LONDON As some others chip suppliers have abandoned the foundering telecom infrastructure business, STMicroelectronics has stood firm and has even bolstered its arsenal.
ST is establishing a division focused on selling to the wireless infrastructure, Aldo Romano, corporate vice president for ST's telecommunications, peripherals and automotive groups, said here Thursday (May 30) at ST's annual analysts meeting. "We are going against the grain," he acknowledged. But "to penetrate a large and growing market and leverage our assets for wireless, we decided to invest where other companies have been obliged to reduce."
Still in the process of preparing its market entry, ST believes the wireless infrastructure market, which requires heavy use of digital signal processors, complements its portfolio well. "We can leverage our key devices, including a new version of our ST100-based DSP with four MACs, D/A converters and very demanding RF components," Romano said.
The company hopes to take advantage of new designs and wireless infrastructure installations that are focused on third-generation technology. "Remember, the first 3G business starts with the infrastructure," he said.
ST is also establishing a host of strategic initiatives in telecommunications. The company is rolling out asymmetric digital subscriber line (ADSL) chip sets for central-office applications; wireline and wireless ICs for customer-premises equipment and handsets; and chip sets and reference designs for mobile handsets.
ST has also engineered several strategic acquisitions and partnerships that are intended to enable the company to move forward in those areas. It has acquired the intellectual property and products of Tioga Technologies, an Israel-based startup, for developing high-performance ADSL multichannel solutions for the central office. It has purchased Alcatel Microelectronics' business in ADSL wireline technology as well as Alcatel's GSM/GPRS and Bluetooth wireless technology. And ST has a new agreement with Alcatel's Mobile Phone Division.
ST considers the agreement with Alcatel Mobile Phone an important opportunity to define future chip sets for mobile handsets through Alcatel, as well as to launch a full reference design for mobile handsets on the open market.
ST also said it plans to introduce a low-power and low-cost multimedia application platform for 2.5G and 3G wireless mobile handsets. Scheduled for launch early next year, the multimedia application engine is expected to go head-to-head against Texas Instruments' Open Multimedia Applications Platform (Omap).
The multimedia engine integrates an ARM9 core; a hardware accelerator for a video codec to handle MPEG-4 and H.263; and a dedicated audio DSP for MP3, AAC, MPEG-1/2, AMR and MIDI. It is "a result of the convergence of technologies and know-how that already exist inside ST," said Marie-Helene Sibille, group vice president of ST's telecommunication and peripherals and automotive groups.
With its recent moves, ST has armed itself with many of the key technology pieces of a mobile phone, including the energy management section, RF, analog baseband, digital baseband, flash, camera and multimedia application engine. Thus equipped, ST will target Nokia, Alcatel and Siemens as its top three customers, Romano said.
The exceptionally bad business conditions in 2001 convinced many of ST's competitors to move their capital and operations to different sectors, while often installing new management.
But ST has stuck with its team and has followed its original investment plans. The company has established its own fabs and has remained focused on the same five key application areas: communications, digital consumer, automotive, smart cards and computer peripherals.
ST was one of only two semiconductor companies (besides Intel Corp.) to remain profitable last year. Pasquale Pistorio, ST's president and chief executive officer, claimed that ST never stopped investing in R&D or in manufacturing during 2001. As a result, Pistorio said, "we have the physical infrastructure, the best cost structure and strategic partnerships in place."
Jean-Philippe Dauvin, group vice president and chief economist at ST, who once predicted that "there is a life outside of PC motherboards," said Thursday that the consumer segment is driving 60 percent of current semiconductor market growth. At the same time, he remained cautious about any imminent upturn in IT hardware spending and predicted that PC unit growth will be in the 5 percent range.
Dauvin called the growth of the wireless market "acceptable" and predicted that wireless market momentum will pick up in the second quarter, with growth of around 10 percent in demand for handsets.
Describing 2002 as a year of transition, Dauvin predicted that a solid recovery will start in 2003.