Wednesday, May 21, 2008
[Originally for Sramana Mitra's site]
ST Microelectronics (STM) has been making steady progress in the wireless world. Last month, it decided to merge its wireless assets with NXP to form a JV that is now the third-largest wireless semiconductor company in the world. As we continue our vendor matrix study, we will dissect STM this month for its market position, strategy and financials. Incidentally, STM is the first non-US vendor that we are covering in-depth here.
STM was formed in 1987 merging the semiconductor business of SGS Microelettronica and the non-military business of Thomson Semiconducteurs. The company completed its IPO in 1994 getting listed on Euronext Paris and NYSE simultaneously. It subsequently listed its shares on the Borsa Italiana in 1998.
STM has been Europe’s semiconductor flag-bearer for quite some time now offering a broad range of products. According to an iSuppli report, STM is ranked fifth among the semiconductor companies in the world. The company also topped the industrial products category, while finishing second for analog products and third for wireless and automotive products.
STM’s Application Specific Products Group (ASG) comprises of semiconductor products for mobile, multimedia, communications, computing, home entertainment & displays, and automotive sectors. ASG is the single biggest contributor to STM’s revenues at $5.439 billion in 2007. With its wireless moves, STM aims to leverage its strengths to make ASG a key growth driver.
The Industrial and Multisegment Sector (IMS) consists of the company’s analog, Micro-Electronic-Mechanical-Systems (MEMS), microcontroller, memory and smartcard businesses. In 2007, IMS contributed 31.4% of STM’s revenues at $3.138 billion.
Until recently, STM also had a Flash Memory Group (FMG) that it strategically divested to spin-off Numonyx. This JV with Intel was intended to give the FMG business the scale to operate successfully while making STM’s core product-line more nimble.
So, much like the other semiconductor leaders, STM has breadth in its product portfolio. With this brief overview of the company history and businesses, we will now continue to dissect its financials and strategy to gain insights into its future.