ST Microelectronics sees YEARS of chip industry growth.
Jeff
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STMicroelectronics Shares Rise After it Predicts Years of Industry Growth
By Daniel Tilles
STMicroelectronics Shares Rise on Improving Industry Outlook
Paris, Nov. 2 (Bloomberg) -- STMicroelectronics NV shares
rose as much as 10 percent after Europe's second-biggest
chipmaker said last week it sees years of industry growth.
The shares rose as much as 8.3 euros to 91.8 euros ($96.73)
in Paris. The shares were the leading gainer on the benchmark CAC
40 Index.
The chip industry will experience a sustained period of
growth, ST's chief economist Jean-Philippe Dauvin told analysts
Friday in New York. Chip prices should remain firm or rise,
especially for ``flash memory' designs that retain stored data
even when power is shut off on devices such as mobile phones.
``They're saying the upturn will last at least two years,'
said Karsten Iltgen, an analyst with WestLB Panmure in
Dusseldorf, Germany, who rates the shares ``buy,' with a price
target of 95 euros. ``They also don't see any significant add-ons
in industry capacity, which should help prices.'
The company is also developing new applications for a design
that combines the functions of several chips on one, a ``system-
on-a-chip' strategy, Iltgen said.
``They seem to be at the forefront in this development,' he
said. The new applications will ``complement another chip design
used for set-top boxes called Omega. They want to develop other
applications such as mobile phones.'
ST also said the industry would grow next year by 25
percent, up from an earlier forecast of 22 percent, French bank
BNP said, citing Dauvin. BNP rates ST's shares ``outperform.'
Analysts also pointed to a report saying that ST and Telia
AB, the Swedish state phone company, announced the development of
a new generation of silicon chips.
The chips are designed for full motion video capability over
regular phone lines at speeds up to 1,000 times faster than
conventional modems, the Financial Times reported, citing ST vice
president of advanced system technology, Andrea Cuomo.
ST and Telia are now working to have the new technology,
called ``Zipper VDSL,' adopted as the world standard, thus
superseding ADSL, currently the favoured high-speed Internet
access technology, the Financial Times reported.
Last month, ST said third-quarter profit rose 33 percent to
$135.3 million, boosted by demand for more powerful chips from
makers of mobile phones, car stereos and palmtop computers.
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