
STMicroelectronics charts path to $12bn
“Silicon carbide and soon gallium nitride will be a differentiator – but we are also developing on IGBT and expanding our offer on power modules,” said Jean-Marc Chery, president and CEO of STMicroelectronics, as the company predicts a turnover of between $9.45 and $9.85bn this year.
But this comes as the industry faces a slowdown that is challenging to hit the advice that the previous CEO, Carlo Bozotti gave to Chery to hit $12bn.
“Since the second half of last year we have witnessed some weakness in the market, particularly a slowdown in China for our general purpose microcontrollers, and as a result inventory started to build up in our distribution channel. As we entered 2019 some economies started to deteriorate,” said Lorenzo Grandi, chief financial officer of STMicroelectronics.
“After two strong years of revenue growth we see 2019 as a temporary pause,” he said. “We expect improved market conditions in the second half of the year.”
“The demand is there, but OEMs and distributors are in an inventory correction,” Chery told analysts in London. “It’s more a mood where people are cautious on overall inventory levels which makes us confident that the end demand is there and we will have the recovery of the market in H2.”
ST has added new areas such as 5G radio front end chips, both at sub 6GHz and 24GHz for a wide range of applications. It has been offering its 28nm FD-SOI process to smatphone makers, and is looking at its own devices for automotive vehicle-to-X (V2X) links, sub-GHz 5G industrial wireless for the IoT and even 5G low earth orbit satellite systems at 24GHz. It has also added phase change memory to its automotive chips as domain controllers to replace numerous electronic control units.
The company is investing in capacity with a new 300mm fab at Agrate in Italy as well as a new production plant in Asia. It is also taking over the fab in Singapore formerly run by Micron, but is cutting production to reduce inventory.
“5G is a particular game changer here and a great opportunity for ST across all the market we target,” said Marco Cassis, vice president of sales for STMicroelectronics. “We are now in the soft part of the semiconductor market, but beyond 2019 automotive and industrial are forecast to grow 6 to 8% and are 60 % of revenues. Automotive electrification and digitalisation are driving much faster content growth than the growth in the market.”
All of this will lead to the $12bn target. “If we assume the market grows 4 to 5% over the next years we believe we can achieve this by the second half of 2021 or 2022,” said Grandi.
Related STMIcroelectronics stories:
