STMicroelectronics. Carmelo Papa. Senior Executive Vice President General Manager, Industrial and Multisegment Sector

Transcription

1 STMicroelectronics Carmelo Papa Senior Executive Vice President General Manager, Industrial and Multisegment Sector Deutsche Bank EuropeanTMT Conference London September 7, 2011

2 STMicroelectronics Overview 2

3 Business Segment Overview 3 50/50 JV with Ericsson Wireless Automotive, Consumer, Computer & Communication Infrastructure ( ACCI ) Industrial and Multisegment Sector ( IMS ) Major Product Lines Home Entertainment & Displays ( HED ) Computer & Communication Infrastructure ( CCI ) Automotive Products Group ( APG ) Analog, MEMS & Microcontrollers ( AMM ) Power Discrete Products ( PDP ) Products Major Customers

4 4 Revenues by Product Segment Wireless* Q211 Revenues: $2,567M Computer and Communication Infrastructure (CCI) 14% 41% 24% Power Discrete Products (PDP) * See appendix ** Includes Imaging business 13% 29% Analog, MEMS & Microcontrollers (AMM) 44% Automotive, Consumer, Computer & Communication Infrastructure (ACCI) Automotive (APG) 35% Home Entertainment & Displays (HED)** ST s exposure to the Wireless segment at the earnings level is ~7%

5 5 H111 Highlights Revenues up 5% to $5.10Bn compared to H110 Mainly due to an improved product portfolio and continued strength in Automotive, MEMS, Microcontrollers and Imaging applications ST wholly-owned businesses net revenues increased 17% Operating margin before restructuring attributable to ST*: 9.5% Net income of $590 million 65 cents per diluted share, 34 cents adjusted* $305M after-tax gain related to the cash payment from Credit Suisse for the Auction Rate Securities litigation settlement Net Cash position: $1,070M Negative free cash flow reflecting particularly intense level of Capex in H111 and the situation at ST-Ericsson $357M collected from Credit Suisse * See appendix We have made measurable progress in advancing our product portfolio

6 6 Financial Performance In US$M, except EPS Q210 Q111 Q211 FY10 FY09 Net Revenues 2,531 2,535 2,567 10,346 8,510 Gross Margin 38.3% 39.1% 38.1% 38.8% 30.9% Operating Income Before Restructuring* Operating Margin Before Restructuring Attributable to ST* % % % % (732) -6.8% Net Income Reported (1,131) EPS Diluted Adjusted EPS Diluted* (1.29) (0.72) Free Cash Flow** Net Financial Position* ,138 (250) 1, ,152 1, Effective Exchange Rate /$ *See appendix ** Including M&A, main amount being $1,145M in Q109

7 7 Operating Margin by Segment ACCI AMM % % Q210 Q111 Q211 13% 0% Q211 $1.1B revenue Up 9% y-o-y 10.9% op. margin Q211 $751M Revenue Up 18% y-o-y 21.2% op. margin Q210 Q111 Q211 13% 0% Wireless PDP Q210 Q111 Q Q211 $347M revenue Down 34% y-o-y -$207M op. result Q211 $337M Revenue Up 2% y-o-y 11.8% op. margin Q210 Q111 Q211 25% 13% 0% 50% minority interest Revenue Operating Margin Operating Income (US$M)

8 Manufacturing Locations France (Crolles, Rousset, Tours) Total Wafers 8" Equivalent Italy (Agrate, Catania) Morocco Malta China (Shenzhen, Longgang) Philippines Non-Europe Europe Malaysia Singapore Front-end sites Back-end sites 8

9 Technology R&D Technology is bringing a competitive advantage to ST in the field of multimedia convergence and power applications ST is unique in the semiconductor industry mastering technologies as diverse as Advanced CMOS Discrete MEMS to drive leadership in multimedia convergence and high performance/pow er ASIC applications 9

10 Strong positions in Targeted Markets 10

11 Key Targeted Products & Applications #1 in MEMS for portable consumer devices Top player in MCUs; rapid migration to 32-bit #1 in EEPROM Entering new high growth markets (healthcare, energy, automation) Top player in Power Discretes Introducing innovative components in silicon & new semiconductor compounds Focusing on renewable energy, hybrid vehicles, factory automation Leading portfolio for an evolving marketplace #3 in Automotive WW gaining momentum w/ Power TM MCUs Leading in Set-top Box Top player in analog ASICs for printers & motor control Focusing on DTV Diversify imaging to new optical sensor applications Leadership in smartphone & tablet market Engaged with 7 of Top 9 device OEMs Expanding portfolio of platforms including software Launched NovaThor TM family 11

