Ladies and gentlemen, welcome to the STMicroelectronics Q3 2020 Earnings Release Conference Call and Live Webcast. I am Alessandro, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. You can register for questions at any time by pressing star and 1 on your telephone.
Webcast viewers may submit their questions in writing by the relative fields. At this time, it's my pleasure to hand over to Celine Berthier, Group Vice President, Investor Relations. Please go ahead.
Thank you, Alessandro. Good morning, everyone, and thank you for joining our Q3 2020 financial results conference call. Hosting the call today is Jean Marc Sherry, ST's President and Chief Executive Officer. Joining Jean Marc on the call today are Lorenzo Grandy, President of Finance, Infrastructure and Services and Chief Financial Officer Marco Cassie, President of Sales, Marketing, Communications and Strategy Deployment. These live webcast and presentation materials can be accessed on ST's Investor Relations website.
A replay will be available shortly after the conclusion of this call. This call will include forward looking statements that involve risk factors that could cause ST's results to differ materially from management expectations and plans. We encourage you to review the Safe Harbor statement contained in the press release that was issued with the results this morning and also in ST's most recent regulatory filings for a full description of these risk factors. Also, to ensure all participants have an opportunity to ask questions during the Q and A session, please limit yourself to one question and a brief I'd now like to turn the call over to Jean Marc, ST's President and CEO.
Thank you, Celine. Good morning and thank you for joining ST on our Q3 2020 earnings conference call. Let me begin with some opening comments. Starting with Q3, as announced on October 1, 2020, net revenues were $2,670,000,000 up 27.8% on a sequential basis, above the high end of our backlog range. This revenue performance was due to significantly better than expected market conditions through the quarter, demand for automotive products, our engaged customer programs in personal electronics, as well as microcontrollers were the main factors that contributed to this result.
Gross margin at 36% included about 140 basis points of unsaturation changes. Our operating margin was 12.3 percent and our net income was $242,000,000 For the 1st 9 months, net revenues grew 2.7 percent year over year to $6,980,000,000 with an operating margin of 9.5 percent and a net income of $525,000,000 Looking at Q4 2020, at the midpoint of our guidance, we expect net revenues to be about $2,990,000,000 representing sequential growth of about 12% and gross margin to be about 38.5 percent, including about 70 basis points of unsaturation charges. For the full year 2020, we now expect net revenues of about $9,970,000,000 at the midpoint of our Q4 2020 guidance, translating into 4.3% year over year growth and with a double digit operating margin performance. Our CapEx plan for 2020 didn't change at $1,200,000,000 Year to date, we have invested $897,000,000 Now let's move to a detailed financial review of the Q3. During Q3, market conditions improved progressively versus expectations.
In early September, we communicated that net revenues would come in above the midpoint of our Q3 guidance. And as we pre announced on October 1, net revenues came in 6.90 basis points above the high end of our outlook range. Net revenues increased 4.4% year over year with higher sales in microcontrollers, RF communications, MEMS and analog, partially offset by lower sales of Automotive, Imaging and Power Discrete. Year over year sales to OEMs increased 7.5% and sales to distribution decreased 3.4%. On a sequential basis, net revenues increased 27.8 percent and whole product groups grew revenues double digit.
Our gross profit was $959,000,000 a decrease of 0.8 percent year over year. Our 3rd quarter gross margin at 36% came in at the midpoint of our guidance, decreasing 190 basis points year over year, mainly due to price pressure and unsaturation charges. Unsaturation charges were about 140 basis points. Moving to operating expenses, we continue to manage them. In parallel, we continue to execute on our R and D, sales and marketing programs and transformation initiatives.
Net operating expenses at $628,000,000 were below what we anticipated when entering the quarter. Our 3rd quarter operating margin was 12.3%, decreasing 80 basis points on a year over year basis. Both ADG and AMS operating margins decreased, while MDG operating margin improved. Our net income decreased to $242,000,000 and EPS to $0.26 compared to $302,000,000 $0.34 per share respectively in the year ago quarter. Turning now to the revenue performance of the product groups on a year over year basis.
