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UPDATE: STMicro CEO: Chip Market Continues To Improve

(Updates with further comments from STMicro chief executive, additional background, share prices.)

      By Jerry A. DiColo      Of DOW JONES NEWSWIRES      

NEW YORK -(Dow Jones)- STMicroelectronics NV (STM) Chief Executive Carlo Bozotti said Friday that the early signs of improvement in the semiconductor market have continued.

"We had recently begun to see some indicators of improvement," Bozotti said during an investor event. "In these last two weeks, the early signs of improvement have been re-confirmed."

In late April, Europe's largest chip maker reported its fifth consecutive quarterly loss as the company suffered a big revenue decline amid the difficult market environment.

At the time, Bozotti said there was some improvement in the chip sector in the current quarter. In particular, better conditions were observed in the industrial sector, primarily in Asia and in the wireless sector.

Bozotti's comments mirrored similar remarks from other semiconductor leaders, including chip giant Intel Corp. (INTC). Earlier this week, Intel Chief Executive Paul Otellini said that the current quarter is "a little better" than the company expected and that conditions in the chip industry aren't as bad as people think.

STMicro had issued an informal target of 5% to 15% revenue growth for the second quarter from the first quarter, a stronger performance than normal in the historically slow period.

And with each week, Bozotti told Dow Jones Newswires he is becoming much less concerned about the company's quarterly results.

"We plan to do better than seasonal in the second quarter," he said. "Our objective in the third quarter is also to do substantially better."

In Asia, Bozotti cited the stimulus package enacted by the Chinese government as the main reason for strength in the region, though Japan, he said, remains weak.

Meanwhile, the French government is drawing up measures to support its semiconductor industry. State secretary for industry Luc Chatel this week said semiconductors were a strategic industry for France and Europe, and without action, "the whole lot will disappear to Asia."

Bozotti declined to comment on the French government's actions, though he reiterated the importance of continuing to support research and development efforts during the downturn.

STMicro has a substantial manufacturing presence in France. In the first quarter, 32% of its total revenue came from Europe, the Middle East and Africa.

The Geneva-based company, formed by the merger of French and Italian state-owned chip makers in 1987, is hurting along with other semiconductor companies from the slump in demand for products that use its chips.

In January, STMicro said the first and second quarters would be the bottom of the drop in demand for chips. However, in April, STMicro's board approved a plan to cut its quarterly dividend by two-thirds, citing the unstable market.

"We remain prudent," Bozotti said. "In this challenging market environment, our first goal is to gain back market share."

Shares of STMicro were recently up 8 cents to $6.31.

-By Jerry A. DiColo, Dow Jones Newswires; 201-938-5670; jerry.dicolo@dowjones.com

(Agence France-Press contributed to this report.)

(END) Dow Jones Newswires

 

 
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