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STMicroelectronics CEO: Chip Market Will Lead PC, Networking Recovery

GENEVA - Expressing confidence in the semiconductor market's gradual return to growth, STMicroelectronics President and CEO Pasquale Pistorio said ST is "well positioned to grow faster" than the 23 percent clip for 2004 he predicted earlier.

STMicroelectronics reported Thursday (Jan. 29) that its 2003 fourth-quarter net revenues jumped 17 percent sequentially to $2.1 billion. ST's strong quarter, said Pistorio, "demonstrates our capacity to grow faster than the markets we serve."

ST's profitability, however, did not keep pace with revenue growth, as gross margins ws 36 percent - a marginal improvement over the 35.1 percent posted in the third quarter. Pistorio called this "disappointing," assigning most of the blame to the continuing decline of the U.S. dollar. He also cited ST's product group mix shifting towards lower-margin devices along with competitive pricing pressure.

Pistorio called a 35-percent gross margin "the bottom." He said the company expects to progressively improve throughout the year, with gross margins reaching 40 percent in the fourth quarter of 2004 - and possibly sooner. ST expects to accomplish this by restructuring the company's 6-inch fabs, migration of products to 0.13 micron or below process technology and an emphasize on new products, Pistorio said.

ST is already transferring "60 percent of 6-inch production from European and U.S. sites to either 8-inch or Singapore 6-inch fabs," he added.

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