ADG revenues decreased 4.9% on weaker demand in legacy automotive and in power discrete, while AMS revenues increased 3% with MEMS and Analog higher, while Imaging sales were lower. MDG revenues increased 18.6%, reflecting double digit growth in both microcontrollers and RF Communications. In terms of operating margin by product group on a year over year basis, NVG operating margin increased to 17.4% compared to 15.7 percent, while ADG operating margin decreased to 5.8% from 8.5 percent and IMS operating margin decreased to 17.5% compared to 20.5%. Net cash from operating activities decreased 10.3 percent to $385,000,000 in Q3, compared to $429,000,000 in the year ago period. CapEx was $319,000,000 in the quarter, compared to $244,000,000 in the year ago period.
After the cash outflow of $76,000,000 for acquisition to further strengthen the company's wireless connectivity capabilities and $33,000,000 of accretive interest paid to settle the 2022 tranche A of the convertible bond issued in 2017, free cash flow was negative $25,000,000 in the Q3, compared to positive $170,000,000 in the year ago quarter. In Q3, we paid cash dividends totaling $38,000,000 During the quarter, ST exercised the call option for the early redemption of its $750,000,000 22 tranche A of the convertible bond issued in 2017, Simultaneously with the exercise of the call option, ST issued a new sorry $1,500,000,000 dual tranche cellular unsecured convertible bond due 25 and 2017. Let's now discuss the market and business dynamics. In Automotive first, global demand picked up faster than what we were expecting in July. This acceleration was driven by car production volumes, which continued to increase in China and South Korea, and restarting faster than expected in Europe and in the U.
S. Importantly, during Q3, we saw a progressive acceleration of key trends driving the increase in semiconductor content per car, electrification and digitalization, our strategic focus areas. In car electrification, the latest 2020 market estimates for hybrid and electrical vehicle production are for about 7,000,000 and 2,000,000 vehicles respectively. Also in car digitalization, the trend is positive, although with a different mix, the pandemic may delay level 4 and 5 enhanced deployments, but demand is clearly accelerating on level 2 and level 2 plus These dynamics are visible in our achievements during the quarter. In car electrification, we had again a number of new design wins for silicon carbide MOSFETs in applications such onbound charger for electrical vehicles.
We also won a number of sockets with complementary technologies such as our MD Mesh MOSFET for a battery management system, low voltage transistor in an integrated based starter generator, Vipower products for a body electrification platform, and with ultrafast and silicon carbide diodes. Overall, our silicon carbide engagement with customers has increased again during the quarter. As of today, we are engaged with 60 customers in 68 ongoing programs. We are extending our reach with electrical vehicle carmakers with important production starts in Asia during the quarter. You will hear more during the 8 digitization of our Capital Markets Day on November 6.
In car digitalization, we are focused on technologies and solutions for driver assistance and autonomous driving, V2X communications, and embedded processing solutions supporting new car architectures. Here, we won a former supply platform designed for ADAS applications with multiple Agile manufacturers and a design for digital output tuners for a software defined radio. As mentioned, we are seeing an acceleration trend on Level 2 and Level 2 plus where we have already delivered together with our partner Intel Mobileye over 50,000,000 vision processing chips to the market in the past 5 years. With our 32 bit automotive MCU embedded processing solutions, We won designs in a keyless access control application and in an integrated communication solution. We also had additional awards for our 28 nanometer phase change memory microcontroller called STELLA, which supports the evolution of car architectures.
We recently announced further details on our stellar MCUs to show all the devices, ensure execution of multiple independent real time applications. ST has developed this new technology with Bosch to meet future OEM integration demand. To conclude this automotive review, I would like to mention that we also expanded our sensor business with automotive grade motion sensors and accelerometers for P4 applications. Moving to industrial now. The Industrial market dynamics remained mixed but gradually improved during the quarter.
