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%
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.