STMicroelectronics Takes Earnings Jump on Back of DVD
nikkeibp.asiabiztech.com
STMicroelectronics NV (ST) of Geneva, Switzerland, has enjoyed record financial results for the first half of its fiscal year 2000, which ended on July 1. Net revenues for the second quarter reached US$1,877.3 million, a 10.3% sequential increase over first quarter levels of US$1,702 million and 57.7% over the US$1,190.6 million reported in the comparable 1999 period.
In fact, net earnings for the first half of the year were US$575 million which is 5% above the net earnings for the full year 1999.
Commenting on the substantial revenue gains, Pasquale Pistorio, president and chief executive officer of STMicroelectronics, said, "Revenue gains were achieved across all major product families and applications. The strongest sequential revenue improvements were posted by consumer and telecom applications which achieved sequential revenue increases of 21.9% and 12.3%, respectively, over first quarter levels."
Growth Trends
As Pistorio points out, the growth in the digital consumer area is significantly bigger than 30%. "ST's main focus in the consumer segment is on digital consumer products," he added.
Major activities in the digital consumer area are taking place in Asia-Pacific where ST, for example, designed its set-top box ICs.
In the digital consumer area, ST was confirmed as the number one worldwide supplier of DVD backend chips in 1999 by market research firm Instat. Further strengthening this leadership, ST introduced a new DVD decoder/host processor chip, the STi5508, that offers all the functions of the STi5505 along with enhanced audio and video features including a Karaoke processor and MP3 decoder. This new device has already several design-ins in DVD drives of major Asian manufacturers.
However, these revenue numbers do not mean that ST has stopped investing in fabs. In terms of manufacturing facilities ST is currently in a process of significant investment. For example, the 8-inch fabs in Crolles, France, (volume production started in 1994) as well as in Catania, Italy, (volume production started in 1997) are now being expanded.
The two new 8-inch fabs in Rousset, France, and in Agrate, Italy, which were built in addition to existing fabs at these locations are already in the ramping up phase.
The new 8-inch Ang Mo Kio fab in Singapore is currently in an advanced construction phase and ST expects the start of volume production next year. In the second half of this year, the ground breaking for two more frontend manufacturing sites will take place: for an 8-inch fab in Catania and for a 12-inch fab in Crolles. Both of these fabs are expected to start volume production in 2002. In addition to producing chips in ST's own fabs about 13% of ST's ICs are manufactured by silicon foundries.
However, one problem should not be unaddressed: Semiconductor equipment manufactures have extremely long lead times. For example, "lead times for wafer steppers are in the 15 to 18 months range," comments Jean-Philippe Dauvin, group vice president and chief economist at ST Microelectronics.
Market Looks Healthy
According to Dauvin, the situation on the semiconductor market will continue to be very good. "Less than one-third of the ninth semiconductor cycle has passed, which means that two thirds of this cycle is still ahead of us," he said.
Dauvin added that the fastest growing applications in 2000 over 1999 are XDSL (+85%, telecom), DVD (+63%, digital consumer), digital mobile (+59%, consumer/telecom), set-top boxes (+35%, digital consumer), digital video (+30%, digital consumer) and smartcards (+30%, several application sectors from telecom to digital consumer). "One of the major contributors to the world wealth increase is China while the Asian dragons show a fast recovery under a favorable cost structure," Dauvin said.
In addition to the acquisition of Nortel Networks' wafer fab operations in Ottawa, Canada, ST has signed a letter of intent with Agilent Technologies for the development and manufacture of optical switch chips.
Even though ST makes almost two thirds of its revenues with differentiated ICs (most of them customer specific), the standard market is of high interest. In Q2/2000 only 7% of ST's revenues came from flash memories but as the currently ramping-up Agrate fab is significantly dedicated to producing flash memories this portion will quietly grow.
1 Gbit Flash Soon
For stand-alone flash IC production, ST uses an 0.35micron process at the current point of time but qualification and production start of an 0.25micron as well as of an 0.18micron flash process are just around the corner while volume production with these minimum feature sizes will take place in 2001. The 0.15 and 0.13micron flash processes are currently under development. ST's technology roadmap (not the product roadmap) lists the 0.13micron flash process with minimum cell sizes of 0.20square micron for Q2/2002. This is the process which will enable the 1 Gbit flash memory.
For its AnalogFlash memory ST expects "no products before 2002," explains Paolo Cappelletti, central R&D vice president and director of Non Volatile Memory Process Development at STMicroelectronics. This AnalogFlash technology offers 16 storage levels (resulting in 4 bits) per cell allowing a significantly higher density. One of the first applications of this technology is expected to be in the multi-media card.
by Alfred B Vollmer, Munich
(September 2000 Issue, Nikkei Electronics Asia) |
