NEW YORK -- Hoping to live up to its long-held ambition to become a world leader in flash memory production, STMicroelectronics Inc. expects to surpass Fujitsu Ltd. as the world's third largest flash IC maker as early as next quarter, according to company president and chief executive Pasquale Pistorio.
The milestone would fulfill a bold prediction made by the company in 1998, when it began investing heavily in the flash-IC sector with the express aim of breaking into the top manufacturing tier.
Speaking with reporters in New York late yesterday, Pistorio said the semiconductor market's downturn should begin to ease in the third quarter with a modest recovery beginning in the consumer sector late this year.
He blamed the industry's steep sales drop on an "unusual coincidence" of factors, which included the bursting of the dot-com bubble, over-buying on the part of the telecom and networking industries, the emergence of the EMS segment as a dominant manufacturing force, and a simultaneous cooling of the U.S. economy.
While these events caused inventory levels to soar, Pistorio said much of the excess has been worked off, allowing normal-albeit more modest-ordering patterns to resume.
"One thing is true. The semiconductor market is serving a market that is more and more consumer oriented ... and is more subject to revenue variations," he said. "This requires better tools. The big things we need to accomplish are better inventory management and to reduce the cycle time for manufacturing."
To help it manage through the downturn, ST has laid off 1,500 employees, instituted salary freezes and pay cuts for managers, and enacted production slowdowns at several of its fab sites. According to Pistorio, however, ST is maintaining its position as the No. 2 provider of ICs to the automotive industry and has worked its way up the flash-memory leader board.
ST ranked as the sixth largest flash-IC maker in the fourth quarter of 1999, according to the company's internal estimates, and moved to the No. 4 spot in the fourth quarter of 2000 with a 6.5% market share. Pistorio said preliminary data indicates ST in the second calendar quarter of 2001 captured 9.5% of the flash market, positioning it to move past Fujitsu late this year and surpass perennial No. 2 flash manufacturer Advanced Micro Devices Inc. as early as the end of 2002.
"When you hit and pass 10% of the market share, you become a factor," he said.
According to separate annualized estimates from Web-Feet Research and iSuppli, Intel and AMD ranked as the first and second largest flash manufacturers in 2000, followed by Fujitsu, Toshiba Corp., and Sharp Corp. The latter two suppliers each had an 8% share of the flash market last year, although Toshiba's edged out Sharp in terms of revenue, according to iSuppli.
A separate research report released this week by IC Insights showed that ST gained three rungs on the semicoductor market share ladder in the first six months of 2001. The company, which was the world's seventh largest chip maker in the first half of 2000, became the fourth largest in the first six months of this year. IC Insights attributed the move to ST's ability to maintain a 2% first half sales decline, the smallest drop of any of the semicoductor market's top 10 suppliers.