1. Forward Looking Statements 1
Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of
Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended) that are ba sed on management’s current views and assumptions,
and are conditioned upon and also involve known and unknown risks and uncertainties that could cause actual results, performa nce or events to differ materially from those in such
statements due to, among other factors:
• the possible impact of an impairment charge on the carrying value of the ST-Ericsson investment in our books of approximately $1.7 billion as well as on our consolidated results of
the successful execution of ST-Ericsson's new strategic direction plan and its related savings announced on April 23rd 2012;
• changes in demand in the key application markets and/or from key customers served by our products, including demand for products where we have achieved design wins and/or
demand for applications where we are targeting growth, all of which make it extremely difficult to accurately forecast and plan our future business activities;
• our ability in periods of reduced demand or visibility on orders to reduce our expenses as required, as well as our ability t o operate our manufacturing facilities at sufficient levels
with existing process technologies to cover our fixed operating costs;
• our ability, in an intensively competitive environment, to identify and allocate necessary design resources to successfully d evelop and secure customer acceptance for new
products meeting their expectations as well as our ability to achieve our pricing expectations for high-volume supplies of new products in whose development we have been, or are
currently, investing;
• the financial impact of obsolete or excess inventories if actual demand differs from our expectations as well as the ability of our customers to successfully compete in the markets
they serve using our products;
• our ability to maintain or improve our competiveness when a high percentage of our costs are fixed and are incurred in Euros and currencies other than U.S. dollars, especially in
light of the increasing volatility in the foreign exchange markets and, more particularly, in the U.S. dollar exchange rate as compared to the Euro and the other major currencies we
use for our operations;
• the outcome of ongoing litigation as well as any new litigation to which we may become a defendant;
• changes in our overall tax position as a result of changes in tax laws, expected income or the outcome of tax audits, changes in international tax treaties which may impact our
results of operations as well as our ability to accurately estimate tax credits, benefits, deductions and provisions and to r ealize deferred tax assets;
• the impact of intellectual property (“IP”) claims by our competitors or other third parties, and our ability to obtain requir ed licenses on reasonable terms and conditions;
• product warranty or liability claims based on epidemic or delivery failures or recalls by our customers for a product containing one of our parts;
• availability and costs of raw materials, utilities, third-party manufacturing services, or other supplies required by our operations; and
• current economic uncertainties involving the possibility during 2012 of limited growth or recession in global or important regions of the world economy, sovereign default, changes in
the political, social, economic or infrastructure environment, including as a result of military conflict, social unrest and/or terrorist activities, economic turmoil, as well as natural
events such as severe weather, health risks, epidemics, earthquakes, tsunami, volcano eruptions or other acts of nature in, or affecting, the countries in which we, our key
customers or our suppliers, operate and causing unplanned disruptions in our supply chain and reduced or delayed demand from our customers.
Such forward-looking statements are subject to various risks and uncertainties, which may cause actual results and performance of our business to differ materially and adversely from
the forward-looking statements. Certain forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “may,” “are expected to,”
“should,” “would be,” “seeks” or “anticipates” or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or
intentions.
Some of these risk factors are set forth and are discussed in more detail in “Item 3. Key Information — Risk Factors” included in our Annual Report on Form 20-F for the year ended
December 31, 2011, as filed with the SEC on March 5, 2012. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual
results may vary materially from those described in this release as anticipated, believed or expected. We do not intend, and do not assume any obligation, to update any industry
information or forward-looking statements set forth in this release to reflect subsequent events or circumstances.
1
2. Agenda 2
Presentation Speaker
Time
9:00 Introduction T. Sorensen
9:05 Company Strategy & Vision C. Bozotti
9:25 ST Business & Financial Roadmap P. Lambinet
9:55 ST-Ericsson D. Lamouche
10:20 Manufacturing & Technology R&D J.M. Chery
10:50 Break
11:05 PANEL: Digital & Multimedia Convergence G.L. Bertino, M. Cetto, R. Krysiak, P. Lambinet,
11:35 PANEL: Power P. Grimme , F. Guibert, M. Monti, C. Papa
12:05 PANEL: Sense E. Aussedat, M. Cassis, C. Dardanne, B. Vigna
12:35 Q & A Panel C. Bozotti, J.M. Chery, C. Ferro, P. Lambinet, D.