This trend was visible across all geographies, demand was strong for power tools and home appliance applications. We continue to see positive dynamics in power related applications, motion control and factory automation, all of which are focused areas for ST. Distribution is an important element of our go to market strategy in Industrial. Here, the improvement of the situation in the channel is accelerating. In Asia, point of sales trends remain strong, up sequentially in the year over year with healthy levels of inventory in our distribution channel across all product families.
In the Americas and Europe, recovery is ongoing with point of sale up sequentially. Here also inventory is back to healthy levels across all product families. We address industrial end markets with our general purpose and secure MCUs, analog and sensor, power and energy management solutions. One of our strategic objectives in industrial is leadership in embedded processing solutions. Last month, we held the 1st module of our 2020 Capital Markets Day covering NDG.
In the presentation, we detail how we are strengthening our embedded processing offer around the SNC2 family in terms of wireless connectivity, security and artificial intelligence. During the quarter, we had several announcements supporting this strategy, including acquisitions of Hyatt Micro and Bespoon to further strengthen wireless connectivity. Machine learning tools from a partner to support AI deployment and higher performance top end microcontrollers. In addition, last week we announced the acquisition of Somos Semiconductor, a power amplifier and RF front end module specialist. With this latest move, we are reinforcing our ability to play a major role in RF front end modules for the e IoT connectivity market.
And we strengthened our array front end roadmap for 5 gs. Another strategic objective is to accelerate our growth in analog and sensor for industrial. In Q3, we won several new designs with our analog products for this kind of application. For example, we received awards for a new smart metering platform as well as in motion control and automation with our ST SPIN product, which integrates an STM32 microcontroller. We also continue to expand our business in industrial sensors with wins for our inclinometer with a number of large players.
The 3rd objective for us is expansion in Industrial Power and Energy Management. Here we capture many wins for our power discrete products, silicon carbide MOSFETs and high voltage silicon MOSFETs, IGBT, Triax Diodes and Intelligent Power Modules. These weeks were for customers in applications such as power supply, air conditioning, metering, home appliance, power tools, solar pump and motor control. Moving now to the personal electronics market. In Q3, there was a strong restart of consumer demand for smartphones, combined by steady growth in wearables, tablet, earables and GaN consoles.
This was driven in part by the fair at home effect and by consumer demand for health and fitness devices. In Personal Electronics, we have 2 strategic objectives: first to lead in selected high volume smartphone applications with differentiated products or custom solutions. Here we continue to have success with multiple wins in flagship devices with time of flight ranging sensors, motion sensors for image stabilization, wireless charging products, touch display controllers and secure solutions such as eSIM and secure elements with near field communication. I would like to give you more detail on one win I mentioned last quarter. I can now confirm it is a Samsung Galaxy Note 20 Ultra smartphone, which use ST Multi Zone Direct Time of Flight Sensor.
Also, both the Note 20 and the Note 20 Ultra include our MEMS post pressure sensor, inertial measurements unit and the scrub props. Our second objective is to leverage our broad portfolio to address high volume applications such as poor wireless payroll headsets, smartwatches, bracelet and gaming devices. Here, we had wins for sensors, analog and power products as well as microcontrollers. It's worth mentioning that we shipped a record number of MAME sensors during the quarter. We also launched the LASR Scanning for Augmented Reality, so LASR, Alliance as an ecosystem to accelerate the development of augmented reality aware applications, we see this as another potential high volume application.
In Communication Equipment and Computer peripherals, during the quarter we continued to see growing demand for home working related products, while the demand for Hardee Drive was softer. Our approach to this end market has 3 objectives: 1 is to address selected applications in cellular and satellite communication infrastructure. Here I would like mention a win we had with the new Gallium Nitrile GaN based product in the communication infrastructure application. This was based on our new Master GaN Smart Power product, which combines a driver and a GaN system. In this area, we also captured multi RFM with ASICs awards, an award for our new STM32 microprocessor and ours for our STM32 microcontrollers for 5 gs infrastructure.
