month or so since the Q2 results in terms of orders, lead times, or inventory levels?
What can I say is that, actually, the situation in respect to what we were seeing during Q2 and what we said at the earning release of Q2 is unchanged. Means that the booking is still very strong. Our book-to-bill remain well above one. This is true in general, I would say, across the various market that we serve. At the end, the situation remain quite healthy. We see a very positive trend, similar to what we had said exiting Q2. No significant changes in respect to that.
Yeah. Any trends to flag in terms of end market demand?
Clearly what we see is that there is a strong demand for the AI infrastructure. This is definitely one trend that is very visible. I have also to say that when we look our market, like automotive and industrial, still there we see very strong demand. Industrial, definitely now the lead time for our STMicroelectronics is increasing significantly. For some of this product is even now reaching 50 weeks. So it's important lead time. Also in automotive, will be steadily the demand increasing, and the book-to-bill also here well above one.
How does that 50 weeks compare to last year?
Last year was completely a different situation. Last year, if you remember, we were still in a situation in which we were having an excess of inventory, distribution, these kind of things. Today, inventory and distribution is super lean, especially for this kind of product.
Okay. I want to come back on the automotive and industrial trends that you are talking about. Maybe let us start with the AI data center opportunity, which is clearly one of the biggest topics around ST today. You raised your data center revenue ambition to above $1 billion in 2026 and to well over $2 billion in 2027, which does leave a bit of room. What gives you confidence in guiding two years out, and what are the key capacity and supply constraints that controls how we should think about 2027?
No. Clearly, we see very strong demand, and as you know, we now see our revenue for this year above $1 billion in this application. For next year, we see revenue well above $2 billion. So means that we see really a strong demand in moving. Clearly, how we serve this application, we have served through, there are three, there is a thermal flow, we have the power flow and the connectivity flow. When we look at these three flows, clearly for us, the stronger revenues are coming from the connectivity flow, where we have the products that are the silicon photonics, we have the microcontroller, and we have the BiCMOS EIC that are for the optical transceiver.
Here, the demand is very strong, and indeed, what we expect, for instance, for next year is that mostly of our revenue will be in MDRF for around 80% of the billing. Only 20% will be in APMS where we serve the other two flow, substantially that are the thermal one and the power. On the power, clearly, we are marginal today, but we are creating our portfolio for the new architecture at 800V, and we do expect that to start to have a meaningful revenue after 2028 for the power.
When you think when that does come in 2028 and when that starts to contribute more meaningful, how do we think about that opportunity beyond that in terms of how you are thinking about market share opportunity, et cetera?
At the end, what we may say is that, clearly for AI, we have a significant opportunity. We have the ability to have the portfolio that is serving the optical transceiver as we have all the ingredients, including our ability for the packaging, what will come, let's say, the NPO, the CPO, these kind of things. We think that we are well-positioned in this respect. Then, as I said, we have also the opportunity to grow where today we are not so particularly strong. That is when we talk about the power flow, the power delivery from the grid to the GPU, this is where we may have opportunity to grow, even if not short term. Short term will be mainly driven by the connectivity portion.
Yeah. So on the revenues this year, next year, silicon photonics, how do you see the market share? Right now you've got a significant market share in that space. How do you see that evolving? How do you maintain that market share?
Today, what can I say is that we have a significant number of customers, and these customers are asking us to do long-term agreement. What does it mean, long-term agreement? Means that they are locking, let's say, capacity, volumes, pricing, and also with cash advance for many of these agreements that we are signing. So I think that it's difficult to me to talk about a number in terms of market share, but I think that now, with our positioning, our technology, our PIC100, we are really, let's say, playing a leading role in these silicon photonics.
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