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ST chairman reiterates industry consolidation is coming

Posted: 29 Mar 2005 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor? fabless?

Pasquale Pistorio, honorary chairman of STMicroelectronics NV, has said that although his past prediction of a semiconductor industry consolidation has not happened to a large extent, a significant reduction in the number of major players has been delayed rather than averted.

In an interview with EE Times conducted immediately after he retired as president and chief executive officer of ST and appointed to the post of honorary chairman, Pistorio said that over the next five to ten years the consolidation would take place.

Referring back to a talk he gave in 1996 to a Financial Times conference Pistorio said: "The consolidation is the one thing I got wrong in my forecast." He continued: "I said there would be less than ten players with more than 5 percent market share, a zone of inactivity between 5 percent and 0.5 percent and then hundreds of specialist companies with less than 0.5 percent market share, and I said that the transformation would be completed by the end of the decade."

While acknowledging that the pace of consolidation had been slower than he expected Pistorio put this down to the slump in the semiconductor market and the rise of foundry-fabless business model.

"The first reason was the collapse of the high-tech market bubble, which slowed everything down. The second reason is the rise of the foundries which are lowering the threshold of entry for fabless semiconductor companies," Pistorio said. "In the next five years we will see big, broad range suppliers forcing the consolidation of the industry."

Pistorio refused to be drawn on possible acquisition targets for STMicroelectronics in the interview confining his discussion to the industry in general.

- Peter Clarke

EE Times

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