The Covid-19 pandemic will see a delay in reaching its target of $12bn, says Jean-Marc Chery, CEO of STMicroelectronics. But the company is setting its sights on reaching $15bn shortly afterwards.
“We are determined to make ST stronger and outperform the market to become a profitable sustainable $12bn company in the short term but the market conditions are notably different from May 2019,” said Chery speaking at ST’s Capital Markets day this week. “Certainly we are witnessing a significant turnaround but with very different dynamics from what we were expecting.”
The company expects growth in 2021 from estimated revenues of $9.97bn in 2020, but from a market lower base as a result of the pandemic.
“Based on our latest assessment we will reach $12bn by 2023 with margins of 15 percent,” he said. This is later than previously predicted for the end of 2021. “The recovery is now expected at a pace originally expected but starting from a smaller market size,” he said. “There is no change in ST’s strategy and market focus of organic growth with small and targeted strategic acquisitions,” he added.
But the financial model provides a more aggressive target of $15bn by 2025 as the 300mm fab at Agrate comes on line in 2023, he says.
“If you want to grow 10 percent per year you need to spend 11 to 12 percent of sales on capex. We have three programmes that support this model,” he said. “This is to prepare our 300mm fab for [revenue in] 2023, with an objective to go to $15bn by 2025, that is the target. The second programme is to go vertical in silicon carbide to build an infrastructure to supply 40 percent by 2024 of raw materials. This is in order to decrease the cost of materials in the long term and drive the process improvement and for strategic independence. Recent events have shown that we need to be careful with strategic materials such as silicon carbide. The target is $15 to $16bn, so the model is very clear,” he said.
He also points to growth in electric vehicles [such as deals with Tesla and in ADAS with Mobileye] as well as LEO satellite systems, where ST has a deal to supply components for ground stations for SpaceX.
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