STMicroelectronics NV (STM)
Morgan Stanley Technology, Media & Telecoms Conference Call
November 16, 2012 5:15 am ET
Carlo Bozotti – President and Chief Executive Officer
Let’s get started. Thanks for waiting, everyone. Carlo, thanks for coming.
Thank you very much. Thank you.
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Well, we’re going through a phase of stability, but on the low end. Okay? We had in the first five months of this year strong bookings trend and this trend changed, I’d say, pretty dramatically starting from the month of June and then the bookings is on the low side since then. And I think that in Europe clearly, there is the macroeconomic situation, there is certainly a slowdown of the growth in Asia and in China.
I believe that in relative terms, we should end the fourth quarter very, very much at the same level we have done in Q3 and in Q2. So we see, at least for ST, stability. We are benchmarking with our 10 major competitors in our industry that are reporting, so moving into Q4, we should perform better than the rest of the pack.
And then we know, we all know that, of course, the western economies are on the very narrow – walking on a very narrow path, where it’s very difficult to balance out between austerity measures and on the other side on a monetary policy that is more aggressive to support the growth.
The new stimulus package in China is going to be very important. They’re formulizing a stimulus package as $100 billion. Anyhow, what we plan is stability over four quarters from Q2 to Q1 next year and then hopefully back to some growth in Q2 and a stronger second part of 2013.
So, a bit of gain of no more – maybe stability?
Okay, okay. Actually Q4, your guidance was, compared to the others, I’m not saying it was great in absolute terms.
No, it was not.
But in terms of compare to traditional competitors like TIs, and the like, actually it was better. So is it because of you’re a bit later cycle or it’s because you think you take market share?
No. I think we’re taking market share. I think we are – as I just said, we are systematically tracking of course. We are tracking our major – the ten major competitors and they are all reporting. So we have all precise numbers every single quarter and I think we will end up this year with some growth, we believe. And then talking on the core business of STM, that does not include wireless, with some growth compared to what we have achieved in Q4 last year. So this is Q4-over-Q4. Despite I have to say some significant decline of certain products at our former major customers.
Sure. So there is a business I like a lot, it’s the MEMS business, because I think the barriers to entry in this business are actually quite high. What are the trends currently and how do you see this business evolving next year?
Well, first of all, it’s an important growth. We are moving from Q3 to Q4 on the MEMS business, I think we are working on three vectors and also this is now with analog, I mean, we have organized in MEMS and analog in one group, analog is low power analog, this is one group, and in the other group we have all our power products, power – Ethernet power products.
So now the analog and MEMS group is the biggest group of the company and we have just commenced about almost $1 billion sales this year. And the effort is very wide as I said these three vectors; the first obviously is miniaturization of what we do with these products.
The second is the variety of sensors, I think it’s really very massive. So we got from in our actual remediation magnetometers, we have a rotational MEMS, the famous gyroscope. But we also have environmental sensors like the pressure sensors, humidity sensors, temperature sensors, and we have new entry like very recently we have introduced the first touch sensing solution for finger tip, and we have new technologies there to even drive the screen at distance. And we have proximity sensors, we have e-mail sensors. So is a major effort in terms of a variety of products, and the combination of this product, or certain of these products in one package. So this is the second vector.
And the third vector clearly is new application, because of course this is not only games and smartphones, but is now more and more also automotive applications, is also healthcare applications, fitness, and wellness.
Okay, that’s probably high margins?
Yeah and is very broad, this is very broad and then I think we are quite unique in this respect. We have such respect range of sensor products. And we have more confident we’ll continue to grow successfully in this area.
Okay, I agree. What’s going on at the moment in the automotive market? We are hearing lots of chat about production cuts in your part, how you are seeing your market there?
Clearly, we see suffering on the market in Q4. We have a good backlog for Q1 in the automotive, but we have a clear decline in Q4. We are not aware about any new closing plants compared to what we had few weeks ago. The rumors in these days there are new plants coming, we don’t see that.