12 Top Customers Top 10 OEM Customers FY 2010 (listed alphabetically) Apple Bosch Cisco/Scientific Atlanta Continental HP Nokia Marketing Initiatives FY10 New targeted key accounts Revenue up 58% Mass market Revenue up 51% Research in Motion Samsung Seagate Sony Ericsson 12

13 Group Strategy Overview Capture growth in historical markets and NEW applications Energy Management & Savings Smart Consumer Devices Multimedia Convergence Trust & Data Security Sense & Power Healthcare & Wellness Power Discrete Analog & MEMS Platforms MCUs ASICs 13

14 Analog, MEMS & Microcontrollers (AMM) 14

15 Leadership in Extreme Analog: MEMS Continuous Advanced Innovation Technology Micron-sized silicon Transducer Advanced Analog Chip Expert Manufacturing High volume + = Low Cost ST MEMS in 2010 ST revenues > $300M; Market TAM = $1,600M* #1 in Consumer & Mobile Handset MEMS >1 Billion accelerometers & gyroscopes shipped Innovative packaging Small Size * isuppli 15

16 MEMS portfolio expansion Accelerometer Gyroscope Pressure Sensor Microphone Compass 16

17 Advanced Analog Product Lines Operational Amplifier Audio Amplifier for Portable FingerTip RF Lower Power for Wireless Sensor Networks ASSP (healthcare, wellness & smart home) 17

18 Sensors Enable New Applications & Services Telehealth Wellness Intuitive Interface & Image Stabilization Context Awareness Point Of Interest 3-Dim Tagging Positioning & Monitoring Augmented Reality Location Based Services 18

19 More High Growth & Convergent Markets Healthcare Medical Wireless Diagnostic Equipment Therapeutic Equipment Telemedicine Health Monitoring NFC 19

20 Microcontrollers at ST General Purpose Secure MCUs Automotive Growth Applications: Industrial market, Consumer, Energy management, Security (mobile transactions, identity, authentication ) Powertrain Body electronics Safety chassis > $700M Revenues 7.7% market share in 2010* 8-bit offer Entering now 32-bit *Source: WSTS 20

21 Microcontrollers Market Drivers General Purpose MCUs Industrial market Energy management: metering Consumer: user interface Healthcare: glucose meter Automotive: car body, safety Secure MCUs Brand Protection NFC : Near Field Communication TPM : Trusted Platform Module Pay TV Smartgrid Embedded SIM Smartcards: SIM, Banking, Transportation, Automotive MCUs (Focus from ST dedicated Automotive Products Group) US$B MCU Worldwide TAM* General Purpose Secure Automotive * Source WSTS 21

22 ST Advanced 32-bit CPU Platforms Based on ARM Cortex M family GP MCUs Entry level 32-bit Cortex - M0 STM32 F0 32-bit Cortex - M3 STM32 F1/2/3 32-bit Cortex - M4 STM F4 High performance Address 8 & 16 bit market Low cost, low power focus ST promote the broadest portfolio addressing a very wide range of applications High computing power including Digital signal processing capabilities Secure MCUs Entry level 32-bit Cortex SC000 ST31 32-bit Cortex SC300 ST33 High performance Cost & power optimized to address the Contactless market Address high security market requiring high computing power 22

23 Power Discrete (PDP) 23

24 Power Discrete at a Glance Power Discrete Revenues 2010 Key Facts TAM = $17.8B Billing = $1.3B Market share = 7.4% Record sales with revenues up by 39 % vs Worldwide industrial competence centers Schaumburg Boston Source: WSTS, STMicroelectronics Prague Seoul Tokyo Catania Shanghai Noida Taipei Singapore Innovation results: 3 new products per day 2 new System Solutions (boards) per week 14% of sales with products less than 2 years old > 400 new patents and patent applications (filed or granted) on power technology in the last 2 years 24

25 Power Discrete: a Core Pillar of Growth High Voltage Power MOSFETs ( >400 V) Protection Diodes Thyristors & Triacs Schottky & Ultrafast Diodes IPAD TM & IPD #1 #1 #1 #1 #1 Market Share 27% Market Share 5% Market Share 22% Market Share 14% Market Share 36% Competitive Advantages: The widest range of Power Technologies and Packages Leading expertise in innovative silicon structures and new composite materials Extremely competitive manufacturing Source: isuppli, WSTS, STMicroelectronics 25

26 Power Discrete: Market Trends Energy efficiency and costs Growing energy demand Environmental technology and sustainability 26

