STMicroelectronics NV Acquisition of NXP MEMS Sensors Business Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Gardiner - Citi Infrastructure Investments LLC - Analyst : Good afternoon, gentlemen. Thank you for taking the question. I just have one on the general area of synergies. Perhaps firstly on the production side, Marco, you mentioned that you're already providing foundry services for NXP in this area. Are you doing all of their manufacturing, and so therefore, this is a very quite easy transition in terms of manufacturing? Or is there some of the products that will have to be brought in-house? And then, are there any areas of product overlap that need to be dealt with in terms of sort of streamlining those portfolios? Thank you. Marco Luciano Cassis - STMicroelectronics NV - President - Analog, Power & Discrete, MEMS and Sensors Group, Head of STMicroelectronics' Strategy, System Research and Applications, Innovation Office, Member of the Executive Committee Okay, I'll start from the second part. Thank you for the question. So in terms of product overlap, I will say really minimal because it's -- basically, the portfolio is really complementary. I will say that the NXP portion is much more on automotive, accelerometer, and pressure sensor, where we are much more in IMU and personal electronics, et cetera. So really minimal, if almost nil. In terms of what foundry service we provide to NXP, as you know, the MEMS is a combination of two parts -- you have the mechanical part and you have the ASIC part. So what we are providing now as a foundry business to them is basically the mechanical part. We have embedded in our fabs two of their technology, and we are providing that portion of the business. Surely there is some legacy that still comes from, let's say, other fabs outside ST, but the majority for the front-end parts will come from ST, while for the ASIC is still at this stage provided from external foundries. I hope this answers the question.

Question: Joshua Buchalter - Cowen and Company LLC - Analyst : Hey, guys. Thank you for taking my questions. I guess you mentioned it being accretive to your margin profile as you discussed in your 2027 model. Any more details you can give on sort of the near-term accretion path and math in 2026? NXP's margins, I think, are sitting in the high 50% range. So like, are you able to share if it's above or below their corporate average gross margins? Thank you. Marco Luciano Cassis - STMicroelectronics NV - President - Analog, Power & Discrete, MEMS and Sensors Group, Head of STMicroelectronics' Strategy, System Research and Applications, Innovation Office, Member of the Executive Committee Lorenzo, you can help him with this.

Question: Joshua Buchalter - Cowen and Company LLC - Analyst : Okay. Thank you, Lorenzo. Actually, one more on the financial side. I think post-close, you'll still have a healthy net cash position. Could you maybe speak to your appetite and how much room you think you have in the model for incremental M&A? And like, is this a signal of a desire to get more acquisitive over the medium and longer term? Thank you.

Question: Joshua Buchalter - Cowen and Company LLC - Analyst : Thanks, Lorenzo. Jerome Ramel - STMicroelectronics NV - Executive Vice President - Corporate Development, Integrated Marketing and Communications and Investor Relations Thank you, Josh. Next question, please. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2025 / 12:30PM, STMPA.PA - STMicroelectronics NV Acquisition of NXP MEMS Sensors Business Call

Question: Christopher Rolland - Susquehanna Financial Group LLLP - Analyst : Hi there. This is Chris Rolland. And my question is around competition. So for all of these products in particular, I don't know if you want to break them out into their individual products. But beyond NXP, who is the greatest competitive kind of threat among these auto products? Marco Luciano Cassis - STMicroelectronics NV - President - Analog, Power & Discrete, MEMS and Sensors Group, Head of STMicroelectronics' Strategy, System Research and Applications, Innovation Office, Member of the Executive Committee Thank you for the question. So clearly, the biggest competitor that we have in the automotive field is Bosch, which is addressing external market, but of course has also access to quite a large captive market. And this acquisition goes exactly in the direction to make us stronger because we are becoming the number two, and frankly, I think more or less the only alternative to Bosch considering the portfolio. We reinforced the R&D teams, so I think we will be in a position to compete extremely well against at this stage the number one, which is Bosch. So this is the major competitor. Of course, after that, in some other products, you have Sensata, you can have HP, et cetera. But considering the market they want to address clearly, we are now in a position, I think, to close more the gaps towards Bosch and to have more weapons to play in the market. So I'm extremely positive on the acquisition and the results to come. I hope this answers the question.

Question: Christopher Rolland - Susquehanna Financial Group LLLP - Analyst : Understood. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2025 / 12:30PM, STMPA.PA - STMicroelectronics NV Acquisition of NXP MEMS Sensors Business Call Jerome Ramel - STMicroelectronics NV - Executive Vice President - Corporate Development, Integrated Marketing and Communications and Investor Relations Thank you, Chris. Next question, please.

Question: Tristan Gerra - Robert W. Baird & Co Inc - Analyst : Hi. You've mentioned the $300 million in fiscal '24 revenue. Year to date and year over year, what's been the decline in that revenue given the ongoing inventory correction that we've seen in automotive? And how would you characterize the inventory situation for those products in the automotive supply chain currently? Marco Luciano Cassis - STMicroelectronics NV - President - Analog, Power & Discrete, MEMS and Sensors Group, Head of STMicroelectronics' Strategy, System Research and Applications, Innovation Office, Member of the Executive Committee You're speaking about the NXP portion or overall?