Our other objectives are to address selected high volume applications with differentiated product or custom solutions while leveraging our broad portfolio. And here I would like to mention wins with our FlightSense products, motion sensors and electronic uses, in personal computer and artists. Now let's move to a discussion of the Q4 and brief comments on the full year 2020. In the Q4, we expect net revenues to be about $2,990,000,000 This sequential revenue growth of about 12% at the midpoint is expected to be driven by all product groups, except the RF communications subgroup for obvious reasons. Gross margin is expected to be about 38.5 percent, including about 70 basis points of unsaturation charges.
For the full year, we now expect net revenues at the midpoint to be about $9,970,000,000 translating into 4.3% growth year over year. Based upon this plan, we expect to report a double digit operating margin performance. We are maintaining our CapEx plan for 2020 at about $1,200,000,000 Before concluding, let me remind you of the upcoming virtual Capital Markets Day, which are conducting through 4 modules. We held our first module on MDG on September 15. Thank you for attending that session.
The 3 upcoming modules are ADG November 6 AMS November 20 and overall strategic update, December 9th. To conclude, I would like to reinforce 2 key points. But first, in response to the global COVID-nineteen pandemic, we will continue to ensure both the ongoing health and safety of our employees and continuity of our business operations for our customers. These priorities remain of utmost importance for us. 2nd, ST fundamentals are solid.
The strategic decision we made years ago stem from secular growing market trends addressing key societal needs. The underlying principle of our strategy have not changed, and we remain determined to continue to make ST stronger, executing our sales and operating plan and outperforming the markets we serve. Thank you, and we are now ready to answer your questions.
We will now begin the question and answer session. Participants are requested to use only handsets while asking a question. Webcast viewers may submit their questions in writing by the relative field. In the interest of time, please limit yourself to one question. The first question comes from Deshpandeep from JPMorgan.
Please go ahead.
Yes, hi. Thanks for letting me on. Maybe if you could help us understand granularly the revenue increase from the Q3 to Q4, it's about $310,000,000 of additional revenue. Where are these $310,000,000 approximately coming in terms of buckets, in terms of automotive, in terms of personal electronics, etcetera? Thank you.
So thank you, Sandeep, for the question. Okay. I will address the question to Lorenzo.
Good morning, Sandeep, and good morning, everybody. Yes, indeed we do expect a significant increase in our revenues in the coming quarter in Q4. Where we do expect that as we were saying before, we do expect that all groups contributed to the sequential growth in term of revenues. But where we see, let's say, the driver, we see driver in term of revenues mainly coming from imaging, coming from analog. We will continue to grow in a significant way also in MMS, means that lower microcontroller, both general purpose and secure microcontroller.
We will also grow our revenues in order, as I said, product groups. So even if we are a little bit less extent, we will see growth also in Power and Discrete in the quarter. Automotive will contribute and MEMS as well will contribute. As we said, we have only one significant headwind in the quarter that is mainly related to our subgroup RF the RF Communication Group, which we will decline revenues. So looking sequentially, all the groups will grow.
On a year over year basis, I can tell you that we our expectation is that definitely MDG Group, AMS Group will grow. Why we do not expect this growth in ADG that sequentially will grow, but on a year over year basis will be substantially flat. This is the dynamic that we see for the next for this current quarter Q4 in terms of revenues. The
next
question comes from Anthony Stoss from Craig Hallum. Please go ahead.
Good morning, guys. With the 38.5 percent gross margin guide for December, not too long ago, you held out a goal of getting to 40 percent gross margins. Any thoughts on if you can attain that in 2021? And also, if you wouldn't mind just sharing where you think you'll end for silicon carbide revenues for 2020 and any thoughts on that for 2021?
So, thank you for the question. So, I will address the first question to Lorenzo and I will answer the second one.
In terms of gross margin for 2021, what can I say is the following? You see that the next quarter our gross margin next quarter, sorry, I am talking always on next quarter, but actually I'm referring to Q4. For the current quarter Q4, you see that our guidance is 38 We will have a 70 basis point in that we will have a 70 basis point impact on unloading in the quarter. This comes from a very different situation. In that we have today, if I look at the various fabs, some of our fabs that are fully loaded running at full capacity, some other mainly related to our legacy product that are still suffering unloading.