27 Focusing on Emerging Applications Power & Energy Hybrid & Electric Vehicles Lighting, Building Automation & HVAC Industrial Motor Drives Power Discrete Power Discrete Power Discrete Power Discrete 2014 TAM: $1.4B CAGR : 9 % 2014 TAM: $1.5B CAGR : 28 % 2014 TAM: $1B CAGR : 6% 2014 TAM: $1.3B CAGR : 7% Advanced Technologies and Products SiC & GaN Power Devices Super Junction MOSFETs Trench Diodes & Field Stop IGBT Technologies High Speed & Low Leakage Protections High Voltage & High Temperature Triacs IPD s for RF communication modules Innovative Power Discrete Solutions Distributed Photovoltaic Hybrid & Electric Vehicles LED Lighting Modules for Automation Source: Semicast, Yole Développement, STMicroelectronics 27

28 Climbing up the Value Chain with Power Modules Advanced Package Technologies Well-Established Silicon Technology New In-House Assembly Line 28

29 Smart Power: A key junction between Analog ICs and Power Discrete 29

30 Smart Power Market Steady growth foreseen in the next 5 years (over 9% CAGR) Automotive Smart Power Biggest market inside Automotive Progressively moving to higher integration Power Management in AMM Energy saving driving innovation System solutions more and more driving market Motor Control in CCI Smart Power in ST Over 25 years experience Broadest presence in the market Smart Power Worldwide TAM (US$B)* Automotive Industrial Consumer Wireless Wired Data Processing * Source isuppli 30

31 Smart Power in ST Key Facts: #2 worldwide in Power Management ICs Solid #1 worldwide in Automotive BCD Smart Power Top 2 in printer and hard disk drive motor control Differentiated manufacturing strategy Partners to market leaders / shared technology roadmaps Innovative systems solutions Automotive BCD Smart Power Power Management ICs in AMM Motor Control Key Product Families: Engine Control ICs Airbag super-integrated ICs Door Module kits Car Radio audio amplifiers Key Product Families: Off-line converter ICs Battery Management ICs LED Driver ICs Motion Control Smart grid Key Product Families: Printers Hard disk drives ST FY10 Smart Power revenues: ~$1.5B 31

32 The Smart Power Evolution Value Creation Complexity & Integration Smart Power System 3D Integration/Through Silicon Vias Digital Control Embedded Power Solution Harvesting/Energy Storage Ultra Low Power Sensors Transceiver New Materials SoC & SiP BCD/HCMOS VIPower Intelligent Power Module Time 32

33 Social Trends Driving Innovation in Smart Power Increasing Energy Demand Towards Green Car Integration & Connectivity Power and Energy Green, sustainable, energy efficiency Automotive saving energy, preventing accidents, being connected Automation efficient, safe, comfortable, secure & private Sources: Semicast Research 2010, isuppli

34 34 Forward Looking Statements Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended) that are based on management s current views and assumptions, and are conditioned upon and also involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those in such statements due to, among other factors: Changes in demand in the key application markets and from key customers served by our products, including demand for products where we have achieved design wins and/or demand for applications where we are targeting growth, all of which make it extremely difficult to accurately forecast and plan our future business activities; in periods of reduced demand or visibility on orders our ability to reduce our expenses as required and to operate our manufacturing facilities at sufficient levels to cover fixed operating costs, as well as our ability, in the case of increased demand, to ramp up production efficiently; the operations of the ST-Ericsson wireless joint venture, which represent an over $2 billion investment and risk for our business, are currently in a transition from legacy to new products and facing a dramatic change in their major customer business. Consequently, ST-Ericsson has been incurring significant losses. In the event of a significant worsening of the current market conditions or a lack of results, the value of ST-Ericsson for ST could decrease to a value lower than the current carrying amount of the investment on our books; our ability, in an intensively competitive environment, to successfully develop and secure customer acceptance and to achieve our pricing expectations for high-volume supplies of new products in whose development we have been, or are currently, investing; the financial impact of obsolete or excess inventories if actual demand differs from our expectations; our ability to maintain or improve our competiveness when a high percentage of our costs are fixed and are incurred in Euros and currencies other than U.S. dollars, especially in light of the increasing volatility in the foreign exchange markets and, more particularly, in the U.S. dollar exchange rate as compared to the Euro and the other major currencies we use for our operations; the outcome of ongoing litigation as well as any new litigation to which we may become a defendant; changes in our overall tax position as a result of changes in tax laws, expected income or the outcome of tax audits, and our ability to accurately estimate tax credits, benefits, deductions and provisions and to realize deferred tax assets; the impact of intellectual property ( IP ) claims by our competitors or other third parties, and our ability to obtain required licenses on reasonable terms and conditions; product warranty or liability claims based on epidemic or delivery failures or recalls by our customers for a product containing one of our parts; availability and costs of raw materials, utilities, third-party manufacturing services, or other supplies required by our operations; and changes in the political, social, economic or infrastructure environment, including as a result of military conflict, social unrest and/or terrorist activities, economic turmoil, as well as natural events such as severe weather, health risks, epidemics, earthquakes, tsunami (in particular, the aftermath of the events in Japan), volcano eruptions or other acts of nature in, or affecting, the countries in which we, our key customers or our suppliers, operate and causing unplanned disruptions in our supply chain and reduced or delayed demand from our customers... Such forward-looking statements are subject to various risks and uncertainties, which may cause actual results and performance of our business to differ materially and adversely from the forward-looking statements. Certain forward-looking statements can be identified by the use of forward-looking terminology, such as believes, expects, may, are expected to, should, would be, seeks or anticipates or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions. Some of these risk factors are set forth and are discussed in more detail in Item 3. Key Information Risk Factors included in our Annual Report on Form 20-F for the year ended December 31, 2010, as filed with the SEC on March 7, Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this release as anticipated, believed or expected. We do not intend, and do not assume any obligation, to update any industry information or forward-looking statements set forth in this release to reflect subsequent events or circumstances.