Lamouche, C. Papa
1:30 Lunch
2:30 Breakout Sessions
5:00 to 6:30 Reception
3. Agenda – Breakout Sessions 3
New
Pearl Plymouth Minskoff Nederlander Palace
Amsterdam
Imaging, BiCMOS
Digital Analog, MEMS &
2:30 – 3:00 ST-Ericsson
Convergence
ASIC & Silicon Automotive
Sensors
Photonics
Industrial & Power Analog, MEMS &
3:00 – 3:30 Discretes
Automotive Microcontrollers
Sensors
Imaging, BiCMOS
Digital Industrial & Power
3:30 – 4:00 ST-Ericsson
Convergence
ASIC & Silicon
Discretes
Photonics
Digital Industrial & Power
4:00 – 4:30 Convergence
Automotive Microcontrollers
Discretes
Imaging, BiCMOS
Analog, MEMS &
4:30 – 5:00 ST-Ericsson ASIC & Silicon Microcontrollers
Sensors
Photonics
5:00 – 6:30 Reception – MAJESTIC Ballroom Foyer (5th Floor)
• Automotive Marco Monti, Paul Grimme
• Analog, MEMS & Sensors Benedetto Vigna, Marco Cassis
• Digital Convergence Gian Luca Bertino, Robert Krysiak
• Imaging, BiCMOS ASIC & Silicon Photonics Eric Aussedat, Flavio Benetti
• Industrial & Power Discretes Carmelo Papa, Matteo Lo Presti
• Microcontrollers Claude Dardanne, Francois Guibert
• ST-Ericsson Carlo Ferro, Ronen Ben-Hamou
4. ST Business & Financial Roadmap
Philippe Lambinet
Executive Vice President
Corporate Strategy Officer
General Manager, Digital Sector
5. About ST 2
• A global semiconductor leader
• The largest European semiconductor company
• 2011 revenues of $9.73B(1)
• Approx. 50,000 employees worldwide(1)
• 12,000 people working in R&D
• 12 manufacturing sites
• Listed on New York Stock Exchange, Euronext Paris
and Borsa Italiana, Milano
(1) Including ST-Ericsson, a 50:50 joint venture with Ericsson
6. Partners of our Customers Worldwide 3
with 78 sales offices in 36 countries
7. Focused Product Segments 4
50/50 JV with Ericsson
Analog & Power
Wireless Digital Automotive
Microcontrollers Discrete
Digital Imaging, BiCMOS ASIC Automotive Analog, Micro, Industrial &
Convergence & Silicon Photonics Products MEMS & Memory & Power
Group Group Group Sensors Security Discrete
(DCG) (IBP) (APG) (AMS) (MMS) (IPD)
4
8. FY11 Revenues by Product Segments 5
Wireless
ST-Ericsson
Automotive (APG)
• #1 in China
• #1 ASIC
16% 17% • #1 Smart Power
• #3 Worldwide
Digital
• #1 in Set-top
Box outside US
• #2 in Set-top
Box Worldwide 19%
Analog, MEMS &
35% Microcontrollers
(AMM)
• #1 in MEMS
13% Sensors and
Microactuators
Power Discrete (PDP)
• #1 in Thyristor
• #1 HV>400V PowerMOS
ST’s exposure to the Wireless
segment* at the earnings level
*See appendix is 9%
Source: IHS iSuppli 2011 rankings
14. Convergence of Functionalities 11
Camera
Battery life
Parental control GPS
Camcorder
Home sharing
Social Networks
Web browsing
Apps stores Gaming
Picture stabilization
Content sharing
Email
Content personalization
SMS MP3 player
Data security
15. 40%
Application Drivers towards 2015 12
35% SSD
30% Tablets
25%
Smartphones
20% (4G CAGR > 100%)
Building & Home Automation
2011 - 2015 CAGR
15% Energy Generation & Distribution
Fiber Appliances
10% Broadband Ebooks WLAN Acess/Routers
Medical
Fab Automation
HDD
STB Game Consoles
5% Infotainment Automotive Body
TV
0% Computer Systems
Printer
-5%
Flat Panel Monitor
-10%
-15% Mobile Phone 1G/2G
-20%
100 1,000 10,000 100,000
Market Size in 2015 ($M)
Automotive Electronics Categories Consumer Electronics Categories Data Processing Categories
Industrial Electronics Categories Wired Communications Categories Wireless Communications Categories
Source : IHS iSuppli
(SAM, excl. DRAM, Flash, MPUs, Opto)
17. Key Requirements 14
Performance Interface
Smart World
Power Security
Multimedia Convergence + Sense & Power
18. Leading Sense & Power 15
Analog MCUs
Key Enablers
MEMS/Sensors ● Leading position in key products Power Management
● Rich portfolio of technologies
● Broad system know-how
Supporting our target markets
Automotive Communications Computer Consumer Industrial
& Peripherals & Other
19. Growth Drivers for Sense & Power 16
Healthcare
• Aging/growing population & Security • Increasing threats
Wellness
Energy Automotive
Growth • Rising global car
• Finite natural resources
production and silicon
content drive market
• New opportunities
(HEV/EV)
20. New Sense & Power Products in 2012 17
• Analog & MEMS • Automotive
• Motion MEMS Combo • Power Amplifier
• Altimeter • ABS, Air Bag, Powertrain, Smart Power
