ST sees 'weak' growth in automotive, wireless

STMicroelectronics NV anticipates a double-digit sales growth in 2008. Vigilance, however, is encouraged as it is not visible in the marketplace. At a press and analysts' conference, Carlo Bozotti, president and CEO, ST, highlighted that the automotive market is under pressure in the United States and Europe, while the wireless segment is showing some weaknesses.

For the Q2 08, ST announced that all market segments posted a year-over-year growth, led by industrial (20 percent); telecom (19 percent); followed by computer and consumer with a 12-percent and 11-percent increases, respectively; and automotive (7 percent).

Sequentially, performance was led by the 14-percent growth of both telecom and industrial. Consumer was up 11 percent, while automotive gained 5 percent. Computer was essentially flat compared to the Q1 08.

Revenue targets
In his speech, Bozotti said he expects to see very good revenue year-over-year growth. He added that, "Our revenue and backlog give us confidence in our prospects. At the same time, we need to be vigilant and be more cautious whenever we are considering the overall microeconomic environment. We expect sales growth to range from -1 percent to +6 percent. This represents year-over-year growth of between 7 and 14 percent. The gross margin for the Q3 08 is expected to be the same as Q2 level of 36.8 percent, plus or minus one percentage point."

Potential for growth
Bozotti noted that the backlog for the Q4 08 is showing potential growth. He stressed, "It is on the right track. Our focus is more on the overall microeconomic environment. At present, the backlog for the Q4 is showing some material improvement sequentially when compared to that of last year."

As for the Q3, Bozotti said ST forecasts a 10-percent growth but toned things down. He added that, "We clearly target a double-digit growth for the year. However, we see some weaknesses in the market, particularly in the automotive sector. In general, both in Europe and in Asia, there is a decrease of the booking trend in distribution and in the wireless domain."

Automotive sector under fire
Bozotti cited that automotive market is under pressure, or worse even decreasing in the Western world, while it holds a stronger position in Japan and in China.

He said from a strategic point of view, ST wants to be a company that focuses on two main blocks with "a strong leadership position" in each block. "The first is power application with a number of industrial applications and motor control having more power applications in automotive, particularly in the car body. This is a big block in ST worth several billions of dollars. This is a very solid and strong block," he added.

"Second, we also want to be a strong leader in the areas of wireless and digital consumer. The intensity of R&D is important, particularly in the area of platform development. So, this is the second area of strong leadership we are targeting," he noted.

- Anne-Francoise Pele
EE Times Europe