This situation will be continuing. We see this situation continue at least for Q1 and most likely even for less than that in Q2 next year. For the level of gross margin of next year allow me let's say to give me some more time in order to understand also how there will be the evolution of the market and our revenue for next year.
So this year about silicon carbide, we will not achieve the $300,000,000 We will be well above last year. The reason why we will not achieve is because, okay, as you know, we face unprecedented situation in H1 along the value chain of all these products. But what is, let's say, great is our current run rate and current demand is, let's say, well aligned with this $300,000,000 let's say, revenue target.
Next question please.
The next question comes from Jerome Ramel from Exane BNP Paribas. Please go ahead.
Yes, good morning. Maybe could you help us to model the OpEx? You've been better than expected in Q3 once again. So how should we model OpEx going forward? And maybe if you could give us a hint for EBIT for next year?
Thank you.
Yes, I will take the question. Okay. For OpEx, if you remember, I was guiding for the year OpEx in the range quarterly OpEx between 635, 645 as a total of the year divided by 4 with some different dynamic quarter in the different quarters mainly due to seasonality, these kind of things. As you nicely say, we are coming a little bit better. So now if I see the OpEx for the full year, I would expect that we will be a little bit lower than our midpoint.
If we exclude any extraordinary item, item, why I'm saying so, because our expectation for Q4 actually is that we will have an extraordinary item that is related to the grand sketch up in one jurisdiction for let's say the year 2019 2020. These will be material for Q4, but it's one time event, So it's not repeatable. That means that we will have our OpEx, let's say in Q4 well below the normal average. We do expect OpEx in Q4 between 600 $5,000,000 $610,000,000 mainly driven, let's say, by this one time impact. I repeat, without this one time impact, we will be in terms of OpEx as an average in the quarters in the range of $640,000,000 for the year, quarterly average.
So we will be at the level that we were expecting to be. Next year there will be definitely some increase in terms of OpEx. Now to be honest, it's a little bit early to model. There are 2 anyway, 2 ingredients that we needed to take into consideration. One ingredient is the fact that there will be the normal increase related to salary, that will be the increase related to the cost of labor, that will be some increase also in term of activity.
So this will bring us to be to move a little bit higher in term of expenses. As well as you see that today our exchange rate is going in the range of 117 to 118. This is for sure something that we have to factor in. Just to give an idea in term of the impact of FX for 1 percentage point of change in euro dollars. This has an impact in our operating margin per quarter of around $8,000,000 to $10,000,000 and this is split up in half between gross margin and OpEx.
In modeling this, you may want to keep into consideration this impact.
The impact is per quarter, right?
Yes, yes, yes. The impact is per quarter.
Thank you.
Next question, please, Alessandro.
Next question comes from Stephane Houri from OTO. Please go ahead.
Yes. Hello. Good morning. Can you please help us understand what is your visibility at the moment for 2021? And given the pretty high starting point or ending point at the end of Q4 and given the comparison basis, especially in H1, is a double digit growth assumption for you next year a credible scenario?
And if you can give us some comments about the visibility you have with the large customer engagement program for next year like and other? Thank you.
I take the question, Marc. It's let's say, of course, a very, very good question, okay. But what I can say, I would like to repeat what I say, let's say, early September. Yes, our assumption is next year will be a year where the market will grow again. This year, we have a view about our fab that basically could be flattish, okay, minus 2, plus 2, but it's still difficult to say.
And next year, okay, we expect, okay, to have a year 2020 with, let's say, market growing again. Now saying that, okay, you know that, okay, we have a, let's say, fixed milestone, okay, to communicate with you. December 9, okay, during our update about strategy, we will communicate about our model for the $12,000,000,000 Then you know that end of January, we will communicate about our CapEx for 2021, which will be, let's say, first indication about the confidence level we have for the full year. And as we have done this year and last year, we will communicate the plan with which we drive the company in April during our Q1 earnings. I would like, okay, to strictly follow this process.
