ST chief discusses plans for China fab, acquisitions

ST chief discusses plans for China fab, acquisitions
By Junko Yoshida, EE Times
May 31, 2002 (9:04 a.m. EST)
URL: http://www.eetimes.com/story/OEG20020530S0065

LONDON — President and chief executive officer Pasquale Pistorio detailed STMicroelectronics' aggressive plans for penetrating China, its possible acquisitions in Japan, and a growing list of strategic partnerships at the company's annual analysts meeting here Thursday (May 30).

"We will build a [semiconductor] front-end facility by 2005 in China, either alone or in partnerships," Pistorio said. The company presently operates an assembly plant and design center in Shenzhen, and application development centers in Beijing and Shanghai.

STMicro also appears willing to acquire competing semiconductor companies, including those in Japan. The company is interested in an acquisition that "improves our portfolio in our focused areas, and significantly increases our presence in the U.S.A. or Japan," Pistorio said. The interest would only extend to a company that would allow ST to turn around products within 12 months. If it takes longer th an that, "we may just as well do [the development] internally," Pistorio said.

Asked specifically about the ongoing semiconductor industry consolidation in Japan and ST's interest in acquiring a Japanese chip vendor, Pistorio said, "When you looked at the overall return on investment of capital made by [those Japanese semiconductor companies] in the last 10 years, it's been miserable." The Japanese market opportunity is already opening up for companies like ST in applications such as DVD, he said. And vertically integrated companies that once developed silicon internally are increasingly turning to ST's more cost-effective solutions, he said. "It's already helping us to grow our presence in Japan."

Meanwhile, ST continues to form strategic partnerships with its customers, suppliers and even competitors. The latest, with Agere Systems, has "a big goal to develop advanced solutions for hard-disk drives for mobile PCs," said Aldo Romano, corporate vice president of STMicro's telecommunications, peripherals and automotive groups. "We will put in a basket both of our companies' [disk drive-related] IPs, defining a common set of technologies and a common mask, to make them totally interchangeable."

The company has also formed a new agreement with Alcatel's mobile phone division, under which ST plans to define, validate and integrate future chip sets for mobile handsets, and make reference designs available. ST also announced a joint venture with Dai-Nippon Printing Co. Ltd. on photomask technologies. Pistorio called the deal "essential for moving forward with deep-submicron semiconductor technologies."

Pistorio, who has led ST since the company's formation in a merger in 1987, said, "It's been a fascinating 15 years." While maintaining the integrity of a team and remaining focused on five key application areas, Pistorio noted that ST has rendered an average after-tax profit of 12.1 percent in the last seven years. He pointed out that ST and Intel Corp. are the only two semiconductor companies that remained profitable in 2001. "It's not bad," he said. Backed by the company's wealth of technologies and network of knowledge, he said, "We will continue to make profitable growth this year and next year."