GENEVA and SAN DIEGO - STMicroelectronics (NYSE: STM), a prominent semiconductor manufacturer, and Qualcomm (NASDAQ:QCOM) Technologies International, Ltd., a subsidiary of Qualcomm Incorporated, have announced a strategic collaboration to enhance industrial and consumer Internet of Things (IoT) applications with edge AI capabilities. The partnership aims to integrate Qualcomm's wireless connectivity solutions with STMicroelectronics' STM32 microcontroller ecosystem.
The collaboration is set to begin with the integration of Qualcomm Technologies’ Wi-Fi/Bluetooth/Thread combo system-on-a-chip (SoC) into the STM32 platform. This integration is expected to simplify and expedite the design process for developers, allowing for faster and more cost-effective development of IoT applications.
Remi El-Ouazzane, President of Microcontrollers, Digital ICs and RF Products Group at STMicroelectronics, emphasized the importance of wireless connectivity in spreading edge AI technology across various applications. The strategic partnership with Qualcomm Technologies is seen as a move to start with Wi-Fi/Bluetooth/Thread combo SoC and potentially expand to include other wireless connectivity products.
Rahul Patel, Group General Manager of Connectivity, Broadband and Networking Business Unit at Qualcomm Technologies, highlighted Qualcomm's R&D leadership in wireless IoT and the acceleration of feature-rich capabilities across the IoT that this collaboration with STMicroelectronics is expected to drive.
This alliance is poised to offer self-contained modules that combine Qualcomm Technologies’ Wi-Fi/Bluetooth/Thread combo SoC portfolio with any STM32 general-purpose microcontrollers, streamlining wireless connectivity for ST's extensive developer ecosystem. The first products from this partnership are anticipated to be available to OEMs in Q1 2025, with broader availability to follow.
Andrew Zignani, Senior Research Director at ABI Research, commented on the significance of the collaboration, noting the expected growth in the connected devices market and the need for high-performance wireless connectivity solutions paired with diverse microcontrollers.
This news is based on a press release statement and reflects the ongoing efforts of companies to innovate in the IoT space, aiming to cater to a market that is increasingly demanding sophisticated and integrated connectivity solutions.
In other recent news, STMicroelectronics has seen a series of developments. TD Cowen has maintained its Buy rating on the company's stock, with an emphasis on the potential of silicon carbide technology and strategies to maintain financial performance despite market fluctuations. BofA Securities also maintained a Buy rating, citing the company's potential to reduce costs and an attractive risk/reward profile.
Despite an 8% shortfall in third-quarter guidance, STMicroelectronics still holds a Buy rating from TD Cowen. The company reported Q1 2024 net revenues of $3.47 billion and a gross margin of 41.7%, with a net capital expenditure of about $2.5 billion for strategic manufacturing initiatives.
Baird kept a Neutral rating and $35.00 price target for the company, noting an increase in inventory and a reduction in its full-year revenue forecast. Goldman Sachs upgraded STMicroelectronics from Sell to Neutral, increasing the price target to EUR42.50.
Lastly, STMicroelectronics reported exceeding expectations with Q2 2024 net revenues of $3.23 billion, driven by higher revenues in Personal Electronics. However, the company experienced a year-over-year decline in key financial metrics. These recent developments highlight the company's ongoing efforts to navigate market challenges and maintain investor confidence.
InvestingPro Insights
STMicroelectronics' strategic collaboration with Qualcomm Technologies comes at a crucial time for the company, as recent InvestingPro data reveals some challenges in its financial landscape. The company's revenue growth has seen a significant decline, with a -25.29% drop in quarterly revenue as of Q2 2024. This partnership could potentially help STMicroelectronics reverse this trend by tapping into new IoT market opportunities.
Despite the recent revenue setback, STMicroelectronics maintains a strong financial position. An InvestingPro Tip highlights that the company holds more cash than debt on its balance sheet, which provides financial flexibility to invest in strategic initiatives like the Qualcomm partnership. Additionally, with a P/E ratio of 9.45, the stock appears to be trading at a relatively attractive valuation, potentially reflecting the market's current underestimation of the company's future growth prospects in the IoT sector.
Another InvestingPro Tip notes that STMicroelectronics has maintained dividend payments for 26 consecutive years, showcasing its commitment to shareholder returns even during challenging periods. This consistent dividend policy, coupled with the company's efforts to innovate and expand its market presence, may appeal to long-term investors looking for stability and growth potential in the semiconductor industry.
For readers interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for STMicroelectronics, providing a deeper understanding of the company's financial health and market position.
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