ST raises capex for “major product ramp”

ST raises capex for “major product ramp”

Business news |
By Peter Clarke

The spending will be weighted towards the first half of the year and includes expanding capacity in assembly and test as well as in front-end manufacturing, ST said. The billion-dollar plus capex compares with $607 million capex recorded in 2016.

ST announced the capital expenditure increase as part of its fourth quarter 2016 financial results. On a conference call financial analysts repeatedly asked for more information and to be told whether it was a processor or MEMS or imaging sensor product and whether it was destined for automotive or smartphone application. Carlo Bozotti, ST CEO, repeatedly declined to give more information about the major product ramp except to say it was important and had scope for positive impact on other ST businesses.

When quizzed on manufacturing capacity expansion at ST’s 300mm wafer fab in Crolles, France, chief operating officer Jean-Marc Chery said that manufacturing capacity would go from 3,000 wafers per week to 5,000 wafers per week in less than a year.

ST had fourth quarter revenues of $1.86 billion up 11.5 percent compared with the same quarter a year before. ST reported a net profit of $112 million in the fourth quarter compared with a break-even result in 4Q15.

For the full year 2016 ST reported revenues of $6.97 billion up 1.1 percent on $6.90 billion in 2015. The net income increased to $165 million in 2016 from $104 million in 2015.

Next: Proprietary technology

Bozotti did make clear that ST’s internal manufacturing focus is on proprietary technologies making the capex spend likely to be going towards a mix of 28nm FDSOI manufacturing of digital circuits and proprietary MEMS or sensor technology. Bozotti told analysts that ST buys in wafers that can be processed by others. For microcontrollers it buys in wafers from outside and it plans to do more of the same for BCD and MOSFET power chips, Bozotti told analysts.

With regard to outsourced manufacturing Bozotti was referring to older generations of microcontroller and power products, a spokesperson said. “The new ones [microcontroller and power products] are part of the areas of focus, including capex, where there is no outsourcing. Due to technology specialization they require to be manufactured internally,” the spokesperson added.

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