ST spends to tune manufacturing in 2020
STMicroelectronics’ 4Q19 revenue was slightly ahead of guidance and the company is forecasting a return to revenue growth in 2020. The company is planning increased capex to support differentiating technologies and move away from some legacy technologies.

In the fourth quarter ST made a net income of $392 million on revenue of $2.754 billion. The revenue was up 7.9 percent sequentially and 4.0 percent year-on-year. The fourth quarter was supported by increased sales in analog, microcontrollers and imaging sensors, which offset lower sales into the automotive sector.

For the full year ST achieved a healthy net income of $1.032 billion on revenues of $9.556 billion but the year’s revenue was down 1.1 percent on 2018. The net income was down 19.8 percent.

Jean-Marc Chery, STMicroelectronics CEO, commented in a statement: “We closed 2019 with a solid fourth quarter sales and financial performance.” He added: “ST’s first quarter outlook, at the mid-point, is for net revenues of $2.36 billion, increasing year-over-year by 13.7 percent and decreasing sequentially by 14.3 percent…”

This is a rather more than seasonal decline but was partly explained by a saturation of production in a newer technologies and lower demand for legacy technologies. Capital expenditure in the first half of 2020 would address this product capacity mix, the company said.

ST’s 2019 capital expenditure was $1.17 billion, just below the budget of $1.2 billion to $1.3 billion set in January 2019. For 2020 ST has budgeted an increase to $1.5 billion.

Chery said the capex plan was distributed across product categories but could be characterized as being deployed to support new technologies and increased differentiation where demand was high – and away from legacy production where demand was low.

Areas of spending would include ST’s 300mm wafer fab in Agrate where ST will makes BCD, IGBT and other power semiconductors; silicon-carbide production; development of gallium-nitride production.

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