A European Perspective for Electronic Industry in Latin America François Guibert Corporate Vice President, Emerging Markets Region General Manager
Electronic, a Global World Security Networking Consumer Wireless Storage Automotive Computer Science 2
Electronic a Wide Variety of Terminals 3
Electronic is a key-industry for the wealth of nations Most other industries and all services will be unable to operate without electronic. Electronic generates more added-value than any other manufacturing industry. Electronic Industry controls three times more jobs than it generates. Electronic accounts for 30% of the fixed asset investments of the overall industries. In the next ten years, the Electronic Industry will continue growing more than two times the global world GDP. 4
Electronic Industry worldwide represents ($US): 4.40 x Oil, Petrol & Minerals 2.75 x Chemical & Plastics 2.45 x Food, Beverage & Tobacco 2.44 x Transportation 2.20 x Electricity, Gas & water 5
Electronic is a key enabler of addedvalue and jobs for the whole industry Telecom operators $5,000B Broadcasting C ies Service providers Automobile, Petrol, Chemical, Aviation Traditional Manufacturing $1,020B Electronics Industry $213B Semiconductor Industry Industrial world in 2004 6
Electronic Industry profile in 2004 Gov. Military 8% Automotive 6% Segments Computer 33% China 16% Other Asia/Pac. 17% Regions Americas 28% Consumer 10% Industrial 15% Communication 28% Japan 14% Europe 25% Total : $1,020B Source : IC Insights 7
Electronic Industry production growth $B 1200 Long-term evolution Electronics CAGR comparisons 1978-2004 7.5% 1000 800 Civil aviation Chemical 5% 5% 600 400 Auto. Oil 2% 3% 200 Textile -1% 0 78 83 88 93 98 03 Steel -2% world GDP 3% Electronic Industry is the fastest growing industry Source : IC Insights, ST 8
Electronic Industry trends Electronic industry growth is driven by: Development of consumer applications through digitalization. World Electronic Industry growth $1,020B $1,080B CAGR 7% $1,440B Development of new regions BRIC : Brazil, Russia, India, and China. CAGR is 4 percentage points above the world GDP growth. 00 01 02 03 04 05 06 07 08 09 10 9
Electronic is a pillar for the industrial strategy of nations Research Programs Development and Innovation Programs Infrastructure Programs Energy saving photovoltaic Medical electronic analysis Etc Buildings energy control security access control Automotive security and intelligence hybrid vehicles Airplanes automation air control Etc City transit automatic mass transport Security Identity control Network Transportation fast train containers follow-up Etc Internet high bit rate TV high definition Medical electronic network Etc Sources: ST based on Jan 2005 report to French government 10
Electronic is at the center of the Computer Defense Telecom Semiconductor Computer USA industrial policy of Nations Semiconductor Consumer Semiconductor EUROPE JAPAN Consumer Semiconductor EUROPE PC Semiconductor KOREA Communication Semiconductor Foundries PC TAIWAN CHINA Software Communication Reinforcing the strategic programs through R&D in Semiconductor: USA Europe Taiwan Launching the strategic programs through R&D in systems '50 '60 '70 '80 '90 '00 INDIA 11
United States of America National Defense Electronic programs Equipment S IL I C O N V A LL Software PC & Peripherals Digital Consumer Semiconductors Data Com. Radio Com. Enhancement through Microelectronic programs Sematech Component E Y Mainframe Computer Defense 1950 1970/1980 2000 12
Japan Exports Production for local demand Radio Audio K7 Subcontracting TV Foreign design Production for export Video Recorder VHS standard Original design VLSI public program Large equipment production creating market for microelectronics Governmental microelectronic program «VLSI» : Logic Memories World recognized microelectronic industry Enhancing Equipment Industry Renewed Microelectronic Public Programs Enhancing Semiconductor Industry Exports 1960 1970 1980 1990 2000 2010 13