And honestly, today is too early, okay, to give more detailed color. But again, the takeaway, the assumption we have preparing our budget, preparing our next year, is next year will be a year where the market we address will grow again. Okay. Thank you very much.
Okay. Thank you. Next question please.
The next question comes from Domenico Cesky from Morgan Stanley. Please go ahead.
Hi, good morning, everyone. First one, just on the gross margin. Obviously, revenues came in significantly ahead for this quarter. So maybe could you just help us bridge this quarter's gross margin versus maybe quarter on quarter sequentially, just to understand the moving parts there? And then separately, there was a mention of some pricing pressure dynamics on top of your unsaturation charges.
So maybe could you just describe which products or divisions were affected there? Thanks.
Francois? Yes, I will take the question. I would like I can take the chance of this question also to give us some colors about not only the dynamic our gross margin moving from Q3 to Q4, but also some color on the Q3 gross margin. As you noticed that our gross margin came in Q3 exactly at the midpoint of our guidance with a higher level of revenues. And on top of that, we were we had in the quarter lower level of unloading charges because at the end unloading charges in the quarter accounted for 140 basis points.
These lower level of unloading charges and slightly better manufacturing efficiency even in much lower impact. This has been totally offset in our gross margin of the quarter by a favorable product mix. And in a much more lower extent also by some negative impact of the change rate. Why the product mix came, let's say, not accretive in the quarter? Product mix in Q3 was characterized by a higher level of sales in automotive legacy product in respect of what was our expectation entering the quarter.
These products were the ones that are suffering in the 1st part of the year and in Q3 in Q2 particularly profit not an optimal manufacturing efficiency. And this was due to the lack of loading that we suffered. As you know, these inefficiency is impacting our gross margin win 1 quarter of delay due to the impact on the inventory. So this is the reason why actually we did not see significant benefit in the quarter by these higher level of revenues. Moving to the second part of the question, let's say, why let's say what are the drivers of the gross margin moving from Q3 to Q4, but we increased by 2 50 basis points sequentially.
And this is mainly thanks to in this case improved product mix, net of price decline. The price decline will remain, let's say, normal price decline. I want to underline that we don't see in the market any significant pressure on prices, price decline as a normal. Definitely, we will have a better loading and some better efficiency in our fact, the loading will reduce from 140 basis points 70 basis points. The only, let's say, headwind that we will see, but really mitigated at this stage by our policy hedging is the negative impact of the exchange rate.
So I would say that at the end, moving from this quarter to from Q3 to Q4, the driver will be definitely lower level of unsaturation and much better impact on the product mix. I was trying to explain to you what it happens in Q3 and that will be a significant difference in respect to what really happened in Q4.
Okay. Thank you very much, Dominique. We can move to the next question, please.
The next question comes from Matt Ramsay from Cowen. Please go ahead.
Yes, thank you very much. Good morning. And congratulations on the execution in what's been a very challenging environment. Jean Marc, one of the questions that I've been getting from investors is around profitability, particularly as your silicon carbide revenue grows in your automotive division going forward towards the long term targets that you've set out. Maybe you could just talk a little bit about how you're thinking about growing revenue in the automotive business, particularly in the hybrid and electric vehicle space versus profitability of that growth as you look forward?
So I will start to answer and Marco will complement. Okay. It is clear that, okay, what we want to do in our automotive activity and Power related to activity is to, let's say, transform the company from, let's say, heavy legacy weight, which we remember at present today approximately 70% of the total revenue we have from Automotive and 30% are, let's say, related to the new application, every application. So in Digitalization, it is ADAS, it is connectivity, it is a microcontroller addressing domain. So this is clearly okay where we want to go.
Now we consider that we have all the enablers okay to push this strategy from device, so silicon carbide MOSFET, low voltage power MOSFET to address the Miley Brute Car, Silicon Carbide to address the electrical car, both on board charger, but as well, let's say, the powertrain of the electrical car. We will have the GaN in the near future for the charger as well. Now, okay, we are really a service we have a service offer in IGBT. And last but not the least, okay, now, okay, we are really competing in the field of power modules, both with our internal source in Shenzhen and external one. All various partnerships we have with the Critical OEM.
