Franco-Italian semiconductor manufacturer STMicroelectronics has reported a sharp improvement in quarterly profits as demand from AI data centres and satellite communications helps revive its business.
The company announced third-quarter revenue of $3.76 billion, up 17.9 per cent from the same period last year. Operating income reached $367 million, compared with $180 million a year earlier, while adjusted operating income rose to $429 million.
The adjusted figure exceeded analysts’ expectations of about $400.5 million, suggesting the company’s recovery is proceeding faster than expected. Gross margin improved to 37.3 per cent from 33.2 per cent as ST benefited from a more profitable product mix and lower costs associated with underused manufacturing capacity.
STMicroelectronics chief executive Jean-Marc Chery said the improvement reflected stronger customer orders and growing demand across several markets.
The company has traditionally depended heavily on automotive and industrial semiconductor customers, both of which have experienced periods of weak demand and excessive inventory. However, its exposure to communications equipment, computing hardware and low-Earth-orbit satellite networks is becoming increasingly important.
AI data centres require a broad range of supporting chips, including power-management devices, analogue components and specialised communications silicon. Satellite communications operators are creating another demand source, as new constellations require large quantities of radio-frequency components and supporting electronics.
ST expects its data-centre business to generate more than $1 billion in revenue in 2026 and substantially more than $2 billion in 2027. The company forecasts more than $3 billion in space-related equipment revenue between 2026 and 2028, providing another potential growth opportunity outside traditional electronics markets.
For the fourth quarter, ST expects revenue of approximately $4.15 billion, comfortably above the $3.76 billion generated in the third quarter and slightly ahead of market forecasts.
The company anticipates a gross margin of about 39 per cent, while full-year revenue is expected to reach $14.5 billion, up nearly 23 per cent.
Chery said demand remained well above supply, prompting the company to expand manufacturing capacity and restructure its existing production operations. Its radio-frequency and optical communications business grew 46.2 per cent year on year, suggesting the shift toward communications infrastructure is already delivering results.
