STMicroelectronics raised its data-center revenue target for a second time this year as the race to build artificial-intelligence infrastructure keeps adding fuel to semiconductor demand.
The European chip maker, which counts Apple, Elon Musk's Tesla and SpaceX among its clients, said revenue from data centers should grow above $1 billion this year and well above $2 billion next year compared with prior guidance of about $1 billion in 2026 and roughly $2 billion in 2027.
The group had just upgraded those forecasts in June, showing how fast demand for chips to power energy-intensive data centers is building up. Like other chip makers, STMicroelectronics is reaping the benefits of hundreds of billions of dollars in spending commitments from some of the world's largest tech groups to build out AI infrastructure.
Chief Executive Jean-Marc Chery said revenue in the second half should grow above the company's normal 15% level for the period compared with the first half, citing data centers as well as satellites as the main drivers.
The group is looking to cash in on semiconductor demand for low Earth-orbit satellites that can provide connectivity to devices in remote areas as the sector keeps growing in the coming years.
STMicroelectronics expects to generate well above $3 billion in revenue between 2026 and 2028 for the supply of equipment to be used in space, a forecast that for now excludes potential benefits from orbital data centers.
Low Earth-orbit satellite networks are closer to Earth than traditional constellations, making them suitable to project low-latency broadband directly to smartphones in parts of the world where cell towers are unavailable.
SpaceX's Starlink provides direct-to-device connectivity to users in several countries, including Ukraine, where damage to terrestrial networks because of the war is common. STMicroelectronics is a key supplier to SpaceX under a partnership stretching more than 10 years.
AI and space represent opportunities for STMicroelectronics to grow and diversify its business, which has long been reliant on the automotive industry given its exposure to clients like Tesla, German parts supplier Continental and Israel's Mobileye. While that end-market has now recovered, it has been a weak spot for STMicroelectronics in recent years as carmakers slowly digested chip inventories they built at the height of the pandemic, weighing on demand for new orders.
Sales in the three months to June 27 grew 26% on year to $3.49 billion, above company guidance of about $3.45 billion and analysts' forecast of $3.47 billion, according to Visible Alpha. Chery said communications equipment and computer peripherals as well as automotive had led sales growth.
"During the quarter demand increased further, with strong bookings in all end markets. We saw improved visibility and signs of tight supply in several product categories," he said.
For the current quarter, STMicroelectronics is forecasting revenue of about $3.70 billion, up from $3.19 billion a year earlier. For the fourth quarter, revenue is expected above $4 billion compared with $3.33 billion a year earlier.
The group swung to a second-quarter net profit of $222 million compared with a loss of $97 million a year earlier. Its gross profit--a closely watched measure of pricing power--climbed to nearly $1.22 billion from $926 million, generating a 34.8% gross margin. Analysts had forecast $209.9 million in net profit and $1.22 billion in gross profit, according to Visible Alpha.
Write to Mauro Orru at mauro.orru@wsj.com
(END) Dow Jones Newswires
July 23, 2026 02:05 ET (06:05 GMT)
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