While no increase in wafer fabrication is expected at the Crolles 1 fab in France, some growth is expected at the 8-inch wafer fab at Crolles 2, according to Alain Dutheil, ST's corporate vice president. He predicted that ST's wafer fab capacity both in Singapore and Rousset, France, will double in 2004. Pistorio stressed that ST's investment is focused on increasing "the quality of capacity."
ST continues to focus on five segments: communications, digital consumer, automotive, industrial/smart cards and computer peripherals. "There will be no changes in our strategy since 1987," Pistorio said. In fact, he added, on a sequential basis, all major product groups posted double-digit revenue increases.
Pistorio said he is convinced ST's strategy is sound since all its best product segments are indispensable for building system-on-chips using converging IP and technologies. Pistorio said, "You must master mobility, security, connectivity, storage and multimedia" in designing complex converging systems such as camera phones, digital consumer and automotive products, he said. "Very few companies have such a broad segment of product portfolio," said Philippe Geyres, corporate vice president and general manager responsible for ST's consumer and microcontroller groups.
ST is also broadening its customer base. Forty-three percent of its 2003 sales came from strategic partners like Nokia, Alcatel, Pioneer, Thomson, Seagate, Bosch and Hewlett-Packard. ST's top 30 customers contributed about 63 percent of ST's total sales in 2003. In its efforts to broaden the company's reach, Pistorio said, "high performance analog products, originally developed for our top customers, are now available to a broader customer base."
Jean-Philippe Dauvin, ST's group vice president and chief economist, said the pace of the chip recovery is quickening, driven by the recovery of the U.S. economy. The jobless U.S. recovery has been driven by expansion of fixed investment, which means "the increase of IT spending," he explained.