So we have all the set of enabler to push our strategy to grow, okay, this 30% part of the Automotive revenue we have. And we do believe that this part will be a key driver of our profitability. Last but not the least, okay, you have seen our announcement with Bosch. Clearly, we have demonstrated that in terms of change of architecture of the, let's say, the car moving from fragmented ECUs to more domain ECU, large domain ECU, you need a very powerful microcontroller capable to drive real time and we have already demonstrated that we have this device, we have this technology, which I repeat is a 28 nanometer embedded Phase Memory, but 28 with MDSOI, okay, which presents some specific, let's say, feature, okay, really great for Automotive. This will also, okay, drive our profitability in the future to increase.
Marcie, so this is the overview that I can share with you. So Marco, you want to comment on some point?
No, I guess, just I would like to add that, as you said, we see a change in the market moving far more towards electrification, digitalization and our product portfolio with the innovation that we are bringing is moving towards that direction where we do believe we will outperform that market. And obviously, this will bring together an improving profitability.
Is it okay, Matt, for you? Thank you very much.
Yes, it's fine. Thank you, Selene.
Thank you, Matt. The next question please, Alessandro.
Next question comes from Alexander Peterk from Societe Generale. Please go ahead.
Good morning and thanks for the question. I just have a few specific points. One, if you could quantify the Huawei headwind in the 4th quarter in terms of revenue percentage here. 2nd one, do you have a view on what will be this year's automotive semi market evolution? And how does your year to date revenue in automotive compare to this overall market growth?
And then just lastly, should we anticipate still some lingering anticipation capacity, actual inflation charges going into the beginning of next year? Is it like or the first half or just the Q1? Thank you.
I will take the first question and Marco and Lorenzo will take the other one. About the first question, if I have well understood, okay, so for Q4, I guess I have been quite clear. After 30 quarters of consecutive revenue growth with Huawei, ST revenue in Q4 from Huawei will be 0. We have stopped to ship any pieces to YY at September 15, being compliant with the direct the foreign produce direct produce rules from the BIS in the USA. Of course, we have applied for export license to continue to support our customer.
But as we say, okay, we have not received any feedback. So our revenue will be 0 in Q4. So I guess, okay, I am quite clear on the subject. But overall, okay, again, why wait, let's say, wait in ST more? We do not communicate percentage of customer only when they are above 10%.
And we have only 1. But okay, it's quite well known that YY weight was, let's say, mid single digit percent, okay, weight in our revenue overall this year with Q4 at 0. Okay.
So we take from Automotive, what we do see confirm again that Q2 was the bottom, and we have moved up our view of light vehicle production for the full year. Now we see a range between $73,000,000 to $77,000,000 which means the midpoint around $75,000,000 which moved materially up to what we were seeing in Q2 where we were between 63,000,000 and 72,000,000 cars, of which 7,000,000 are hybrid cars and 2,000,000 are electric cars. So and in terms of market overall semiconductor market, clearly, we see the acceleration of increase of content in thanks to electrification and thanks to the digitalization of the car, a trend which is ongoing and probably further accelerated due to the provision more and more of electric car. Lorenzo, if you want to complement in terms
of Unloading charges, yes. If I well understood the question is that how the unloading charges will be in moving forward in the 1st part of next year. Yes, I confirm what I said before. Yes, we do expect that we still to have some unloading charges in Q1 and likely even in progressively going down also in Q2. Let me say that as I was saying before, this is a very unbalanced situation in which we have some of our fabs that are fully loaded at this stage, let's say, and for which we cannot do more than what we do.
