Morningstar Rating

Stock Research and Analysis

by Peter Wahlstrom, CFA

Bulls Say

STMicro has strong customer relationships with large industrial firms like Siemens and GE, which offers some long-term growth potential.
The firm completed the split of ST-Ericsson, its majority-owned joint venture, in late 2013, which could materially improve its future performance.
STMicro sold its stakes in two low-margin memory chipmakers in recent years, another sign that management is serious about improving the firm's profitability profile. Read more 

Bears Say

The firm is essentially controlled by the French and Italian governments, which raises doubts as to whether it is truly focused on operating efficiency.
Despite a relative scale advantage, STMicro's gross margins and operating profits are significantly lower than those of other successful analog chipmakers.
Several analog players are vying for share of the growing automotive market, and STMicro needs to consistently prove itself in order to remain competitive. Read more 

Management

We view STMicro as good stewards of shareholder capital. STMicro has a complex corporate structure that differs from the typical U.S.-based firm; 27.5% of the firm is owned by a group of companies controlled by the French and Italian governments. Moreover,  Read more 

Profile

A merger between Italian firm SGS Microelettronica and the nonmilitary business of Thomson Semiconductors in France formed STMicroelectronics in 1987. STMicroelectronics   Read more 

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