NEW YORK – In contrast to NXP Semiconductors, committed to a turnaround based on its “no-big-chip-in-the-middle” strategy, STMicroelectronics is betting its future on a much broader product portfolio – including such big chips in the middle as digital TV SoCs and ST-Ericsson’s multi-mode modem/applications processor.
Carlo Bozotti, six years after succeeding the legendary Pasquale Pistorio as ST Microelectronics’ CEO, looked visibly confident, in control of the company’s destiny, and even relaxed while bantering on stage with members of his management team at ST’s Investor and Analyst Day here Thursday (May 19th).
There is reason to feel upbeat. ST’s first quarter in 2011 showed a solid start with net revenues of $2.5 billion and a gross margin of 39.1 percent, helped by the company’s strong growth in analog, MEMS and microcontrollers revenues (38 percent increase compared to a year ago). However, ST’s wireless revenues dropped 34 percent, a result of ST-Ericsson’s legacy products suffering a bigger than expected decline.
Clearly, Bozotti’s turnaround remains only half done.
Gilles Delfassy, president and CEO of ST-Ericsson, in particular, is painfully aware of the challenge. He said: “This is not at all where it should be,” adding that to achieve the publicly promised break-even target in Q2, 2012 is “not going to be easy.”
Nonetheless, Bozotti evinced strong support for ST-Ericsson. Beyond what he described as “four growth areas” including energy, healthcare, trust (security) and smart devices, Bozotti stressed that the real big growth is “in wireless.” He said, “ST-Ericsson, built on the strong foundation, has made a transition to the best-in-class modems and application processors.”
ST-Ericsson is now armed with new “Nova” ARM-based application processors and “Thor” modems, in addition to “NovaThor” combining a modem and apps processor into a single chip.
Tractions from customers for all these new products “are very strong,” Delfassy stressed.
In my opinion the USP for STE is the integrated NovaThor chip. Every other company already have separate Apps processor and Modem chip. If STE has already came up with an integrated Apps & Modem processor, then they should rigorously market it to cellphone manufacturers like HTC/Samsung/LG. BTW I never heard any successful mass market product that uses STE apps processor.
ST Ericssion wil succeed. They together have knowhows in semiconductor and communication technology with them. They will be suceesful soon and to maintain the same in long term ST Ericssion needs to focus on future advancements which others will be planning to add up by seeing ST's success.Faster they plan and do it long lasting sales
Difficult but not impossible. European firms benefit from a great deal of EU/State subsidies in R&D. I note with interest Delfassy's quote above about the challenge for ST-Ericsson's competitors to integrate newly purchased IPs, whereas ST-Ericsson have just been through that...
I think Mr. Delfassy can dream on.
The mobile phone and tablet business (or even connected devices, like laptops with 3G/4G modems) has concentrated around 4 operating systems: iOS, Android, Win7 and BB. The money is in the application processor, not in the datapipe. Three out of these four are dominated by the "Intel" of the mobile business, i.e. Qualcomm.
Even TI understood this and focussed on application processors.
ST-Ericsson needs a few big design wins, but it will be an up-hill battle.
This is bad for Europe, because the mobile industry is dominated by operating systems from US companies and hardware from US companies.
Actually, ST-Ericsson has two pronged strategies. They offer two separate roadmaps for Nova (apps processors) and Thor (modems); meanwhile they also offer NovaThor which combines a modem and an app processor into a single chip.
So when more feature phones get smarter, they can opt for NovaThor, while smartphones can use two seprate chips (Nova and Thor).
At least that's how I understood.
Very interesting strategy from ST. However is not a one solution for everybody. The mobile market is divided in segments, the smartphone, the non-smartphone and the tablet segment.
Using big chip in the middle seems to be a good solution for non-smartphones as it is easier to develop and put together packaged systems with chips that have lower horsepower. But applying that scheme to smartphones will not work because they need a stronger baseband and main chip for multimedia rich applications. So... I think the winner is the one that works in the middle, not like NXP nor like ST-E.
What do you think?
Ericsson capabilities in phone modems (BBs) are indeed stellar.
The industry needs successful phone platform players and it looks that STM, nVidia, Renesas, Marvell, MediaTek, Broadcom, TI, Qualcomm and Intel are certainly among the top candidates.
Very soon we will all know which few among them won the race and why.
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