Europe European and Pan National programs Telecommunications National programs Defense electronics Pan National programs Computer Industry: ICL Siemens Bull European programs Digital communication ESPRIT EUREKA JESSI MEDEA Digital TV Smart Card Equipment industry support Semiconductor support Consumer Application support 1960 1970 1980 1990 2000 14
Taiwan PC Motherboard Peripherals Audio Toys Subcontracting Equipments ITRI ERSO SC foundry industry TSMC UMC Subcontracting Semiconductors Hsinchu (High Tech Park) Diversified Electronic Leadership PC Consumer Becoming a Leading Semiconductor Supplier 1980 1990 2000 15
Peoples Republic of China Balancing Growth and Cost Competitiveness Consumer Foundries development Establishing China as the workshop of the world Wireless Wireline PC Thru foreign companies transplant : OEM EMS Establishing China as a competitor in Semiconductor ODM Design houses Establishing China as a significant Competitor in Advanced Electronic Creation of areas of competencies Shenzhen/Hong Kong: Consumer/PC Shanghai: Semiconductors Beijing: Telecom Mastering Electronic manufacturing science 2000 2010 2020 OEM (Original Equipment Manufacturers) EMS (Equipment Manufacturer Services) ODM (Original Design Manufacturers) 16
Ingredients for success in Electronic Industry Electronic Focus Electronic Key Applications (PC, Telecom, Consumer, Appliances ) Regional Economic Success Government Focus Education Tax incentives Technologic Parks R&D efforts Government Key Financial & Industrial Players Electronic Industry Competitiveness Entrepreneurs Dedication Diversification of major Industrial Companies Development of Startups Partnership With Electronic / Semiconductor world leaders Semiconductors Innovation/Integration 17
Why Europe is the partner of choice Europe has reached leading position in many keyapplications : Telecommunication (in particular Mobile Phone ) Digital consumer (SetTopBox ) Smart Card (telecom, banking, security ) Automotive (electronic, security ) Semiconductors (STMicroelectronics, Infineon, Philips ) Solid member of the top 10 semiconductor suppliers, key contributor to the European Electronic success and having a strong historical culture of cooperation, STMicroelectronics is ready to contribute to Latin America Electronic Industry Development. 18
Opportunities for Latin America in Electronic Present Situation Market Potential Regional (around 550M inhabitants) Worldwide Export opportunities Stable and High Growth Economic Prospect Available Industry Structure with access to External Technical Cooperation Possible Partnership with Key Local Entrepreneurs Engineering Educational System Possible drivers Digital Set Top Box / HDTV Smart Cards White Goods (appliances) Electronic Meters 19
STMicroelectronics a global semiconductor company Sales by region as % of 2004 sales 14 % North America 27 % Europe 5 % Japan 12 % Emerging Markets* * Latin America, India, Middle East & Africa, Russia & Eastern Europe, 42 % Asia Pacific o 2004 Sales : US$ 8.76 billion o over 45,000 employees o 17 main production sites o 16 advanced R&D centers o 39 design and application centers o 88 direct sales offices in 31 countries 20
Global manufacturing infrastructure USA France Italy Morocco Malta China Malaysia Singapore Advanced wafer fabs: 12" Crolles (France) - Pilot line in operation 12" Catania (Italy) Building & Facilities underway 8" Front-end Back-end Other Front-end 21
STMicroelectronics Strategy focusing on Key Programs and Product Lines Wireless broadband - handsets 3G Platform Nomadik Wireless LAN Wireline broadband Computer Peripherals Storage & Printing Set-Top Boxes DVDs Digital TVs Shared Platform Imaging Microcontrollers NOR Flash NAND Flash Memory cards Smartcards Discretes MOSFET VIPower Automotive 22
STMicroelectronics Contribution Multiple Product Offerings From System-on-Chip System-above-Chip System-in-Package To PLATFORM SOLUTIONS 23
«No advanced industrial society can exist without controlled access to an advanced electronics industry, which in turn cannot exist without controlled access to an advanced semiconductor industry» Pasquale Pistorio (Honorary Chairman ) 24