• Microphone • PowerTM MCU
• Touch screen controllers
• Operational amplifiers
• Smart Sensors (RF, MCU, Sensor)
• Memory, Microcontrollers & Security • Industrial & Power Discrete
• MCU Cortex - M0/M4 families • IGBT for motor control, solar and UPS
• 32-bit F0 series • Amoled power management
• 32-bit F3/F4 Series • Power MOSFET MDmesh V
• Secure MCU (ST31 on ARM SC000 core) • Smart Grid:
• NFC for mobile handsets • Power Line Modem
• Android, Windows 8 and other • Photovoltaic ICs
• EEprom dual interface
21. Driving Multimedia Convergence 18
Digital TV Digital
& Monitor Set-Top Box
Automotive
Infotainment
Network
Infrastructure
(ASIC)
Key Enablers
Smartphones
Imaging ● Low-power and high performance CMOS & Tablets
process roadmap
● Leading position in all converging markets
● Broad system know-how
22. Growth Drivers for Multimedia Convergence 19
Secure,
ubiquitous,
personalized
services
Explosion of
Emerging
digital
markets
content
Growth
23. New Multimedia Convergence Products in 2012 20
• Digital Convergence Platform • Imaging
• Digital TV: Newman
• Imaging diversification
• Set-top Box: Orly
• DisplayPort • Consumer, computer,
• Premium monitors: Athena automotive, medical
• DisplayPort based Smart Connectivity: • Expanding customer base
Pegasus
• Networking ASICs
24. Next Step in Multimedia Convergence 21
• We will offer a unified processing platform to serve all markets
• We will leverage our broad system knowledge and customer relationships
Mu
Specific 3,000
IPs
by
Mobile PCs
Market 2,500
E-book Readers
HW/SW
Handheld Video Game Players
Video Game Consoles
2,000
Digital Picture Frames
Digital Still Cameras
1,500 Camcorders
ST Portable navigation
Residential Gateways
Unified
1,000 Tablets
Processing
Smart Phones
Platform
Car Infotainment
500
Smart TVs
Digital Set Top Boxes
0
2010 2016
Source: IHS iSuppli
25. Our Strengths 22
• Expertise in leading edge • CPU and graphics
platform
• Power consumption
• Ecosystems • Video quality
• Google, Windows, Adobe, …
• Security
• Customer relationships • Reliability
26. ST Unique Offer 23
Process Key IPs Functions Packages Products Markets
CPU cores Display QFP
32 nm Multimedia
Convergence
More Moore
Video
composition BGA Platforms
& display Industrial & Others
28 nm User
CMOS Logic LOC
A/V decode Interf ace
Transport LGA ASICs Sense &
28 nm
FDSOI GPU Communications power
Position Sensors
Security
CMOS Analog
55/40 nm SOP
Mixed Signal/RF DDR i/f
More Than Moore
Microcontrollers
Motion (MCUs)
USB SiP Computer
CMOS Embedded
80/55 nm & Peripherals
Non Volatile Memory SATA
WLCSP
HDMI Multimedia
Audio
Bipolar CMOS / Analog ICs & convergence
160/110 nm DMOS PCIe DIP MEMS
MCU
TO2xxx
Consumer
22 um/AR 1:25 MEMS Video
Analog
Discrete &
SMDP Integrated
Gyroscope
Power
0.4 mm Power & Discrete Devices
Accelerometer Networking TSSOP Automotive
27. ST Total Revenues 24
FY11 total revenues = $9.73B
Wholly-Owned Businesses +1% year-over-year
Wireless down 30%
12000
10000
US$M 8000
6000
4000
2000
0
FY05 FY06 FY07 FY08 FY09 FY10 FY11
ST ex Flash Wholly-Owned Wireless
24
28. Billings Bottomed in Q112 25
ST Q112 Revenues = $2.02B
Sequentially, Separate Revenue Dynamics Again
Wholly-Owned Businesses down 3%
Wireless down 29%
Q212 Revenue Guidance: +7.5%; +/- 3 percentage points
3000
2500
US$M 2000
1500
1000
500
0
Wholly-Owned Wireless Guidance
29. Wholly-Owned Business Performance 26
ST’s Wholly-Owned Businesses outgrew ...expanding its market share to
its SAM by +220bps during 2011... 5.8% from 5.7%
1.5% 10.0 6.0%
1.0%
Revenues (USD bn)
Market Share
Growth (%)
0.5%
5.0 5.0%
0.0%
-0.5%
-1.0% 0.0 4.0%
-1.5% 2010 2011
SAM excl. WLS ST-WO Revenues Market Share
• SAM = Serviceable Available Market
• SAM Wholly-Owned Businesses = SAM excluding Wireless SAM
• ST Wholly-Owned Businesses are comprised of Automotive, Digital, Analog, MEMS & Microcontrollers and Power Discrete
Source: WSTS, STMicroelectronics
30. Wholly-Owned Business vs. Wireless 27
Wholly-Owned* Wireless **
In US$M FY10 FY11 Q112 FY10 FY11 Q112
Revenues 8,127 8,183 1,727 2,219 1,552 290
Operating Income (Loss) before impairment,
1,063 933 13 (483) (812) (293)
restructuring & one-time items
Operating Margin 13.1% 11.4% 0.8% na na na
Minority Interests na na na 297 413*** 168
