December 11, 2012, Seoul – STMicroelectronics (hereinafter ST), a global semiconductor company providing a wide range of electronic applications, has announced a new strategy. ST has released this plan as a result of a strategic review conducted for over a year while observing structural changes in the wireless market.

Carlo Bozotti, CEO and Chairman of ST, stated, “Today, we announce a new ST in line with the new market environment. Based on this, we have decided to withdraw from ST-Ericsson following a certain transition period. We intend to continue our ongoing support as a supply-chain partner, advanced process technology partner, and application processor IP provider for ST-Ericsson.”

ST's new strategy focuses on leadership in sensors, power, automotive products, and embedded processing solutions. We intend to place a special focus on five product areas: MEMS and sensors, smart power, automotive products, and application processors, including microcontrollers and digital consumers. We believe these product families will demonstrate robust growth in alignment with current trends and align very well with our market-leading position and competitiveness. Innovative products in these fields, combined with our world-class technology and manufacturing capabilities, will create more opportunities to significantly increase our market share.

“The new ST is more focused, stable, and better positioned to bring value to customers and shareholders, and aims to quickly achieve a 10% operating profit margin,” he said.

New strategy

ST's new strategy is based on two sectors: Sense & Power and Automotive products, and Embedded Processing Solutions.

ST will establish a leading position in Sense & Power, which includes MEMS and sensors, power discrete and advanced analog products, and in the automotive product line, which spans from the powertrain sector to safety-related components, body control components, and infotainment.

The embedded processing solutions will focus on the core of electronic device systems rather than wireless broadband access. The embedded processing solutions sector encompasses microcontrollers, imaging products, digital consumer products, application processors, and digital ASIC products.

In line with the new financial model, ST expects both major product segments to maintain profitability and generate cash. In particular, embedded processing solutions will transition into a profitable phase, driven by more powerful products, technology-intensive capabilities, an expanded customer base, and manufacturing synergies between microcontrollers and digital products.

ST will focus on these markets, which are expected to reach $140 billion[1] in 2013, and has sufficient potential to increase its market share in these markets.

Chairman Bozotti stated, “The opportunities in this industry are very exciting. As semiconductors become increasingly widely used, ST’s products will be found wherever microelectronics makes a positive contribution to human life. With this new strategic plan, we will not only grow faster and become more profitable, but also become a stronger company overall.”

ST-Ericsson

Due to structural changes in the wireless market, ST has decided to withdraw from ST-Ericsson after a transition period and is currently discussing withdrawal options. The withdrawal process has already begun and is expected to be completed within the third quarter of 2013. While further details are not available at this time, any measures taken will align with the new financial model, as announced by ST today.

ST will continue to support ST-Ericsson as a supply chain partner, advanced process technology partner (FD-SOI), and application processor IP provider.

ST will continue to find significant growth opportunities in the wireless market with its major product portfolio.

financial model

ST is aiming for an operating profit margin of 10% or higher. To achieve its new financial model, ST will reduce its average quarterly net operating expenses to the range of $600 million to $650 million by early 2014.