How ST Semiconductor maintains its product status?

STM 32-bit MCU has the largest market share in the world. Under the trend of digitalization, the demand for MCU will grow at a rate of 4 times in the future.What type of company is ST? How have they consolidated their product position over the past 37 years? What have they done over the years?In 1987, Italy’s SGS Microelettronica merged with France’s Thomson Semiconducteurs (Thomson’s semiconductor division): ST was born. When ST was first established, it ranked 14th among the top 20 semiconductor suppliers, with sales of approximately US$850 million. Initial public offering on the stock exchange on December 8, 1994. ST’s new business performed well after listing. July 6, 1998 – STMicroelectronics (Lexington) developed the world’s first commercial audio amplifier integrated circuit using Class D technology. These circuits, still known today as the TDA7480, TDA7481, and TDA7482, went into production with more than 150,000 units shipped to customers.

Although ST has a high starting point, everything is not smooth. New businesses are booming, but old businesses are facing a decline. At that time, the global smart card IC market, which had passed its peak growth period, was in a state of gradual shrinkage. ST and Siemens These two monopoly giants have launched a fierce competition. Although ST has been involved in semiconductor mergers and acquisitions since its establishment, each time it has brought growth, but mergers and acquisitions alone cannot ensure that its technology is popularized in the industry. In order to remain technologically competitive, they established a semiconductor alliance with Motorola and Philips in 2002 and established a new R&D center Crolles2. Fred Shlapak, president of Motorola’s semiconductor product division, said: The beauty of this alliance is The point is that it will greatly accelerate the development of future technologies, ensure the popularity of these technologies throughout the industry, and reduce costs at the same time.”

In the mid-term of semiconductors, it is inevitable to face overcapacity like today.A phase of sluggish demand Dataquest Inc reported that 1998 went down in history as the worst year for semiconductor manufacturers since the mid-1980s. Seven of the world’s 11 largest chip suppliers saw revenue fall by at least 14%. In this environment, STMicroelectronics’ profits were still able to maintain a level of 38.3%. At that time, they believed that their diversified product portfolio balanced coverage of customers. ST reported that its net income for the year was US$411 million, with revenue of 4.2 billion US dollars, the chip manufacturing channel has overcapacity, and the demand in the semiconductor market has declined for three consecutive years.Semiconductor demand, which had been sluggish for three years in 1999, rebounded in 1999, and overcapacity turned into undercapacity. In order to keep up with demand, st also built an 8-inch wafer fab in Singapore. Plunged into recession and put on hold.

STMicroelectronics is also building new 8-inch wafer fabs in Agrate, Italy, and Rousset, France, to increase production capacity. To this end, the expenditure budget was increased from US$950 million that year to US$1.6 billion. At the same time, ST did not stop the pace of acquiring other companies. In the same year, they also acquired Arithmos Inc. because Arithmos had developed unique CMOS analog and Digital technology.car• Regarding the layout of ST in the automotive field, it started as early as 1999.ST started to emerge in the automotive field in 1999. The TDA7500 was one of their weapons to enter the automotive field. This was already a very highly integrated automotive chip at the time and was mainly used for car audio systems because they believed Semiconductors for car audio systems will see rapid growth. In that year, Siemens changed its name to Infineon Technologies. In the same year, Hitachi also launched a 32-bit single-chip RISC microcomputer that supports the “CAN” automotive LAN standard. It seems that the situation is completely different today.

• Later, ST tried its best to participate in activities related to industry standard decision-making to ensure that it would not fall behind in the popularization of technology. In 2003, in order to promote the open standard of processor interface, ARM, Nokia, ST and TI jointly founded an entity, MIPI Alliance. The important role of this organization is to establish the consistency of application processor interface and speed up the time to market of products.In order to gain a cost advantage, ST formulated a plan to build a factory in China. Due to China’s low labor force and large labor force, it has slowly lost its advantage in building factories in Europe. In order to retain STM, the Malvern government announced to provide subsidies for STM’s new investment. Despite some ups and downs in the choice of factory construction, STM has achieved good results in the next 10 years, and maintains a certain amount of investment in the research and development of new products every year, such as high-end motor control modules, LED light drivers and other products that are in line with the trend of the times. But there are also times when technology choices and product launch timing fail.

In 2015, they suffered losses. Under Bozzotti, STMicroelectronics has racked up net losses of about $1 billion, in part because of misplaced bets on chip customers such as Nokia. The company’s revenue in 2014 was $7.3 billion, down 17% from 2005, when Carlo Bozotti was CEO.Later, they quickly adjusted their direction and targeted the automotive and industrial fields. In 2020, strong automotive demand, inventory reduction across the entire supply chain, and a rebound in supply chain difficulties promoted the development of the automotive industry. The demand for high-end and consumer electronics in the industrial sector continues to grow.This was also driven by electrification and digitalization driving semiconductor content, with net revenue rising 24.9% to $12.76 billion in 2021 and earnings beating expectations.In order to be more stable in the Chinese market, they jointly developed chips with Huawei in 2020. In addition to smartphones, they also include semiconductors used in the automotive field (such as autonomous driving)., their top 10 global customers previously included Huawei (as of 2019, their top 10 customers include Apple, Huawei, Bosch, Samsung, Tesla, HP, etc.)

Electric vehicles are the area in which they are most confident in the future. Semiconductors are still going through a downturn in 2023-2024, causing the stock price to not perform well. They believe that STMicroelectronics’ stock price is seriously undervalued. STMicroelectronics is in every Their strong position in the long-term trend of increasing chip content in vehicles still makes them confident about the future. Electric vehicles may be the highlight of this period, but they will soon become saturated. At which node in AI may the next highlight appear? How should major semiconductors plan for the next field to ensure their status?

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