* ST Wholly-Owned Businesses are comprised of Automotive, Digital, Analog, MEMS & Microcontrollers, Power Discrete and Others
** 100% of ST-Ericsson’s results (out of which 50% from the competence of ST) as consolidated by ST plus other margins of ST rel ated to ST-
Ericsson’s business
*** Q411 Wireless Minority Interests exclude the impact of $92M related to ST-Ericsson valuation allowance
31. ST Gross Margin & Opex Evolution 28
40%
Gross Margin Evolution
35%
30% Progressive
Recovering from low disappearance of
25% volumes recorded unused capacity
from mid-2011 and charges and
20% one-time arbitration improvement in
Q111 Q211 Q311 Q411 Q112 Q212 award manufacturing
Gross Margin - Reported Unused Capacity efficiencies
Arbitration Award Guidance
1,000
800 Operating Expenses Evolution
600
US$M
400 Opex expected to be: Key program:
Stable in $ in Q212 ST-Ericsson
200 Down in $ in H212 restructuring
0
Q111 Q211 Q311 Q411 Q112 Q212
R&D SG&A
32. Net Financial Position* 29
US$M
Reported Attributable to ST Expect net financial
1,400 $1.27B position
attributable to ST
1,000 to be stable to
slightly up
at the end of
600 December 2012
200
-200 12/31/08 12/31/09 12/31/10 12/31/11 3/31/2012 12/31/12e
-600
Maintained strong net cash position throughout FY11 and Q112
despite weak market conditions from mid-2011 as well as a specific
situation at a major customer
While funding $1.38B of capex…
…and absorbing our portion of ST-Ericsson investment…
…redeemed $764M in debt and paid $415M in dividends
*See appendix
**Includes ST-Ericsson short-term debt to Ericsson of $489M as of Mar. 31, 2012, $400M as Dec. 31, 2011, and $75M as of Dec. 31, 2010.
33. Dividend Evolution 30
$0.40 9%
• STM dividend yield of >8%
$0.35 8% among the highest in the
semiconductor industry
7%
$0.30
6% • ST cumulative dividends over
$0.25 the past 6 years (including the
5% $0.40 per share submitted to
$0.20 the 2011 AGM for approval)
4% have been > $1.5B
$0.15
3%
• Quarterly dividend offers a
$0.10 steady income to
2%
shareholders and also
$0.05 1% potential stock price
revaluation
$0.00 0%
Dividend Yield
*Source: Bloomberg (May 21, 2012)
**2011 annualized dividend as submitted to the Annual General Meeting
30
34. Wireless 31
2011 Revenues: $1.55B; -30% Y/Y ST-Ericsson to lower breakeven point
• 50% Minority Interest Revised, more flexible business model
ST expects a significant reduction in
losses at ST-Ericsson in 2012
ST-Ericsson
Operating Profitability Improvement
16% 500 35%
0 0%
-500 -35%
-1,000 -70%
2009 2010 2011 Mid
term
Operating Profit Operating Profit Margin
35. Digital 32
Operating Margin Mid-Term Drivers
2011 Revenues: $1.84B; -15% Y/Y
Realize synergies related to unified processing platform
Capitalize on recovery in STB market
Ramp new products
TV, monitors, Smart Connectivity products
Communication infrastructure ASICs
Market/product diversification in Imaging
New applications – proximity sensing, user detection, etc.
19% New markets – auto, gaming, medical, security, sports
Operating Margin Expansion:
Mid-term Target: Mid-Single Digit %
10%
5%
0%
Q111 FY11 Q112
-5%
-10%
-15%
36. Power Discrete Products (PDP) 33
Operating Margin Mid-Term Drivers
2011 Revenues: $1.24B; -6% Y/Y
Capitalize on market megatrends
Energy saving, automations green & renewable energy
Improve product mix
IGBT & Power Modules drive motor control applications
Breakthrough low voltage Power MOSFET technology (OFT)
Manufacturing flexibility
13% Efficient front/back-end capabilities
Singapore conversion to 200mm
Operating Margin Expansion:
Mid-term Target: Mid-Teens %
20%
15%
10%
5%
0%
Q111 FY11 Q112
-5%
37. Automotive Product Group (APG) 34
Operating Margin Mid-Term Drivers
2011 Revenues: $1.68B; +18% Y/Y
Capitalize on solid growth in Auto market
Increasing pervasion of electronics in the car
Volume opportunities in emerging markets
New and innovative products
32-bit Power MCU in eFlash, RF for Active Safety
Leader in BCD technologies; introducing new generation
17% Complete system offer in emerging markets
Operating Margin Expansion:
Mid-Term Target: Mid-Teens %
15%
10%
5%
0%
Q111 FY11 Q112
34
38. Analog, MEMS & MCUs (AMM)* 35
Operating Margin Mid-Term Drivers
2011 Revenues: $3.38B; +7% Y/Y
Rapid growth in Motion MEMS / expanding product portfolio
Microphone, pressure sensor, compass, etc.