Question: Tristan Gerra - Robert W. Baird & Co Inc - Analyst : Great. Thank you very much. Marco Luciano Cassis - STMicroelectronics NV - President - Analog, Power & Discrete, MEMS and Sensors Group, Head of STMicroelectronics' Strategy, System Research and Applications, Innovation Office, Member of the Executive Committee Thank you. Jerome Ramel - STMicroelectronics NV - Executive Vice President - Corporate Development, Integrated Marketing and Communications and Investor Relations Thanks, Tristan. Next question, please. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2025 / 12:30PM, STMPA.PA - STMicroelectronics NV Acquisition of NXP MEMS Sensors Business Call

Question: Janardan Menon - Jefferies LLC - Analyst : Yeah, hi. Thanks for taking the question. I have two questions. One is, how does this NXP's MEMS gross margin compare with your own MEMS gross margin? You're saying it's higher than the company average even at 45% for ST. Can I assume that their gross margin is also much higher than your own MEMS gross margin? And if so, I'm just wondering, given that you are the foundry for the mechanical part, why is that? Is that mainly because they are more automotive focused and you have more personal electronics, and in general, the pricing pressure is higher than personal and that's why? Is that the main reason? And then I have a brief follow-up. Marco Luciano Cassis - STMicroelectronics NV - President - Analog, Power & Discrete, MEMS and Sensors Group, Head of STMicroelectronics' Strategy, System Research and Applications, Innovation Office, Member of the Executive Committee Lorenzo, do you want to take this or you want me to answer?

Question: Janardan Menon - Jefferies LLC - Analyst : Understood. And my follow-up is, ST obviously was one of the early players in MEMS. Almost -- close to 15, 20 years ago, you saw extremely strong growth, you were a marketing leader. But if I remember right, since that was mainly personal electronics, and then if I remember right, around 8, 10 years ago, you said you wanted to diversify into automotive, which was clearly a great growth area for MEMS. So I'm just wondering why you were not able to be that successful in the automotive on your own IP and production capabilities and why you could not take on Bosch, for instance, on your own and you needed to do the acquisition to get to that strong position in automotive. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2025 / 12:30PM, STMPA.PA - STMicroelectronics NV Acquisition of NXP MEMS Sensors Business Call Marco Luciano Cassis - STMicroelectronics NV - President - Analog, Power & Discrete, MEMS and Sensors Group, Head of STMicroelectronics' Strategy, System Research and Applications, Innovation Office, Member of the Executive Committee Okay. In the past, you are right, it takes -- first of all, automotive is a market that takes time to enter. And our major -- if you look back in the years, the major -- our technologies also were born at the beginning more to support the personal electronics and the computer equipment, computer peripherals field. We had success in automotive because we are number one in navigation system. More complex is the IMU, the six axis, where, by the way, we are at this stage pretty well positioned. We could do expanding automotive we are doing it. But this is an opportunity of a great acceleration because the position on accelerometers with the technology, which is designed specifically for passive safety and vehicle dynamics control, traction control that NXP has. It has been something specifically designed. These were fields that we are not really addressing inside the automotive, so there is a very good complementarity. So I would say, coming back, yes, we had good progress. Let's not forget that Bosch has a huge captive market and has been there for many, many years. So we have good progress in the automotive, but with the acquisition of NXP, considering also the dynamics of the automotive market, it is surely an accelerator of our presence in that field, and we can leverage on the knowledge and the IPs and the technology that they have developed specifically for that market. So you will see a strong acceleration in what we are doing, not only adding the two things, but creating synergies to expand portfolio and to become even more aggressive in the market that we cover. I hope that this answers the question.

Question: Domenico Ghilotti - Equita SIM SpA - Analyst : Good afternoon. I have a question on the overlap in terms of client base. So if you see areas in which you can cross-sell and/or areas, geographies. Marco Luciano Cassis - STMicroelectronics NV - President - Analog, Power & Discrete, MEMS and Sensors Group, Head of STMicroelectronics' Strategy, System Research and Applications, Innovation Office, Member of the Executive Committee I mean, overlap, the Tiers 1 that they are serving, we are serving clearly. Because when we speak about Denso, Veoneer, et cetera, these are customers that we are serving. We are serving with a different portfolio. That's why there is basically no overlapping, and that's why it's a great opportunity. Because now -- and I think the customer will be not worrying about the change of -- because they do know us and we are an IDM, vertically integrated, so it's also a positive, I want to believe. And we can leverage now on having a wider portfolio that will allow us to reinforce the overall sales of ST products at these customers. So it's very important for you to understand that, really, the overlaps are minimal. We were focusing on different kinds of products, and this is why it's really a great opportunity. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2025 / 12:30PM, STMPA.PA - STMicroelectronics NV Acquisition of NXP MEMS Sensors Business Call