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ST's drives car IC biz to full throttle

Posted: 25 Jul 2012 ?? ?Print Version ?Bookmark and Share

Keywords:STMicroelectronics? automotive semiconductor? supply chain? MEMS?

According to STMicroelectronics executives, its automotive semiconductor business is one of its most stable and predictable business segments. In fact, it contributed about 17 percent of the company's $9.6 billion revenue last year and is growing at a double-digit while other divisions face a different fate.

Major structural changes occurring in the automotive market and the increasing adoption of electronics by auto OEMs gives ST and auto IC rivals hope that market strength can be maintained. With mega trends such as energy savings, automation, renewable energy and safety identified, auto suppliers must remain agile. Indeed, customers are requiring more of chip suppliers as the trend toward system-level support in places such as China and India, combined with the variations in components demand for vehicles, means companies such as ST must simultaneously boost R&D spending while holding down costs.

Meanwhile, suppliers like ST understand that auto makers can't afford to shut down production lines because of supply chain snafus.

ST is therefore pouring resources into the auto business as the division's profile rises within the company. ST has been hiring Chinese engineers to support its business there because it believes a good understanding of local customers is critical to grabbing design wins even for foreign manufacturers selling to the region. Even if the bulk of funds invested in automotive is going into R&D and capital expenditure, the company hasn't neglected the supply chain angle.

Amid constant market fluctuations, ST has deepened back-end supply chain support for its customers, recognizing that for many the idea of a halted production line is anathema. The "line must move" is a cardinal principle of ST's support system for the auto sector, according to Otto Kosgalwies, head of ST's infrastructure and services unit.

Opportunities in the auto IC market are matched by major challenges. Solid growth for chip vendors entering emerging markets are offset by cost-conscious customers and the general evolving nature of the auto sector. Meanwhile, design differences and customization requirements among Western customers and those in the faster-growing developing economies of Brazil, China and India are among the challenges faced by auto chip suppliers. ST said it sees growing demand for its current portfolio of auto ICs but is still hustling to deliver MEMS-based devices.

"We have to begin selling MEMS to the auto market if we want to maintain our growth rate. In fact, it would be stupid for us not to enter with MEMS," Marco Monti, EVP and GM of ST's automotive product group.

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