He holds the most powerful position in a world-leading semiconductor company, but this interaction was just more than defining his goal. Jean-Marc Chery, President & CEO, STMicroelectronics has more than just a vision. Talking to this modest man about a four-decade-old semiconductor and electronics company taking to its next destination seamlessly. His defining ability in every sector is salient. A defining journey and a visionary aspiration are ‘power-packed’ in the below-edited excerpts.
ST’s strategic plans and ambitions as stated to become a $20B+ revenues company between 2025 and 2027?
ST’s ambition is to become a $20B+ revenues company between 2025 and 2027 with an operating margin stably above 30%. This will be duly executed with strong determination and discipline while achieving our goal to be carbon neutral in 2027.
This is the next important step of the strategy we set four years ago. I will first recall the fundamentals before going into more detail.
• Our value proposition for our stakeholders is focused on sustainable and profitable growth, providing differentiating enablers to customers and a strong commitment to sustainability.
• We pursue an organic growth model, with a strategy of selected bolt-on acquisitions.
• Our operational model is as an Integrated Device Manufacturer, with a wide range of capabilities in internal products & IP design, Technology R&D and advanced manufacturing. Our technology and manufacturing portfolio are selectively complemented by several great Foundries and OSATs.
• Our strategy stems from three long-term enablers: smart mobility; power and energy; the Internet of Things and connectivity. These guide our market positioning and customer engagements, continuous and open innovation processes, Product & IP design and technology R&D efforts and manufacturing investments.
• We have a strong focus on the Automotive and Industrial markets as a broad range provider of Application-specific and general-purpose products, targeting leadership positions wherever we play.
• We selectively address the Personal Electronics market, targeting some leadership positions with a few differentiated products or custom solutions as well as with our general-purpose products portfolio.
• We also participate selectively in the Communications Equipment, Computers and Peripherals market addressing high-volume applications with differentiated products or custom solutions.
• All this builds on our large customer base and balanced go-to-market approach, addressing top accounts, a broad range of OEMs and our distribution partners.
This strategy has already yielded appreciable results with ST reaching $12.8B in revenues in 2021. And we are on track with our plan to reach about $15B in revenue for 2022.
Our ambition considers a high-single-digit SAM growth in the next few years across all the end markets we serve, largely driven by the long-term enablers I mentioned earlier.
How ST’s manufacturing and supply chain has been a critical success factor?
We are continuously investing to support our growth plans and improve our competitiveness. In 2022 alone we expect to spend $3.2-3.5B CAPEX. We are transforming our manufacturing footprint with strategic investments in 300mm wafer manufacturing and vertically integrated Wide bandgap production capabilities. We already have a unique position in our 300mm wafer fab in Crolles, France, as a high-volume manufacturer with CMOS-based technologies including embedded non-volatile memory, RF mixed Signal or other speciality technologies ranging from 90nm down to 28nm. This makes ST’s manufacturing footprint unique and competitive among our peers. And we continue to invest with our new 300mm wafer fab in Agrate, Italy while also expanding to analogue and specialty technologies. We are also rapidly growing our Wide Bandgap manufacturing capabilities and leading the technology race moving soon to 200mm for SiC. We are making progress on reaching our target of 40% internal substrate sourcing with a pilot line delivering 150mm and 200mm substrate. In the near future, we will have a new integrated plant. In GaN we have now completed our internal 200mm manufacturing line and epitaxy center in Tours, France. We anticipate starting volume production next year (in 2023). We are of course already in production on powerGaN with TSMC. Meanwhile, we continue to expand capacity by 200mm to support customer demand. Our Singapore fab is ST’s largest by volume, and it will continue to grow, especially for analog. Elsewhere in Asia, we continue to invest in both capacity and technology in our back-end fabs located in Malaysia, China and the Philippines to support future growth.
ST’s key investments to support and enable supply chain capabilities for the future whereas committing to sustainability goals?
We will continuously invest in our business support and enabling functions to optimize our supply chain capabilities to face incremental challenges and constraints of our industry with increasing complexity.