Enlargement of 32-bit MCU portfolio (GP & Secure)
Ramping new BCD technologies for motor control
New products for SmartGrid and OLED display drivers
New wave of advanced analog products
Expansion of customer base and targeted applications
35% Operating Margin Expansion:
Mid-Term Target: Low-Twenties %
25%
20%
15%
10%
5%
0%
Q111 FY11 Q112
*New AMM perimeter starting January 1, 2012
39. ST Financial Model 36
ST remains committed to delivering on a fully consolidated basis:
9% to 12% operating margin
12% to 18% return on net assets (RONA) target
16% to 22% RONA attributable to ST
40. Key Programs to Increase Value 37
Increase Shareholder Value
Expand ST-
Boost Cost
Customer Ericsson
Innovation Reduction
Base Turnaround
43. Glossary 40
• Free cash flow is defined as net cash from operating activities minus net cash from (used in) investing activities, excluding payment for pu rchases of and proceeds from the sale of
marketable securities (both current and non-current), short-term deposits and restricted cash. We believe free cash flow provides useful information for investors and management
because it measures our capacity to generate cash from our operating and investing activities to sustain our operating activi ies. Free cash flow is not a U.S. GAAP measure and does
t
not represent total cash flow since it does not include the cash flows generated by or used in financing activities. In addit
ion, our definition of free cash flow may differ from
definitions used by other companies.
• Net financial position: resources (debt), represents the balance between our total financial resources and our total financial debt. Our total financ resources include cash and cash
ial
equivalents, net of bank overdrafts, if any, current and non-current marketable securities excluding Micron shares received in connection with the sales of Numonyx, short-term
deposits and non-current restricted cash, and our total financial debt includes short term borrowings, current portion of long-term debt and long-term debt, all as reported in our
consolidated balance sheet. We believe our net financial position provides useful information for investors because it givesevidence of our global position either in terms of net
indebtedness or net cash position by measuring our capital resources based on cash, cash equivalents and marketable securities and the total level of our financial indebtedness. Net
financial position is not a U.S. GAAP measure.
• Return on Net Assets (RONA) is the ratio of operating income before impairment and restructuring charges divided by average net assets used during the pe riod. ST defines average
net assets as average total assets net of total liabilities as reported in our consolidated balance sheet excluding all itemsrelated to our financial position such as cash and cash
equivalents, marketable securities, short term deposits, restricted cash, bank overdrafts, current portion of long term debt and long term debt.
• Operating income before impairment, restructuring and one time item excludes impairment, restructuring charges and other related closure costsand NXP Arbitration award.
• Operating income before impairment, restructuring and one-time item attributable to ST is calculated as operating income before impairment, restructuring and one time item
excluding 50% of ST-Ericsson operating loss before impairment and restructuring as consolidated by ST.Operating margin before impairment, restructuring and one time item
attributable to ST is calculated as operating income before impairment, restructuring and one time item attributable to ST divided by reported r
evenues excluding 50% of ST-Ericsson
revenues as consolidated by ST. Return on Net Assets (RONA) attributable to ST is calculated as annualized operating income before impairment, restructuring and one time item
attributable to ST divided by reported net assets excluding 50% of ST-Ericsson net assets as consolidated by ST.
• Adjusted net earnings and earnings per share (EPS) are used by our management to help enhance an understanding of ongoing operations and to communicate the impact of the
excluded items. Adjusted earnings excludes impairment, restructuring charges and other related closure costs attributable toST, the impact of equity investment divestiture and
subsequent sale of Micron shares, other-than-temporary impairment (OTTI) charges and realized gain on financial assets, NXP Arbitration award net of the relevant tax impact.
• Consolidation of ST-Ericsson: ST-Ericsson, a joint venture owned 50% by ST, began operations on February 3, 2009 and is consolidated into ST’s operating resul s as of that date. ST-
t
Ericsson is led by a development and marketing company consolidated by ST. A separate platform design company providing platf orm designs mostly to the development and
marketing company is accounted for by ST using the equity method.
• Wireless Segment: As of February 3, 2009, “Wireless” includes the portion of sales and operating results of the 50/50 ST-Ericsson joint venture as consolidated in the Company’s
revenues and operating results, as well as other items affecting operating results related to the wireless business.
