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ST quivers with analogue/MEMS: Like deer stuck in quicksand

Posted: 06 May 2016 ?? ?Print Version ?Bookmark and Share

Keywords:STMicroelectronics? MEMS? analogue? ST-Ericsson? smartphone?

STMicroelectronics NV, one of Europe's top three semiconductor companies, has come to a realisation that its analogue and MEMS business unit is dragging the company down and keeping it in the red.

This was shown in the company's Q1 financial results in which the company made a net loss of $41 million on revenues of $1.61 billion. The quarterly sales were down 5.4 percent YoY. Despite rumours that Carlo Bozotti's tenure as CEO of ST could soon come to an end the executive declined to discuss this in a conference call with analysts set up on the topic of the financial results.

For several years ST suffered losses as it struggled to disentangle itself from the failed mobile phone chip joint venture ST-Ericsson. During that time the analogue and MEMS business unit was spark of hope for ST as it achieved design wins for inertial sensors in smartphones and enjoyed the booming market. In recent quarters however, its MEMS business has been in decline as ST lost some of those design slots and MEMS in consumer applications has become increasingly commoditised and pricing was eroded. At the same time the last couple of quarters have seen softness in a smartphone market that seems to have largely saturated its market.

In 1Q16, ST re-organised its business into three product business units to address a strategic focus on smart driving and the Internet of Things (IoT): the Automotive and Discrete Group (ADG); Analogue and MEMS Group (AMG) and Microcontrollers and Digital ICs Group (MDG). Revenues within the ADG and MDG were essentially flat YoY while the AMG showed a YoY decline in revenue of 17.1% to $369 million.

"Following a few quarters of market softness, during Q1 we started to see signs of a recovery in the industry, with bookings improving across all regions and particularly in automotive and industrial," said Bozotti.

The company said it expects 2Q16 revenues to increase sequentially by about 5.5% 3.5 percentage points.

- Peter Clarke
??EE Times Europe

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