News and New Products

ST Targets Sales, Market Share

By David Manners -- Electronics Weekly, 2/1/2006

For STMicroelectronics, 2005 was a year of gaining structural efficiencies, while 2006 will be a year of growing sales and market share.

The structural efficiencies were aimed at manufacturing efficiency, cost efficiency and capital management. “By the end of this year 75 percent of our six-inch production will be in Singapore,” said Alain Dutheil, COO of ST, announcing the company’s recent full-year results. This has resulted in a cost saving of $100 million by the end of 2005 compared to 2004.

Further cost reductions have led to a cut in headcount in the U.S. and Europe by 3,000 people to be completed by mid-2006. Efficiencies have been improved by the relocation of 1,000 engineers from low priority projects such as FPGA and 2G-GSM to projects that are more of a priority, such as wireless Asics, the Nomadik wireless applications processor, automotive and advanced analog.

“We are a sharper research, design, manufacturing and marketing machine. We are confident that these initiatives will bring the company into an accelerated sales growth pattern in 2006, after the inevitable seasonal slowdown in Q1,” said ST’s CEO, Carlo Bozotti.

ST is focusing significant engineering resource into five platform products: set-top-box, integrated digital HD TV; the Nomadik processor; basestations; and a platform for computer peripherals. “Only one of these is producing significant revenues, and that is set-top box,” said Bozotti, “but the others will come. We are confident we will see the other platforms take off.”

Even the flash memory activity turned in a profit in Q4. ST introduced a 4Gbit NAND flash product on 70nm last year, and intends to introduce an 8Gbit product on 60nm this year, a level of density which only Samsung and Toshiba/SanDisk can match in the industry.

ST rode the 2005 market trend with a weak first half and a very strong second half. Q4 revenues shot up by 6.3 percent on Q3 to $2.39 billion.

Electronics Weekly is the London-based sister publication of Electronic News.