STMicroelectronics Set to Grow with China's Giants of Tomorrow


A long-time champion of the China semiconductor industry shifts gears for market leadership

Beijing, March 29, 2006 - Today, STMicroelectronics' recently appointed Greater China Corporate Vice President Bob Krysiak reinforced the Company's intention to strengthen its local presence and continue its long-standing, successful partnership strategy by expanding the Company's network of relationships with tomorrow's giants. According to the most recent iSuppli reports, ST is currently the number 3 semiconductor supplier to the China market and plans to further increase its influence in the world's fastest growing economic zone.

At a meeting in Beijing, Krysiak presented a clear view of the Company's position in China and its strategy for market leadership. ST's partners for joint future growth are slated to include the region's top electronics companies, which are increasing their market share in a wide variety of different applications such as telecommunications, digital consumer, industrial, automotive, and smartcards.

"Today, we are the number 3 semiconductor supplier in China and the number 2 if we exclude microprocessor products. We plan to become the number 1, reinforcing our position as a leading player in this market," said Bob Krysiak, Corporate Vice President and General Manager for Greater China. "Because it is in our DNA, we will continue to work closely with our existing partner and alliance network while establishing new partnerships and alliances with major emerging players, many of which will come from China and Asia."

The booming segment of Electronic Manufacturing Services (EMS) is another focal point of ST's market strategy in China.With the business model shifting towards outsourcing to original design manufacturers (ODM) and sub-contracting services, the world's major EMS and ODM players, who are largely based in the Greater China region, will outpace the market and dictate the choice of semiconductor devices.

STMicroelectronics explained its determination to further expand its presence and support for the China market with an intensified push, using all of the infrastructure, relationships, and knowledge the Company has developed in China during its 20 years history there. ST's strong integrated presence in the country encompasses manufacturing, design, research, and sales and marketing operations, complemented with a rich network of partnerships and joint programs with local companies, major universities, research centers, and government institutions. In addition to effectively positioning the Company for success in China, many of these partnerships also provide value to customers and partners around the world.

ST emphasized its commitment to developing technologies, products, and people in China for China, capable of serving the local economy and fostering its already stellar progress.

The Company has re-confirmed its investment plans for China, including the already announced investment in a joint memory manufacturing facility together with Hynix in Wuxi, where the Company has a 33% minority stake. When completed, later this year, the Wuxi facility is set to become one of the largest and most advanced wafer fab in the country, for a total cost of approximately US$ 2 billion. Supplementing ST's existing assembly and test plant in the Futian Free-Trade Zone of Shenzhen, the Company is planning to invest US$ 500 million to build its second back-end plant in China, which is expected to start production in Q3 2008. The US$ 500 million investment will be spread over a number of years, until the new back-end facility in Longgang reaches its full ramp-up capacity of 7 billion units per year.

The Company's Greater China headquarters have been set up in Shanghai and, as a sign of further commitment to the country a new building is currently under construction, with a total investment of US$ 10 million once it is completed.

STMicroelectronics in China

STMicroelectronics is a long-time leader in the China semiconductor market with a strong integrated presence of manufacturing, design, research, sales and marketing operations. The Company currently employs around 4000 people in the country. One of the largest assembly and test facilities in China, ST's back-end plant in Shenzhen ranks as among the most state-of-the-art in the semiconductor world. ST's design and competence centers in Shenzhen and Shanghai serve and stimulate the fast-growing demand for silicon products tailored to domestic requirements, including the key growth segments of multimedia, digital consumer, telecoms, and industrial applications. Leveraging its strong and successful culture of co-operation, the Company engages in a wide range of partnerships and joint programs with local companies, major universities, research centers, and government institutions.

ST is one of the top three suppliers of semiconductors in China. Since 1999, ST's sales in China have steadily outperformed the local market, growing at a CAGR of 31%, compared to 24% for China's semiconductor industry as a whole.

About STMicroelectronics
STMicroelectronics is a global leader in developing and delivering semiconductor solutions across the spectrum of microelectronics applications. An unrivalled combination of silicon and system expertise, manufacturing strength, Intellectual Property (IP) portfolio and strategic partners positions the Company at the forefront of System-on-Chip (SoC) technology and its products play a key role in enabling today's convergence markets. The Company's shares are traded on the New York Stock Exchange, on Euronext Paris and on the Milan Stock Exchange. In 2005, the Company's net revenues were $8.88 billion and net earnings were $266 million. Further information on ST can be found at www.st.com.

STMicroelectronics, Inc.
Lexington Corporate Center
10 Maguire Road
Bldg. 1, 3rd Floor
Lexington, MA 02421
(781) 861 2650
www.st.com

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