While analysts seemed satisfied with the upbeat outlook
presented for ST's business in MEMS sensors, power semiconductors and
automotive, objections were raised against ST's continuation in digital
semiconductors and particularly in manufacturing them at ST's 300-mm wafer fab in
Crolles. ST was challenged that it was adopting a business model
similar to that of Texas Instruments, Freescale and Microchip but
continuing to engage in the expensive business of leading-edge digital and not aiming for sufficiently aggressive margins.
ST said it plans to divide its Crolles manufacturing output into thirds, with one third for MCUs, one third for
CMOS image sensors and one third for digital consumer products including
the use of ST's own 28-nm fully depleted silicon on insulator (FDSOI)
process. The company also disclosed it has three design wins for FDSOI
and has signed a second-source agreement with Globalfoundries Inc.
Bozotti said that while the company aims for
10 percent profitability at $9 billion annual revenue the margins go up
with sales at higher levels. "There are tremendous synergies in product
design, development and manufacturing among these three product
"We see them as a bloc. We will be very transparent
about this bloc. We will disclose opex, capex for this segment, the
cash flow," He added: "What we will not do is offer merchant silicon for
application processors in the smartphone segment. It is too competitive
and too crowded and we see verticalization among our major customers
"We are committed to exploit what we have at Crolles,"
Bozotti said while adding that he would keep the capital expenditure to
sales ratio at below 10 percent. For 2013 capex is set at $550 million
to $600 million. "We want to stay below 10 percent. We do not have any
major plan to expand capacity in the company."
Carlo Bozotti, CEO of STMicroelectronics, defends manufacturing strategy.
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