We have been heavily investing in machine learning and artificial intelligence solutions, big data analytics, digital twin models to merge the physical and the virtual, and collaborative tools across all our operations. All this is supported by a step-change in the way we use cloud computing.
Embedded into our ambition, we are committed to sustainability for all our stakeholders: here we are investing to further accelerate our efforts by creating technology for a sustainable world, in a sustainable way. Our commitments here go back more than a quarter of a century and we have the goal to achieve carbon neutrality by 2027.
For example, A great example is a project we just announced a couple of weeks ago in Singapore. With our local partner SP Group, we will build a district cooling system for our fab; it will be the largest industrial DCS project in Singapore. This is a significant project worth $370M over 20 years, to provide chilled water as a service for both manufacturing operations and offices. It will be operational in 2025. The benefits are clear: 20% savings in cooling-related electricity consumption annually, and a reduction of carbon emissions of up to 120,000 tons per year.
A few years ago, ST was profoundly known for its set-top and digital TV chipset businesses, from then to now the company has now become a major player minting in the power semiconductor and in the evolving wide-bandgap space. What key challenges and commitments has the company undergone to entitle this transformation?
ST has been so successful in microcontrollers or STM32, developing this wide portfolio and software ecosystem thanks to the fact that when we disengaged ourselves from the set-top box and digital TV. First of all, we kept all the resources of IC design and we allocated them massively to the microcontroller product group and automotive microcontroller product group as well. So, we disengaged from a set-top box and TV, but thanks to this strategic decision, we have enabled our massive design resources and product development to be successful in the embedded processing solutions based on STM32, which we will complete with artificial intelligence and connectivity features in the near future.
About the power world, clearly, it’s important to sustain our mission in the power world. First of all, you lead technology because the product design part of power is less intense than other kinds of products, like consumer analog, BCD RF or embedded processing solutions. So, the key success factor in power electronics is the technology, and of course, the architecture of the device, as well as product design as usual. ST has leadership in technology because we have developed, during the past few years, the full set of key enabling technologies, such as low voltage MOSFETs, high voltage MOSFETs, IGBTs, silicon carbide, and ST is a worldwide leader in silicon carbide because this year our revenue will be above 700 million US dollars. And as I’ve already shared during my short speech, we will reach 1 billion over the next year. We are developing our own solution for the gallium nitride power devices in our fab in Tours in order to shorten the time to market. We have developed a great partnership with TSMC as well. So, first of all, we own and develop the full set of process technologies in order to propose to our customers the full kind of power switches. Then we have GaN drivers. As always if you want to offer the full set of power solutions, you need to develop a very efficient gate driver based on BCD technology. And you know, ST is a company that invented the BCD technology more than thirty years ago. Today we are developing the next generation. And then we have mixed technologies also to propose either system in package (SiP) or system on chips (SoC) to provide custom solutions for our customers.
Is Integrated Device and Manufacturer (IDM) the standout operating model for power solutions? How is ST catering to the complete power solution ecosystem?
When we talk about microcontrollers, we can propose either a standalone microcontroller or some microcontrollers in a solution in an integrated chip. So, to answer your question, ST is already leading and wants to become an undisputed leader in power solutions, thanks to our technology leadership and full portfolio. Moreover, it is clear that the standout operating model for power solutions is Integrated Device and Manufacturer (IDM). Because there are not too many foundry capacities worldwide to support power technology, thanks to our fabs in Catania, Sicily in Italy, and in Singapore, where we have the biggest fab, we offer the fully adequate capacity to our customers. Therefore, for silicon carbide, specifically, now, we are developing our own internal source of SiC substrates and we target in the near future, by 2024 to reach our target of 40% internal substrate sourcing.
In addition, packaging offering including modules is very important for power and ST now has development tools and capability in power package and module internally or through great cooperation either with OSATs (Outsourced Semiconductor Assembly and Testing) or important module makers like Semikron in Germany.
Last but not the least, another important aspect is competence centres. We have developed some competence centres, specifically in Asia, to support power applications like motor control. So, this is the way ST wants to lead technology, manufacturing, but also competence centre activities with our customers and the wide portfolio from ST, specifically STM32, as well as power solutions.