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ST pares R&D, centres on embedded processing

Posted: 30 Apr 2014 ?? ?Print Version ?Bookmark and Share

Keywords:STM? R&D? embedded?

STMicroelectronics NV sees a bright outlook as it pared losses during the first quarter following an R&D cutback and reduced impairment and restructuring charges.

The European chipmaker recorded a net loss of $24 million, compared with $171 million a year ago, while revenue, excluding legacy ST-Ericsson products, grew 0.7 per cent on a year-over-year basis and decreased 6.4 per cent sequentially. The company's revenue, including legacy ST-Ericsson products, decreased year-over-year and sequentially by 9.2 per cent and 9.4 per cent, respectively, to $1.825 billion. ST's results were in line with expectations.

"During the first quarter, ST posted an operating profit before impairment and restructuring charges of $8 million, improving by $188 million year-over-year, driven by the exit from ST-Ericsson as well as operating expenses well in line with our financial model," said ST president and chief executive, Carlo Bozotti, in a statement.

Impairment and restructuring charges were significantly reduced in the first quarter at $12 million compared to $101 million in the year-ago quarter, and R&D expenses fell 29.1 per cent, to $378 million.

Indeed, ST is slowly making its way back to profitability. ST sustained years of losses, stemming mostly from its wireless chip joint venture with Ericsson, as sales to key mobile device customers, including Nokia, Sony Ericsson, and Blackberry, plummeted.

Looking ahead, ST expects to record a 2 per cent sequential increase in sales in the second quarter of 2014, with less of its revenue garnered from ST-Ericsson. In a conference call with analysts following the earnings release, Bozotti pointed to improvements in the macroeconomic environment, and said that the company's main area of focus moving forward will be the embedded processing solutions segment, which includes microcontrollers, digital consumer products, imaging products, memories, application processors, and ASICs.

ST's general purpose microcontroller unit posted its fourth straight consecutive quarter of record revenue, Bozotti said. Microcontroller, memory and secure MCU sales grew 15.6 per cent year-over-year, to $346 million.

During the quarter, ST signed a strategic agreement with a top-tier foundry for 28nm, fully depleted, silicon-on-insulator (FD SOI) technology.

"This agreement expands the ecosystem, assures the industry of high-volume production of ST's FD-SOI based IC solutions for faster, cooler, and simpler devices and strengthens the business and financial prospects of the Embedded Processing Solutions Segment," said Jean-Marc Chery, who was promoted to chief operating officer from executive vice president and general manager of ST's embedded processing solutions unit.

- Ismini Scouras
??EE Times

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