Bozotti has a dream: to turn round ST's digital problem

Much more difficult than we thought

As questioning was opened up to the floor, the discussion returned to the challenges the chip industry and ST face, and whether both are simply not charging enough for chips, or not charging for the software they are being asked to ship with their chips.

"These are the challenges the world faces today," said Bozotti but added that they are not so great for chip product companies. It is where the chip company aspires to provide a "solution" that the software burden can become problematic. "There are only two areas where want to sell platforms; smart phones, through ST-Ericsson and set-top boxes through ST," said Bozotti. "The problem is in consumer. ST-Ericsson; we need to fix it; expand the customer base, reduce costs, whatever it takes."

One questioner asked whether ST should move up to ship set-top boxes to try and capture more of the value for the hardware and software it provides. Bozotti was adamant ST would not do that. "We could make a box, but then we would be competing with our customers. And we would have brand management costs and problems."

From the floor Tien Wu, chief operating officer of ASE Group (Kaohsiung, Taiwan) characterized the problem as being related to a heavily consolidated customer base that is driving prices down. "We are dealing with a bipolar distribution. There are four customers in wireless, four customers in PCs and four customers in automotive but it is wide open in medical and industrial," Wu said.

Bozotti did not see things so simply. "Automotive has consolidated but it is still a good market. The ST business model is different in wireless and PC. It is partly to do with the level of involvement the customer wants to have in R&D. In automotive there are less platforms and less software."




ST CEO Carlo Bozotti tells the GSA European Executive Forum: "ST-Ericsson; we need to fix it; expand the customer base, reduce costs, whatever it takes."

To wrap up van Beurden asked Bozotti what keeps him motivated after 35 years in semiconductors and 28 quarters as CEO of ST.

"My dream is two have the two pillars [of the business] be successful. We have a $1 billion microcontroller business; a $900 million MEMS business; this is nice. The challenge is VLSI. ST-Ericsson is much more difficult than we thought. The customer base has changed substantially."


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