35 35 Appendix Free cash flow is defined as net cash from operating activities minus net cash used in investing activities, excluding payment for purchases of and proceeds from the sale of marketable securities (both current and non-current), short-term deposits and restricted cash. We believe free cash flow provides useful information for investors and management because it measures our capacity to generate cash from our operating and investing activities to sustain our operating activities. Free cash flow is not a U.S. GAAP measure and does not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addition, our definition of free cash flow may differ from definitions used by other companies. Net financial position: resources (debt), represents the balance between our total financial resources and our total financial debt. Our total financial resources include cash and cash equivalents, net of bank overdrafts, if any, current and non-current marketable securities excluding Micron shares received in connection with the sales of Numonyx, short-term deposits and non-current restricted cash, and our total financial debt includes short term borrowings, current portion of long-term debt and long-term debt, all as reported in our consolidated balance sheet. We believe our net financial position provides useful information for investors because it gives evidence of our global position either in terms of net indebtedness or net cash position by measuring our capital resources based on cash, cash equivalents and marketable securities and the total level of our financial indebtedness. Net financial position is not a U.S. GAAP measure. Return on Net Assets (RONA) is the ratio of operating income before impairment and restructuring charges divided by average net assets used during the period. ST defines average net assets as average total assets net of total liabilities as reported in our consolidated balance sheet excluding all items related to our financial position such as cash and cash equivalents, marketable securities, short term deposits, restricted cash, bank overdrafts, current portion of long term debt and long term debt. Operating income before restructuring excludes impairment, restructuring charges and other related closure costs. Operating income before restructuring attributable to ST is calculated as operating income before restructuring excluding 50% of ST-Ericsson operating loss before restructuring as consolidated by ST. Operating margin before restructuring attributable to ST is calculated as operating income before restructuring attributable to ST divided by reported revenues excluding 50% of ST-Ericsson revenues as consolidated by ST. Return on Net Assets (RONA) attributable to ST is calculated as annualized operating income before restructuring attributable to ST divided by reported net assets excluding 50% of ST-Ericsson net assets as consolidated by ST. Adjusted net earnings and earnings per share (EPS) are used by our management to help enhance an understanding of ongoing operations and to communicate the impact of the excluded items. Adjusted earnings excludes impairment, restructuring charges and other related closure costs attributable to ST, the impact of equity investment divestiture and subsequent sale of Micron shares, other-than-temporary impairment (OTTI) charges and realized gain on financial assets, net of the relevant tax impact. Consolidation of ST-Ericsson: ST-Ericsson, a joint venture owned 50% by ST, began operations on February 3, 2009 and is consolidated into ST s operating results as of that date. ST-Ericsson is led by a development and marketing company consolidated by ST. A separate platform design company providing platform designs mostly to the development and marketing company is accounted for by ST using the equity method. Wireless Segment: As of February 3, 2009, Wireless includes the portion of sales and operating results of the 50/50 ST-Ericsson joint venture as consolidated in the Company s revenues and operating results, as well as other items affecting operating results related to the wireless business. Sales recorded by ST-Ericsson and consolidated by ST are included in Telecom and Distribution

36 OPERATING RESULT NET EARNINGS 36 Pre-Tax Items to Adjusted Earnings* In US$M Q210 Q111 Q211 FY10 FY09 U.S. GAAP Net Earnings (1,131) Impairment & Restructuring (attributable to Parent Company s shareholders)** Equity Investment Divestiture (Gain)Loss on sale of Micron shares OTTI Realized Gain on Financial Assets Numonyx Impairment Estimated Income Tax effect of Adjustment (265) 60 (21) 5 (1) (323) 5 (265) (76) Adjusted Net Earnings* (627) * See appendix ** Total Impairment & Restructuring Charges were $12M in Q210, $24M in Q111, $31M in Q211, $104M in FY10, $291M in FY09.