News | Sunday, 25 January 2009

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Whatever happened to STMicro?

DAVID DARMANIN looks into how STMicroelectronics, Malta’s largest private employer, developed through the years, from its foundation to its future plans

STMicroelectronics, one of the five global leaders in the electronics and semiconductor industry, has a strong tradition. Employing over 52,000 worldwide, the conglomerate nowadays boasts yearly revenues to the tune of US$10 billion. But with impulsive fluctuations in the value of the US dollar against the euro, the energy crisis, the current economic climate and the trend of manufacturing firms relocating to Asia, how does ST intend keeping its strength in the global market?
Judging by a quick look at its history, there is little doubt on whether ST will turn such predicaments into yet another success story.
STMicroelectronics’ foundations take us back to 1957, when 56-year-old Adriano Olivetti, an Italian entrepreneur widely acclaimed as the foremost innovator in the manufacturing of typewriters, calculators and computers, founded Societa’ Generale Semiconduttori (SGS).
Pre-empting the boom of the semiconductor industry in the 1960s, Olivetti was among the first to take the manufacturing of such devices away from Texas and California. Only four years into operation, SGS clinched a deal with co-national competitors ATES and agreed on a merger.
In 1981, SGS invested heavily in an assembly plant in Malta and this gradually increased its staff to the present figures of 2,200 employees.
Meanwhile, in the same year, France elected its first left-wing government after 23 years, with Francois Mitterand as President. A widespread nationalisation of industries ensued, and as part of this process – Thomson Semiconducteurs was formed by the merging of six companies from France and the US in 1982.
In 1987, SGS and Thomson merged to form SGS-Thomson. Upon its formation, the semiconductor conglomerate ranked as one of the top selling in the world, with registered sales to the tune of US$850 million in its first year.
Investments followed and in 1989, SGS-Thomson acquired British company Inmos, followed by the purchase of Nortel’s semiconductor activities in 1994. This was the same year SGS-Thomson floated its first shares on the Paris and New York Stock Exchanges.
In 1998, less than a year before Thomson SA underwent privatisation, the French shareholding was withdrawn and shares were floated on the Milan Stock Exchange, leading SGS-Thomson to rebrand into ST Microelectronics.
In 2002, ST Microlectronics acquired Alcatel’s Microelectronics division. The same year saw ST enter a successful partnership project with Freescale (formerly known as Motorola Semiconductors), TSMS and Philips.
By 2005, ST ranked among the top five semiconductor manufacturers in the world – ahead of NEC, NXP and Freescale itself. It held its rank ever since. But with a global market share of close to 4%, ST could never come close to Intel’s 12%.
2007 however saw a diversification on ST’s part, with the creation of an unprecedented technology partnership with market leaders Intel in Flash Memory activities.
Last year in April, ST signed a joint venture agreement with NXP to create a wing for mobile activities. ST owns 80% of this new company.
The company is nowadays established globally, with seven manufacturing facilities, three administrative headquarters, three assembly points, 22 design centres and 12 sales offices scattered around the world.
So far, STMicroelectronics has announced plans to close down an 8” fab in Phoenix Arizona, a 6” fab in Carrolton Texas and two assembly parts in Casablanca, Morocco, by 2010. The latter site is Morocco’s biggest exporter.
A new 6” wafer fab for Nand flash memories, in which ST owns a 33% stake, was intended to open its doors in 2006. Meanwhile, the conglomerate is negotiating with an NEC joint-venture to build a new site in China.
After ST bought Nokia’s microchip development team in 2007, plans to open a number of sites in Finland for the development of cellular ASIC applications followed.
Also in 2007, ST acquired 91% of Genesis Microchip, which has design centres in Santa Clara, Toronto and Bangalore.
Where STMicroelectronics intends going in the next few years is not hard to assume. What is sure is the stability of Malta’s economy depends on this conglomerate’s business. Short of begging ST to stay, government must now start thinking of suitable alternatives.

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