Full Year 2008 Revenues by Product Group
The following table provides a breakdown of revenues by product group.
Net Revenues Full Year Full Year Year-over-Year
(In Million US$ and %) 2008 2007 Change
ACCI
Automotive (APG) 1,460 1,419 2.9%
Computer and Communication
Infrastructure (CCI) 1,077 1,123 (4.0%)
Home Entertainment &
Displays (HED) 1,585 1,402 13.0%
Other ACCI 7 0 n/a
IMS
Analog, Power and MEMS (APM) 2,393 2,313 3.5%
Micro, non-Flash Memory
and Smartcard (MMS) 936 825 13.3%
Business Outlook
Mr. Bozotti stated, "While it is extremely difficult to predict how the industry will evolve in 2009, we believe it could be a year of fundamental change and opportunity.
"We have four key priorities for ST during 2009.
-- First, 2009 will be a year focused on improving our competitiveness as
we execute on our plan to complete the wireless joint venture with
Ericsson Mobile Platforms during the first quarter.
-- Second, we are targeting to reduce our costs by over $700 million in
2009 in respect to the Company's fourth quarter 2008 cost base. The
actions are a combination of the ongoing restructuring initiatives and
new programs that are focused on resizing the Company's manufacturing
operations and streamlining expenses, and are expected to affect about
4,500 net jobs worldwide in 2009.
-- Third, we continue to advance our lighter asset strategy focused on
careful management of our capital investments. As a result, we have set
a capex budget of about $500 million for 2009, representing a 50%
reduction in comparison to 2008.
-- Fourth, thanks to our strong and consistent investment in our product
portfolio we are in a solid position to provide innovative products that
will continue our momentum by driving the Company to gain market share
in 2009 just as we have in 2008."
Current uncertainty in the global financial markets, economic recession in one or more of the world's major economies, seasonality, and the effect on demand for semiconductor products in the key application markets and from key customers served by our products makes it extremely difficult to accurately forecast product demand and other related matters and makes it more likely that ST's actual results could differ materially from expectations. Consequently, the Company will only provide approximate revenue and gross margin internal planning targets with respect to the first quarter of 2009. When visibility on market conditions improve, the Company will reconsider providing quantitative guidance similar to past practices. In the meantime and for internal purposes, the Company is currently planning for revenues to be in the range of $1.5 billion to $1.85 billion. As ST works to reduce inventory levels during this timeframe, fab loading will run at levels of about 50%, driving gross margin to a extraordinary low level which the Company is planning for internal purposes to be in the mid to high 20s as a percentage of sales. Gross margin is subject to changes in demand levels and pricing that could impact fab loading, inventory write-offs, mix and unit costs, and combined with currency fluctuations potentially create additional margin variability.
The above internal planning data do not include the potential impact - to include related purchase accounting - of the expected business combination with Ericsson Mobile Platforms.
Q4 2008 Products, Technology and Design Wins
Automotive, Consumer, Computer and Telecom Infrastructure (ACCI) Product Highlights
-- In automotive powertrain applications, ST gained several design wins: a
multi-driver IC for a market leader in Japan, expected to be used by two
car makers in Japan and third in China; and in Europe, tier-one OEMs
selected ST for a mid- to low-end powertrain platform, including
multiple Power PC-based microprocessors, and as the single-source
supplier for gasoline direct-injection integrated driver ICs, for use in
small to medium Euro 5 and 6 cars from 2012, involving most European car
makers and several makers in China. ST also gained design wins for its
automotive standard products, in areas such as airbags and brake-control
modules.
-- Also in powertrain, ST and LG Chem unveiled details of a battery pack
combining LG Chem's lithium-ion battery technology and a
state-of-the-art battery-management IC from ST, which can significantly
extend the potential of electric and hybrid electric vehicles (HEVs),
reducing both petrol consumption and CO2 emissions. In safety
applications, ST announced its first high-dynamic-range CMOS camera
tailored for vision-based Advanced Driver-Assistance Systems (ADAS).
-- In car multimedia, ST announced it is to collaborate on a common
platform that combines ST's GPS technology with NAVTEQ's digital road
map, also for ADAS solutions. ST's GPS technologies were also selected
by two major system makers for telematics applications in South America
and also for tolling systems in Europe. Additionally, ST introduced the
world's first car audio-amplifier with a digital input, eliminating the
need for signal conversion and resulting in higher sound quality and
better noise immunity.
-- In car-body applications, ST gained many design wins for body control
module platforms in Europe and Japan and achieved strong market
acceptance of its 24V product roadmap for intelligent power switches. ST
also introduced a single chip that produces the major signals required
to drive vehicle door-mounted systems as well as an improved method for
controlling electrochrome rear-view mirrors, eliminating discrete driver
chips normally mounted in multiple locations inside the door.
