SAN FRANCISCO— STMicroelectronics has gone through some big changes just in the past five months alone. ST has exited some of its biggest businesses, reported lackluster financial results, and is taking on behemoth NXP for dominance in automotive microcontrollers.
One of Europe’s top three semiconductor companies, the French-Italian ST split from a joint mobile venture with Ericsson in 2013 and some say the company has been struggling ever since. In January 2016, ST announced it would lay off up to 1,400 workers as it left the set-top box business, and restructured to three product groups: automotive and discrete, microcontrollers and digital ICs, and analog and MEMS. So far the company has escaped the merger and acquisition fever that swept through the industry over the last 18 months, hitting the microcontroller sector in particular.
“ST is a really sad story actually. In the ‘90s they were the star of Europe. NXP was falling apart, Infineon was a mess, and now [ST is] sort of adrift,” said VLSI Research CEO G. Dan Hutchenson.
“ST is definitely a survivor – they’re not necessarily in the high growth or high [volume] areas, but they do have potential… They’ve always been very cost competitive,” said Jim McGregor, principal of market watcher Tirias Research.
ST executives (from left): Chief strategy officer Georges Penalver, COO Jean-Marc Chery, CFO Carlo Ferro, CEO Carlo Bozotti, analog and MEMS group head Benedetto Vigna, automotive and discrete group leader Marco Monti, microcontroller division general manager Claude Dardanne.
The company’s first quarter financial results showed a $41 million net loss on revenues of $1.61 billion with quarterly sales down 5.4% year-over-year. ST executives said the company is poised for better days at an analysts meeting held in New York City in late May.
“Over the past 5 years ST has worked to react to the significant loss of business. The recovery has been painful. It has been painful for you as shareholders, and for us,” said ST Chief Financial Officer Carlo Ferro at the event. “Our challenge and opportunity is to compensate for the erosion of products over their life cycle [with] the introduction of new products.”
That means reorganizing to focus on “businesses with above market growth,” such as the Internet of Things (IoT) and smart driving. More specifically, ST wants to pump up its microcontroller, automotive, MEMS, imaging, analog, power and discrete businesses. The company also plans to improve its product mix and fab loading for 12-inch wafers.
“Both customers and investors especially have been concerned about the breadth of ST,” said Bob Krysiak, executive vice president of ST in the Americas region. “Being able to bring ourselves into sharper focus with IoT and driving…we’ve reduced our digital commoditized business and we’ve gone after business where there’s growth.”
“The company has looked strategically in what markets it wants to be in,” said McGregor of Tirias. “You really have to pick and choose what segments you can be in and where you can be a key player. If you want to be key player in this market and make good margins, you have to be in the top three.”
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