Amid signs of recovery in analog chip demand, STMicroelectronics (STM.US) reported better-than-expected revenue for the fourth quarter of 2025 and issued optimistic guidance for the first quarter of 2026. The company's Q4 revenue saw a modest increase of 0.2% year-over-year, reaching $3.329 billion, surpassing the average analyst estimate of $3.29 billion. Gross profit, however, declined by 6.5% to $1.172 billion, resulting in a gross margin of 35.2%. Operating profit plummeted 66.0% to $125 million; excluding $141 million in impairment charges related to business restructuring, the quarterly operating profit would have been $266 million. Non-GAAP earnings per share stood at $0.11, a sharp decrease of 70.3% compared to the prior year. By business segment, revenue from the Analog, Power, and Discrete, MEMS, and Sensors (APMS) product group fell 4.6% to $1.861 billion, while revenue from the Microcontroller, Digital ICs, and RF (MDRF) product group grew 7.0% to $1.464 billion.
Looking ahead, STMicroelectronics anticipates first-quarter 2026 revenue to be approximately $3.04 billion, exceeding the average analyst forecast of $2.99 billion. The company also expects a Q1 gross margin of around 33.7%. This Franco-Italian government-backed chip manufacturer boasts a diverse product portfolio, supplying high-performance power chips for Tesla (TSLA.US) and traditional system-on-chips, alongside core chips for eSIM modules in Apple's (AAPL.US) flagship iPhone models. Its primary customer base includes automotive manufacturers and industrial enterprises. However, since the initiation of trade tensions by the former U.S. administration, these sectors have been grappling with the uncertainties posed by tariff threats. This lingering uncertainty risks prolonging the period of weak demand, as customers had built up excess chip inventories following the shortages experienced during the pandemic. As a critical link in the global supply chain, chip manufacturers are increasingly caught between geopolitical factions. Data indicates that STMicroelectronics relies heavily on U.S. clients, with approximately one-fifth of its revenue derived from Apple and Tesla. Notably, the company lacks manufacturing facilities in the United States, potentially exposing its customers to additional costs on imported components.
Significantly, the optimistic outlook from STMicroelectronics was echoed by its rival and fellow analog chip giant, Texas Instruments (TXN.US), which provided strong guidance after the market close on Tuesday. This convergence suggests a potential recovery within the analog chip market. Texas Instruments forecasts Q1 2026 revenue between $4.32 billion and $4.68 billion, with the midpoint of this range slightly above the market consensus of $4.42 billion. The company also projects earnings per share in the range of $1.22 to $1.48, with the midpoint surpassing the expected $1.26. Given Texas Instruments' long-standing position as the global leader in the analog chip market, its performance and outlook are often regarded as a key barometer for worldwide chip demand. Concurrently, another analog chip leader, Analog Devices (ADI.US), also released results signaling an entry into a recovery cycle. Analog Devices reported a 26% year-over-year increase in Q4 2025 revenue to $3.076 billion, with Non-GAAP EPS of $2.26, both exceeding market expectations. The company further projected Q1 2026 revenue of $3.1 billion and Non-GAAP EPS of $2.29, again topping analyst forecasts.
As we move into 2026, the global semiconductor market is gradually warming. The AI wave is generating massive demand, accelerating the consumption of various components. While memory chip prices have repeatedly hit new highs and passive components have been frequently raising their quotes, the analog chip sector has appeared more subdued. In reality, however, supply has quietly tightened, product lead times are continuously extending, and the curtain is rising on an industry-wide recovery. Analog chips form the foundation for sensing and power management in electronic systems, handling continuous signals like temperature, sound, and voltage to perform acquisition, amplification, filtering, conversion (e.g., ADC/DAC), and power management. They are essential across numerous fields, including communications, automotive electronics, industrial control, data centers/AI, consumer electronics, and medical devices. The large-scale construction of AI data centers is materially impacting the demand structure for analog chips. Compared to digital chips, analog chips play a critical role in fundamental functions such as power conversion, voltage regulation, and signal chain management. Within high-power-density computing clusters, specialized analog components are required to support 48V bus architecture hot-swap control, board-level power supply solutions, and current monitoring systems. Once these products are designed into a system, they typically enjoy long supply cycles and stable supplier-customer relationships.
Furthermore, since late 2025, leading analog chip manufacturers like Texas Instruments and Analog Devices have successively initiated price hikes, marking the beginning of a new price adjustment cycle for the industry. Unlike routine adjustments, this round of price increases is characterized by its concentration and persistence, with the core driver being a sustained imbalance between supply and demand. Reports indicate varying degrees of shortage for certain analog chip models used in automotive, industrial, and AI server applications. A key factor contributing to the supply tightness is the contraction in 8-inch wafer capacity—Samsung and TSMC are gradually phasing out their 8-inch wafer production. Multiple media reports have suggested that Samsung is accelerating the restructuring of its foundry lines, planning to shutter an 8-inch wafer fab within the year, while TSMC will gradually close an 8-inch facility by 2027. According to the latest wafer foundry survey by TrendForce, the reduction in 8-inch capacity by these two major players is expected to lead to a 2.4% decrease in global 8-inch capacity in 2026. Under these circumstances, the World Semiconductor Trade Statistics (WSTS) organization believes the expansionary trend in global chip demand is likely to continue strongly into 2026. Moreover, microcontroller units (MCUs) and analog chips, which have experienced persistent weakness since late 2022, are expected to enter a phase of robust recovery.
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