And we have some other fabs that are still suffering for unloading charges due to, let's say, the demand that is not balanced between what is the demand and what is our capacity. This, we do expect that we'll continue for at least for sure Q4, Q2, Q1 as well, and we'll start to progressively be corrected during the course of Q2 moving forward. Just to give you an idea, let's say, the level of saturation of the fact that we were in average, let's say, suffering during the quarter, during Q3 was in the level of 73%, 74 percent, the saturation level with many very different situation, some one in the range of 50%, some one above 90. And in the current quarter in Q4, this level will be more in the range of 82%, so with some improvement. But still you see that we are not at the optimal level and this will continue, I repeat, for sure also in Q1, progressively reducing, but not immediately reducing.
Thank you very much.
Thank you very much. We have time for 1 or 2 last questions, Alessandro. So next question please.
The next question comes from Aditya Metuku from Bank of America. Please go ahead.
Yes, good morning guys. Two questions. Firstly, just looking at the OpEx numbers, I just wondered if you could give us some color on what in your view has led to OpEx being so different to what you expected at the beginning of the year? What were the key puts and takes just so we get a sense for what's changed? And then also if you could give us the exact grants figure that we should expect in 2020 and how would that figure look going into 2021?
Any color there would be much appreciated. And if possible, just a quick follow-up on the share count for next year, given the redemption of the convertible bond, Would that really change? Should we factor anything in versus the disclosures in 3Q? Any color here would also be appreciated. Thank you.
So the question is on the level of OpEx on average per quarter for 2020. This is your question, Adi?
Yes. As in what has changed? I know the numbers that were given earlier, but what was different to what you expected?
If you say for the full year, Lorenzo can Okay.
For the full year, as I said, the average quarterly expenses that we do expect at the end of 2020, if you take the full value of our expenses, including other income and expenses and you divide it by 4, it will be in the range of $640,000,000 before one time item that we do expect in Q4. In Q4, we will have a positive impact in the line other income and expenses, material impact in the range of $100,000,000 positive that will reduce significant expenses, but it's one time. So at the end, let's say, this will not be repeatable. It's due to the fact that we have a catch up of grants, thanks to a new law, let's say, in one legislation that allow us to recognize these grants. But then is one time, will not be repeatable.
So in respect to our original guidance, we are there, of course, without this impact. For sure, we'll be lower than that because you have to consider that this will decrease the average of our expenses in the year. What has changed? I would say apart of this one time in Q4, what we have seen when we gave our original guidance, 645, 635, for sure also due to the pandemic impact we added some savings for sure. Let's say at the beginning of the year we were thinking to travel in a normal way.
This would not happen, let's say. So at the end, what it happens, we had some savings, especially in this kind of discretion of the expenses, but not on our R and D programs. What I can tell you is that in the R and D programs, in our, let's say, core activity, the activity was there, was done, let's say, even if we were under this particular situation of the pandemic. For sure, there was other savings because less traveling, less meetings, less put the discretionary expenses that in the normal life of course of a company you have and in this situation we did not incur. On the other side, we had some more expenses for some items that we are not supposed to be like mask protection for the pandemic, these kind of things.
So at the end, if you want, we were before these exceptional market jump substantially in line with our expectation, a little bit less on the discretionary, a little bit more on extraordinary expenses related to the pandemic, but more or less we were there. I don't know if this actually answer completely to your question.
They do. Thank you. And just a quick follow-up just on that share count number, whether the pre Q number is really reflective of the changes in the convertible bonds that you did in the quarter or whether we should factor anything in when we look at the share count for the Q4?
The share count, you mean the total share count of the company?
Yes. Yes. It is reflected.
Yes, it reflected. We have provided as well the number of shares which has been provided, treasury share.
Understood. Thank you.
Okay. So with this, I think this concludes we are at the time at 10:30. With this, I think it concludes our earnings call. Thank you very much, everybody, for attending. As usual, we remain Investor Relations team is available.
If you have some follow-up questions, do not hesitate.
Yes. And next meeting is 8 Digi,
November 6.
November 6. November 6.
November 6.
November 6. November 6. November 6. November 6. November 6.
November 6. November 6.
Okay. Bye bye, everybody.
Thank you very much. Thank you.
Thank you. Bye.
Bye, bye.
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