• Sales recorded by ST-Ericsson and consolidated by ST are included in Telecom and Distribution
40
47. What it takes to transform our company
Culture
• From technology focus
to customer focus
Company Organization • Sustainable
• Execution profitability
• Simplicity • From brilliant ideas to
Customers products delivered on
• Speed
• Engage with market time
• Focus
shapers
Products • Diversification
• Clear market
strategy
• Focused portfolio
approach
• Differentiation
Repositioning our business model
4
48. Our strategic objective and direction
Become a sustainable and profitable
technology leader in the wireless
industry, by repositioning our whole
business model and by leveraging our
strength in system integration
5
49. The value is in system integration
System
ModAp+ Connectivity
System Solution System + service
integration
Apps
ModemModAP RF, Power
Processor
AMS
System integration
Integration
Platform Connectivity
RF, Power
AMS
Modem Processor
Chipset SW System integration
RF, Power
Modem Processor Connectivity
AMS
SW Complexity
RF, Power
Connectivity
AMS
Time
6
50. ModAp systems as a key strategic
differentiating offering through partnerships
∙ Focusing the R&D portfolio to deliver highly competitive complete system solutions in
the form of integrated ModAp platforms
∙ Repositioning whole business model to develop key building blocks either directly or
through partnerships
ModAp system integration
RF
Application
Modem Connectivity Power
Processor Analog mixed signal
• Continue to develop • Partnership with ST • Build on current • Build on current
modem IP for ModAp • Transfer of R&D capabilities capabilities
integration and to activities and
offer thin modems to • Develop either directly
headcount or through
customers
• Jointly promote partnerships and
• Possibly license standalone APEs and alliances
modem IP to 3rd thin modems
parties
∙ Full continuity of ST-Ericsson committed roadmap and current customer engagements
7
51. Application processor partnership with ST
Combining ST and ST-Ericsson Market-specific
competencies in one Team Complete platforms
Development of
common core APE
Common
Common Core APE
Core APE
Common
Core APE
Development CPU Graphics
organization
Video Imaging
Common
Display Security IPs
Application
Specific IPs
8
52. Partnership value for ST-Ericsson
Value for ST-Ericsson ST 3rd Party Standalone
Roadmap continuity = - =
Addressable market + + =
R&D cost reduction & ++ + =
synergies
Fixed cost to variable ++ ++ =
Royalties - (long term) -- =
Cash savings ++ + =
ST Partnership has the highest value for ST-Ericsson
9
53. Roadmap continuity a key decision factor
With a 3rd party
∙ Timing for our next generation ModAp platform significantly delayed
In Production/Sampling 2012 2013/2014 2015
IMG
2xA9 Next Gen
L8540 1.85G Partner A
100
42 Next Gen
Partner B
ARM ARM IMG
2xA9 2xA9 To be 2xA9
U8500 1G U8520 1.2G Announced 1.2G
100
14 14 42
10
54. Roadmap continuity a key decision factor
With ST
∙ Roadmap and revenue continuity
∙ Full continuity for customers investment in our platforms today
∙ Timing for next generation shorter
In Production/Sampling 2012 2013/2014 2015
IMG
IMG IMG
Rogue
2xA9 To be 2xA9 Next Gen 2xA15
L8540 1.85G Announced 2+G
ST 2+G
100 100 150
42 42 84
ARM ARM IMG
2xA9 2xA9 To be 2xA9
U8500 1G U8520 1.2G Announced 1.2G
100
14 14 42
11
55. Execution efficiency as a revenue lever
Product definition
SW Development
IC Development
System Development
Customer Engineering
Manufacturing
For Illustrative purposes only
∙ Improve R&D execution & accelerate time-to-market, while reducing operating
expenses
∙ Consolidation into a significantly smaller number of sites, specialized by technology
∙ Develop integrated excellence centers delivering larger portion of system value chain
∙ Increase revenues through faster R&D execution
12
56. Lower the breakeven point
∙ Global workforce reduction of about 1,700 Operating Profitability
employees worldwide*, including the headcount that
would be transferred to ST Improvement
500 35%
∙ Reducing R&D costs through partnership and site
consolidation
∙ Reduction of SG&A expenses by about 25 % versus 2011,
streamlining the general and administrative activities
0 0%
∙ Discussions with employee representatives ongoing and on
track
∙ Partnership for application processors with ST
-500 -35%
∙ Transfer fixed cost to variable
∙ Achieve scale to support sustainable execution
