Net revenues totaled $2.67 billion, representing a year-over-year increase of 4.4%. On a year-over-year basis, the Company recorded higher sales in Microcontrollers, RF Communications, MEMS and Analog, partially offset by lower sales in Automotive, Imaging and Power Discrete. Year-over-year sales to OEMs increased 7.5%, offset in part by a decrease of 3.4% to Distribution. On a sequential basis, net revenues increased 27.8%, 690 basis points above the high-end of the Company’s guidance. All product groups reported double-digit increases in revenues on a sequential basis.

Gross profit totaled $959 million, representing a year-over-year decrease of 0.8%. Gross margin of 36.0% decreased 190 basis points year-over-year, mainly due to price pressure and unsaturation charges. Third quarter gross margin was aligned with the mid-point of the Company’s guidance.

Operating income decreased 2.0% to $329 million, compared to $336 million in the year-ago quarter. The Company’s operating margin decreased 80 basis points on a year-over-year basis to 12.3% of net revenues, compared to 13.1% in the 2019 third quarter.

By product group, compared with the year-ago quarter:

Automotive and Discrete Group (ADG): 

• Revenue decreased in both Automotive and in Power Discrete.
• Operating profit decreased by 35.7% to $49 million. Operating margin was 5.8% compared to 8.5%.

Analog, MEMS and Sensors Group (AMS):

• Revenue increased in MEMS and Analog and decreased in Imaging.
• Operating profit decreased by 11.8% to $175 million. Operating margin was 17.5% compared to 20.5%.

Microcontrollers and Digital ICs Group (MDG):

• Revenue increased in both Microcontrollers and in RF Communications (former “Digital” sub-group).
• Operating profit increased by 32.0% to $142 million. Operating margin was 17.4% compared to 15.7%.

Unused capacity charges are included under the group “Others”.

Net income and diluted earnings per share decreased to $242 million and $0.26, respectively, compared to $302 million and $0.34, respectively, in the year-ago quarter.

Cash Flow and Balance Sheet Highlights

Capital expenditure payments, net of proceeds from sales, were $319 million in the third quarter and $897 million for the year-to-date period. In the year-ago quarter, capital expenditures, net, were $244 million.