The company also announced it was upping its capital spending plans for 2000 to $3 billion, after spending $808 million on fabs and chip plants in the second quarter. At the start of 2000, STMicroelectronics had earmarked $2.2 billion for capital spending this year, up from $1.4 billion in 1999.

Sequentially, STMicroelectronics' second-quarter sales were 10.3% higher than $1.7 billion in the first three months of this year. "Revenue gains were achieved across all major product families and applications," said Pasquale Pistorio, president and CEO of the company. "The strongest sequential revenue improvements were posted by the consumer and telecom applications, which achieved sequential revenue increases of 21.9% and 12.3%, respectively, over first quarter levels." He said the company's standard, commodity, logic and memory product categories recorded sequential increases of 17.2% and 14.7%, respectively, from the first quarter 2000.

Improvements in filling wafer fabs with higher levels of capacity and higher prices for products drove earnings in the second quarter, added the CEO.

"We continue to experience record incoming order rates and backlog levels, indicating that the market recovery remains robust and that ST's technologically-advanced product portfolio is well suited for next generation applications," Pistorio declared. "Increasing order visibility leads us to expect that, despite traditional seasonal factors, third quarter revenues should show sequential improvement over second quarter levels. Additionally, we anticipate that the company's operating margin for the third quarter will be above the record level achieved in the second quarter of this year."

"In the second quarter, ST's capital investments were $808 million, bringing first half capital spending to over $1,430 million," he said. "We expect to spend over $3 billion in 2000, investing in additional capacity in order to take full advantage of growth opportunities within this period of strong market recovery."