Catalysts
- EV and renewable energy demand (SiC chips)
- Growth in AI, IoT, and automation
- Government incentives for chip production
Assumptions
- Revenue Projection (5 Years)
- Estimate: ~$22-25 billion by 2029
- Reasoning:
- Current revenue: ~$17 billion
- Annual growth rate: ~5-6% CAGR (historical + industry trend)
- Growth drivers:
- Electric Vehicles (EVs) → SiC demand surging
- IoT & AI expansion → Increased adoption in smart devices
- Automotive & industrial electronics → Rising semiconductor integration
- China market expansion → Key growth opportunity
- Where do you think earnings will be in 5 years time? and why?
Earnings Projection (5 Years)
- Estimate: ~$3.5-4.5 billion by 2029
- Reasoning:
- Current earnings: ~$2 billion
- Profit margin expansion (currently ~11.7%, could reach 15-18%)
- Cost efficiencies: Advanced manufacturing in Italy + supply chain optimization
- Higher-margin products: AI chips, SiC, custom automotive semiconductors
Conclusion: Revenue growth moderate but steady, while earnings can scale faster due to cost optimizations and product mix shift.
Risks
- Declining profit margins (cost pressure)
- Supply chain risks in semiconductor industry
- Rising competition from ON Semiconductor & Asian manufacturers
How well do narratives help inform your perspective?
Disclaimer
The user cjimi holds no position in ENXTPA:STMPA. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
