There is no downturn in chips, merely a "mid-cycle market correction", according to STMicroelectronics (ST).
ST, which reported its fourth quarter and full-year results today (25th January), acknowledged that, like other big semiconductor vendors, it had suffered from the effects of higher client inventories in the last three months of 2000.
Q4 sales were sequentially flat at $2.174bn from Q3's $2.042bn.
But ST now sees the most positive aspect of 2001 being the second half. Once inventory levels have stabilised, it believes that demand could send growth towards 20% from the third calendar quarter onwards.
The company was in bullish mood as it posted a Q4 gross profit of $1.04bn, the first time it has passed the $1bn mark at that time of year. Net profit for the period was $461.9m.
For the full year, ST recorded a 54.5% jump in turnover to $7.813bn — the highest sales growth for any top 10 chip vendor — and a 165% leap in net income to $1.452bn.
Pasquale Pistorio, president and CEO, attributed the comparatively strong performance to the company's continuing high R&D spend — up to $1.026bn in 2000 from 1999's $836m — and its concentration on higher margin products rather than commodity chips, such as memories.
ST nevertheless was a major beneficiary of 2000's intense demand for flash, as its full year revenues for that segment rose 211% to $637m.
In other fields, last year's telecom chip revenues were up 76% at $2.356bn, digital multimedia rose 119% to $1.022bn and smartcards grew 53% to $278m.
Joe D'Elia, semiconductor research director for Gartner Dataquest, said: "These results are a vindication of the strategy the company has followed for the last decade.
"These guys have got it right."
Pistorio confined his self-congratulatory comments to repeating the phrase "It's not bad" in three different languages.
Jean-Philippe Dauvin, ST's group vice president and chief economist, also poured cold water on the notion that the mobile comms slump was hitting as hard as has been claimed.
"[Mobile communications] did deteriotate in the fourth quarter, but look at the overall projections we had for 2000," he said. "That was a 440 million [unit] sales volume; in the end it was 410 million, so that's not even 5% off."
The greater influence, he argued, had been the drop off in the PC market.
Dauvin is factoring the PC element strongly into his overall chip market projections for 2001, forecasting only 8% growth, somewhat below other recent entries.
The bright side for ST is that once PC and other segments - chiefly opto - that it does not serve are factored out, its own target markets should achieve 15% growth, said Dauvin.
Dataquest's D'Elia objected to the 8% forecast.
"I think that's a political number. My own personal belief is that 2001 will be in the teens [of percentage growth]. My gut feel is that it's not a single digit growth year," he said.
Dataquest's preliminary 2000 ranking of the world's top 10 chip companies places ST in seventh place by turnover, up from ninth last year.
However, the Q4 2000 $2.174bn figure now gives ST a faster run-rate than sixth-placed Motorola, with expected $8bn full-year 2000 sales, and puts TI, which has just posted disappointing figures, well in ST's sights.
Pistorio, who recently turned 65, was asked if securing the number five spot might be the point at which he chose to retire. He was, not surprisingly, non-committal.
"Why do you want me to retire?" he asked.
Peter Clarke is European correspondent for EETimes, our US sister publication.