Having last week cited an alleged small fire at an STMicroelectronics (STM -0.6%) fabrication facility in Crolles, France, firm revisits the development, claiming the sensor manufacturing component of the site as back in commission as of yesterday, with the company prospectively "back to their original delivery schedule."
Comprising STMicroelectronics' motion sensors, touch-screen controller IC, STM32 microcontrollers and NFC controller IC, the contribution is notable, especially as prior involvement with Nintendo's Wii is held by STMicroelectronics in particularly high regard.
Amid recent speculation alleging production delays out of STMicroelectronics (NYSE:STM) for 3D sensor components intended for utilization in Apple's next-generation iPhone, analyst John Donovan notes checks citing a small basement fire within a cleanroom at a company fabrication facility in Crolles, France.
Further: "This fab is the sole manufacturing facility for STM’s 3D sensors. This incident has currently shutdown the facility and our research indicates it could take several weeks to requalify the fab and resume production. Our understanding is that several AAPL employees are on site in Crolles presently. These 3D sensors have a long production cycle time and relatively low yield rates, which will make it difficult for STM to get back on their production schedule target with each day that the fab is incapacitated. Importantly, we have yet to see any corresponding push out of iPhone 8/X builds with the rest of the supply chain. We believe it’s likely that AAPL and STM are assessing the impact to the schedule and working on a recovery plan."
With Apple's tenth-anniversary iPhone model largely anticipated for fall release, speculation has STMicroelectronics' 3D image sensors in potentially delayed initial delivery regarding the device, with a "lag of several months" portended.
Quality of STMicroelectronics' components is noted (Bryan, Garnier & Co analyst Dorian Terral) as a non-issue, while longer-than-anticipated acceleration of the smartphone due to increasing technological complexities is reasoned.
From $11 prior, analyst Anthony Stoss notes capital expenditures guided at approximately $1B-$1.1B for 2017, compared to approximately $607M in 2016, as a likely result of an indicated and thought to be Apple related, H2 2017 revenue ramp.
Considers STMicroelectronics set up favorably given expected substantial volume of Apple's forthcoming 2017 iPhone upgrade, and notes potential to increase present ToF content from around $2 ASP/phone to $4 ASP/phone should an additional sensor be utilized in support of 3D sensing and augmented reality capabilities.
Also notes belief of a Samsung Galaxy S8 win for ToF.
Increases 2017 revenue outlook to $7.845B (from $7.47B; consensus $7.33B) and EPS to $0.70 (from $0.63; consensus $0.53).
Q4 2016 results – revenue $1.86B (+11.4% Y/Y, in line), EPS $0.13 (non-U.S. GAAP $0.15; consensus $0.13), net earnings $112M, gross margin 37.5% (over guidance), operating margin before impairment and restructuring 8.25%, gross profit $698M, combined R&D and SG&A expense $570M (+$28M Q/Q), other income and expenses, net, recorded income of $25M (vs. $18M Q/Q), impairment and restructuring charges $24M (vs. $29M Q/Q), operating income $129M (vs. $90M Q/Q, $25M Y/Y), operating income and operating margin before impairment and restructuring charges $153M (vs. $119M Q/Q)
Q1 2017 projections – net revenue decline 2.4% Q/Q at midpoint (would represent 12.5% growth Y/Y at midpoint), gross margin 37% at midpoint
STMicroelectronics (NYSE:STM) president and CEO Carlo Bozotti: "Based on market forecasts, a positive booking trend, and a strong point-of-sales performance at our distributors, we see the momentum of the second half of 2016 to continue entering 2017 . . . In order to support ST's innovative product portfolio and to fuel significant revenue growth in 2017 and beyond, particularly from new specialized technologies and products, we expect to invest approximately $1 billion to $1.1 billion in 2017. Specifically, the Company is investing in 300mm front-end manufacturing and in back-end assembly and test to support new products. In particular, we anticipate a newly won program to ramp with substantial revenues in the second half of 2017."