STMicroelectronics posts $3.76bn Q3 revenue, guides to $4.15bn in Q4
STMicroelectronics reported third-quarter 2026 net revenues of $3.76 billion, up 17.9% year-on-year and 7.7% sequentially, beating the mid-point of its own guidance by 150 basis points. Gross margin came in at 37.3%, a 410 basis-point improvement on the same quarter of 2025, driven by lower unused capacity charges and a more favourable product mix. Operating income more than doubled year-on-year to $367 million, or $429 million on a non-GAAP basis once restructuring and purchase-price allocation charges are stripped out.
Net income attributable to shareholders reached $291 million, equivalent to $0.31 diluted earnings per share, against $237 million and $0.26 a year earlier. Free cash flow turned strongly positive at $351 million, compared with $130 million in Q3 2025, and the company's net financial position stood at $2.11 billion at the quarter close.
Segment performance
The strongest growth came from ST's RF Optical Communications segment, which posted revenues of $504 million, up 46.2% year-on-year, with operating margin expanding to 26.2% from 16.6%. The Embedded Processing segment, which includes general-purpose microcontrollers, grew 24.1% to $1.21 billion, with operating profit up 74.2% to $280 million. Analog, MEMS and Sensors revenues rose 8.8% to $1.56 billion, helped in part by revenues from the NXP MEMS sensor business acquired in Q1 2026 for $895 million. The Power and Discrete segment remained loss-making at the operating line, recording a loss of $81 million on revenues of $477 million.
President and chief executive Jean-Marc Chery pointed to improving order visibility and distribution inventory running below standard targets as confirmation of a sustained recovery, and named AI datacentres and low-earth-orbit satellite communications as company-specific growth levers beyond the broader cyclical upturn.
Market context and outlook
ST's Q4 guidance calls for net revenues of $4.15 billion at the mid-point, up 10.5% sequentially and 24.7% year-on-year, with gross margin improving further to 39.0%. If achieved, full-year 2026 revenues would reach approximately $14.5 billion, representing 22.8% growth on 2025 and a gross margin of around 36.4%.
The results place ST alongside Texas Instruments and Infineon in the cohort of diversified semiconductor vendors that have navigated a prolonged inventory correction and are now reporting accelerating top-line momentum. ST's RFOC segment growth reflects widening demand for optical components in both hyperscale datacentre interconnect and LEO constellation programmes such as Starlink and Amazon's Kuiper. The MCU recovery, led by general-purpose devices, is consistent with patterns reported by rivals earlier in the earnings cycle.
Capital expenditure remains elevated: net capex was $643 million in the quarter, up sharply from $401 million a year ago, reflecting ST's stated strategy of expanding its manufacturing footprint to meet structural demand. The company is mid-way through a programme to reshape its global cost base and shed manufacturing capacity that is no longer competitive, with $55 million in restructuring charges booked in Q3 alone.
One material risk flagged in the release is the uncertainty around global trade tariffs. ST's Q4 outlook explicitly excludes any impact from further tariff changes beyond current conditions, an unusual caveat that reflects continuing tension in US-China semiconductor trade policy and the EU's own export-control discussions. As an integrated device manufacturer with fabs in France, Italy and Singapore, ST has exposure to multiple trade-policy regimes simultaneously.
ST will publish Q4 2026 results on 28 January 2027, with a quiet period beginning 16 December 2026.