∙ On track for closing July 1st
-1,000 -70%
∙ Target annualized net savings of $320M from new 2009 2010 2011 Mid
and on-going restructuring plans on completion end term
of 2013
Operating Profit Operating Profit Margin
∙ Restructuring charges $130-150M (including
remaining charges related to ongoing restructuring
plan to be completed at 2012-end) through
completion
∙ Bring breakeven point just below $600M per quarter
13
58. Wireless industry (r)evolution
• From component to platforms
• Rapid disruption in mobile OS
100%
80% Other
∙ Open source (Android + Linux) taking 60% Blackberry OS
over 50% market share in 3 years 40%
Symbian
Windows Phone
∙ In the PC industry open source (Linux) 20%
iOS
has only gone from 2% to 5% in the 0% Android
last 10 years 2009 2010 2011 Q1
2012
Source: Strategy Analytics, May 2012, ABI, March 2012
2Q 2009 Volume 4Q 2011 Volume
Share Share
• Drastically altered smartphone Nokia
RIM
41%
19%
Apple
Samsung
24%
23%
device maker landscape
Apple 13% Nokia 13%
HTC 6% RIM 9%
Samsung 3% HTC 6%
Source: Strategy Analytics, May 2012
15
59. Highest smartphone volumes in mainstream
1'000
900
800 Premium
700
600
Units Mn
High
500 Will be addressed
by integrated
400
Mid ModAp application
300
processor and
200 modem solutions
100 Entry
0
2012 2013 2014 2015
Source: Strategy Analytics, Dec 2011
Targeting above 10% market share in volume by 2014
16
60. ST-Ericsson executing on Android
Android volume market share Android volume market share
Q3 2011 Q1 2012
Others Others
2% 2%
Chinese
16% Chinese
22%
Sams ung
Japanese
38%
5% Samsung
Motorola Japanese 46%
7% 4%
Motorola
LG 6%
6%
Sony LG
9% H TC 6%
Sony
17% 7% HTC
7%
Source: Strategy Analytics, May 2012
NovaThor ModAp platforms now in 10 devices already launched with
four top tier Android OEMs and multiple regional players
17
61. CPU 2012 2013
DMIPS Q1 Q2 Q3 Q4 Q1 Q2
ST-Ericsson
well
Premium positioned in
the LTE ModAp
High
platforms
NovaThor landscape
(NovaThor NovaThor
L9540) L8540
Mid NovaThor
Entry Competitor
products
18
63. Our approach
Integrated ModAp solutions for
industry-leading bill of material and size
Leading thin modems for any device
Full complement of connectivity
and enhancements
20
64. HSPA
Roadmap
LTE
In Production/Sampling 2012 2013/2014
ARM ARM Partnership with ST for future
A9500 A9540 application processors
2xA9 2xA9
1.2G 1.85G
U9500 L9540
M5730/80 21 M7400/ 100 150
M7300 42 M74XX 84
IMG IMG
IMG
FD-SOI FD-SOI Rogue
ModAps L8540
2xA9
1.85G
To be
Announced
2xA9
2+G
To be
Announced
2xA15
2+G
100 100 150
42 42 84
ARM ARM IMG
U8500 2xA9 2xA9 To be 2xA9
1G U8520 1.2G Announced 1.2G
100
14 14 42
GPU IP & speed (MHz)
ARM Processor & Speed (GHz)
Modem DL Speed (Mbps)
CG2900 CW1100 CG2905 CW1250 To be
Connectivity GBF W LAN GBF W LAN announced
21
65. A disruptive innovation in modem technology
Thor™ M7400
• Groundbreaking architecture
• SW Modem
• Mass market LTE
• Mid to premium devices
Future architecture investment
– scalability and stability
LTE 100+50Mbps
>60%
size
1st generation
reduction
compared
Modem PCB area:
to solutions
~1400 mm2
on the
market
Chipset area: 2nd
today
530 mm2 generation
Same board as to the left with picture edited to show Thor M7400 size Power consumption
S ource: UBM TechInsigths & S T-Ericsson. M emory excluded/C2C.
22
66. Need to master the whole chain
ST- Competitor Competitor Competitor Competitor
Ericsson A B C D
Application
Processor
LTE Modem
Integration
capabilities (ModAp)
Multiple OS support
Advanced silicon
technology
Mastering the supply
chain
Strong
Good
Developing
23
67. Differentiation with FD-SOI Technology
∙ FD-SOI technology offers: ∙ NovaThor L8540 in FD-SOI would have
∙ More GHz and less power ∙ Operation up to 2.5Ghz
∙ Reuse of existing design ∙ 2x the performance possible at 0.6V
∙ At comparable cost ∙ 35% less power operating at max
performance of NovaThor L8540
∙ Working with ST
∙ For a typical smartphone this
translates to:
∙ 4 hours more high-speed browsing
∙ 2.5 hours more HD video playback
∙ 2 hours more HD video recording
∙ Or an additional full waking day of use
24
69. Latest NovaThor™ phones
Samsung
Galaxy Beam Motorola
XT760
Dual core 1GHz
HD camcorder Dual core 1GHz
HD camcorder
5 Mpixel camera 8 Mpixel camera
Integrated projector
Samsung Galaxy Xperia™ sola
Ace 2 by Sony
Dual core 800MHz Dual core 1GHz
HD camcorder HD camcorder
5 Mpixel camera 5 Mpixel camera
26
