On Tuesday, semiconductor giants STMicroelectronics NV (STM) and Qualcomm Inc (QCOM) subsidiary Qualcomm Technologies International announced a strategic alliance focused on bolstering industrial and consumer Internet of Things (IoT) solutions through edge artificial intelligence. The partnership aims to integrate Qualcomm Technologies’ cutting-edge AI-powered wireless connectivity with the microcontroller (MCU) ecosystem developed by STMicroelectronics. This integration will create a powerful synergy, enabling a broader implementation of AI across a diverse range of enterprise, industrial, and personal applications.
Remi El-Ouazzane of STMicroelectronics emphasized the crucial role of wireless connectivity in facilitating the rapid expansion of edge AI across an ever-growing spectrum of use cases. This collaboration comes at a time when STMicroelectronics is facing headwinds in the industrial and automotive sectors. The company’s stock has plummeted over 33% in the past year, and its second-quarter revenue declined by 25.3% due to weakness in these key markets. The company’s reliance on major clients like Tesla Inc (TSLA) and Apple Inc (AAPL) has added to its challenges. Several Wall Street firms, including Craig-Hallum, TD Cowen, and Bernstein, have lowered their price targets on STMicroelectronics stock following the disappointing earnings report.
In contrast, Qualcomm stock is on an upward trajectory, having gained over 48% in recent months. The company reported an 11% increase in third-quarter revenue, driven by strong performance in its handset and automotive segments. In the third quarter, Qualcomm secured over ten new design wins in the automotive sector, showcasing its growing presence in this promising market. JPMorgan analyst Samik Chatterjee highlighted Qualcomm’s growth potential, attributing it to regaining market share with Samsung Electronics and expanding into the automotive and IoT sectors, partially offsetting the revenue loss from Apple.
The recent interest rate cuts by the U.S. Federal Reserve and China are expected to stimulate discretionary spending by companies in the industrial and automotive sectors. Lower interest rates can potentially revive these sectors by encouraging investments and boosting economic activity.
At the close of trading on Tuesday, STM stock was down 3.48% at $28.70, while QCOM stock declined by 2.44% to $165.73. This strategic partnership between STMicroelectronics and Qualcomm Technologies is likely to accelerate the adoption of AI in the IoT space, bringing forth innovative applications and solutions across various industries.
