STMicroelectronics raised its 2026 forecast for AI data centre revenue on Oct 29, after demand from data centres and satellite operators helped it beat market expectations for third-quarter earnings.
The Franco-Italian chipmaker now expects to book about US$1.3 billion (S$1.6 billion) in data centre revenue in 2026, up from a July forecast of more than US$1 billion. It reiterated the 2027 goal of well above US$2 billion.
Chief executive Jean-Marc Chery told analysts that demand was driven mainly by STMicro’s silicon photonics chips, which use light rather than electrical signals to move data between servers.
The company’s quarterly operating income, excluding one-off charges, was US$429 million, nearly doubling from a year ago and beating the US$400.5 million expected by analysts polled by LSEG.
It forecast fourth-quarter revenue of US$4.15 billion, up from US$3.76 billion in the third quarter, give or take 3.5%. Analysts had expected US$4.10 billion.
“In an environment where demand remains well above supply, we continue to expand capacity,” Chery said in the earnings statement.
STMicro, which makes chips ranging from microcontrollers to sensors and power semiconductors for cars, factories and smartphones, said higher sales of communication equipment, computer peripherals and personal electronics drove the beat.
It had said already in July that fourth-quarter sales would be more than US$4 billion. Chery said on Oct 29 that company-specific drivers, including data centre demand and low-Earth-orbit satellite communications, were adding to the cyclical recovery.
The company’s gross margin rose to 37.3% in the third quarter from 33.2% a year ago, helped by a higher share of sales from more profitable chips and lower costs from idle factory capacity. STMicro expects the margin to rise to about 39% in the fourth quarter.
STMicro shares opened 3.7% lower but quickly recovered to trade slightly positive by 0935 GMT. REUTERS
