LONDON — "We're building a new ST, a better ST," CEO Carlo Bozotti (right) told financial analysts at STMicroelectronics' annual field trip meeting, held here last week.
It is not so much what the company is doing - moves towards an "asset-lighter" business model and a renewed focus on analog ICs are being pursued by other IDMs. It's more a matter of when ST started and the spirit in which it is following through and reaping the benefits.
The company is pushing towards a future in which analog ICs, MEMS, power semiconductors and proprietary processes will allow it to pursue high-value applications in energy, healthcare, automotive electronics and multimedia.
But it became clear at the meeting that it will not be all plain sailing. Along the way there will be job cuts from the continued rationalization of chip manufacturing and Bozotti is running his calculator over several product families with a view to divesting them. Between three and five product families could go within a matter of months, he said.
At the same time ST is outsourcing more processes and manufacturing. The company is now, after the creation of the flash memory company Numonyx BV as joint venture with Intel, about 10 percent outsourced and plans to move to about 20 percent outsourced in 2009.
ST was able to remind the analysts of the revenue growth of 11.6 percent achieved in the first quarter compared with a year before and with a total available market that grew 4 percent. ST also confirmed its second quarter guidance that sales are set to increase sequentially by between 5 and 11 percent compared to first quarter sales of $2.18 billion excluding flash memory. This represents growth of between 10 and 16 percent year-over-year. With new key account sales jumping 48 percent in Q1 year-on-year while Japanese sales jumped 28 percent, a previous reorganization of STs key account elite is clearly paying off.
We now have four areas we are growing faster; sixteen worldwide strategic accounts, China, Japan and the mass market. In terms of products were offering a digital baseband [for cellular telephony], MEMS is exploding, automotive car navigation systems is good, Bozotti told EE Times.
Bozotti made the point that in the Industrial and Multisegment Sector (IMS) business unit most of the product families are growing - from smartpower through discretes to microcontrollers. Indeed, after carving out the flash memory group to form Numonyx, ST now has about 45 percent of its $8.8 billion annual (post flash) revenues in the analog sector.
Carmello Papa, the executive vice president in charge of IMS, showed analog IC sales up 41.1 percent in 2007 when compared with 2005 in a market up 12.6 percent over the same period. MEMS sales at $200 million in 2007 had more than tripled compared with 2006. Even discrete transistors, mainly power devices, and EEPROM showed a 27.0 percent revenue growth over two years compared to a two-year market growth of 13.4 percent.
But the analog mantra has been intoned by other large-scale IDMs trying to reinvent themselves, notably by Texas Instruments Inc. (see TI banks on analog, embedded as mobile slips.