70. Continuing to build momentum
Samsung Sony Samsung Samsung Samsung
Motorola Via Samsung
Galaxy S Advanced X peria P Galaxy S 4G Exhibit 4G Infuse 4G
X T760 U8500 Sidekick 4G
At rix 2 Sharp Panasonic Nokia
Samsung Sony HTC Sensation Ont im
Motorola Aquos Eluga T7
Galaxy Beam X peria sola Z710t WP8500 Tablet
Sony Nokia
Samsung Sony Panasonic Lenovo 702T
Tablet P/S
Galaxy Ace2 X peria U Toughbook ThinkPad
27
71. Conclusion
∙ The wireless industry has gone through dramatic changes
2014
∙ adapted our strategy to cope with new landscape Success
∙ Clear path to success defined
∙ execution of product delivery is priority one focus
∙ major re-positioning and actions in 5 months
∙ major organization re-alignment toward accountability and 2013
execution focus Growth
∙ strategy re-definition and main steps taken
∙ cost reduction roadmap defined
∙ Early signs of recovery visible
∙ successful bring-up of 6 smartphones from market leaders in 2012
last 3 months
Stabilization
∙ Q2 sequential growth over 10%
∙ Confident on future success despite challenges
28
80. Multimedia Convergence:
8
The Ideal Technology
Multimedia convergence is about…
Performance
Design Power
simplicity leakage
Cost of
Area scaling
ownership
81. Multimedia Convergence:
9
28nm Bulk Weaknesses
Peak performance vs. energy efficiency
500% 4.7x 100%
Peak Performance
(DMIPS/mW)
Energy Efficiency
(DMIPS)
400% 80%
300% 60%
200% 40%
100% 20%
7%
0% 0%
0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2
Vdd Transistor performance improvement
Gain by traditional scaling Gain by innovation
100%
Relative % Improvement
80%
60%
40%
20%
0%
180 nm 130 nm 90 nm 65 nm 45 nm 32 nm
82. Multimedia Convergence: Fully Depleted
10
Devices Enabling sub-20nm Technologies
• Main candidates after bulk are fully depleted devices
• For improved electrostatic control and device scalability
FDSOI = 2D FinFET = 3D
drain
gate
height
gate
source
Thin Silicon film
Thin Silicon f ilm
84. Multimedia Convergence:
12
Value Proposition
Planar Technology – 2D 3D Technology
28nm LP
• Available for Design: Now!
High-K/Metal
28nm Boost • Superior Power Performance
gate
FDSOI/UTBOX • Faster Design
• Enable Product Cost / Power Reduction
+30%
20nm LPM 20nm Boost
Strained-Silicon FDSOI/UTBOX
+20%
14nm
Bulk-Trigate
• High Logic/Memory Integration
• More complexity added to the process
• Available for Design: Q4 2012
• Enable New High Performance Product
2012 2013 2014 2015 2016
85. Other VLSI Key Differentiation Initiatives 13
• Embedded Flash PCM for future
shrink nodes
• Ultra Fast and Low Power
Microcontrollers
• Imaging sensor with BSI on bulk
86. Smart Power: The Ideal Technology 14
• Thick Cu metallization & bonding
POWER DEVICES over active areas
• Figures of merit:
• Rsp = RonxA
• Gate charge (Qg) – Fsw up ISOLATION
to 5 Mhz
• Safe operating area • Junction isolation
• DTI (Deep Trench Isolation)
• SOI
• Trends:
• Integration density saturating
with LITHO scaling
• Device architecture and drain
engineering
• Thick copper metallization for
high current • LOGIC: from 100 K gates up to 500 K gates
• e-Memories
ST ROADMAP
• BCD8sP best in class for Power devices integration capabilities
• Customized solutions by application Low Maks Count
• BCD9s (110 nm) ready for prototype in Q113 and BCD10 (90 nm) process architectures in definition
phase
87. Smart Power: BCD9S 15
Full Copper Metallization
Power areas comparison vs. BCD6s-DCu
1.4 1.25
1.2
1.0
1.0 0.84
0.7
0.8 0.59
0.5
0.6 Power Areas
from Rdson
0.4 (BCD6s-Dcu=1)
0.2 Power Areas
from energy
0.0
pulsing
BCD6s-DCu BCD8sAuto BCD9s
90. Packaging Technology R&D 18
Sense
MEMS and microphones (LGAs), Optical modules and Imagers towards BSI
Power & BCD
High dissipation, miniaturized packages (PSSO, QFNs)
Multimedia Convergence with advanced CMOS
Integration and miniaturization based on BGAs. Towards Flip Chip & WLP
92. Front-End Manufacturing:
20
Flexibility/Efficiency
Manufacturing flexibility across market cycle
• Minimize unused capacity in the downturns and lean
investment to support upsides:
• Model deployment by technology cluster better balancing
internal vs. external with new major initiatives:
• Start new generation of BCD (Smart Power) outsourcing
• Start CMOS 28/20 nm FDSOI outsourcing
• Start advanced CMOS Imaging Sensor with BSI
• Guarantee in-out flexible sourcing at product level 200mm ?
300mm ?
• Make fixed cost variable wherever possible