ST Buys Remaining Stake in Norstel

Article By : Nitin Dahad

Imaging, analog, and MEMS drive growth. Control of Norstel assures capacity for SiC products, meanwhile.

Reporting its Q3 2019 results today, STMicroelectronics reported growth of 17.5% over the previous quarter at $2.55 billion, driven by imaging, analog, power discrete and MEMS. President and CEO Jean-Marc Chery also confirmed it will complete the acquisition of the remaining 45% stake in Norstel in Q4 for around $60 million.

Chery said he expects strong growth in the second half of the year compared to the first half, taking it to a full year revenue of $9.48 billion. Q3 growth was driven by specialized imaging sensors, application-specific analog products, general-purpose and secure microcontrollers, RF products for front-end modules, silicon carbide MOSFETs, and digital automotive.

However, on the automotive side, Chery commented, “What we are seeing today is that the legacy automotive business, closely linked to car registrations, is recovering at a slower pace compared with what we were expecting when entering the second half.” He added that while the company was seeing improved booking trends worldwide in the internal combustion engine sector of automotive, there’s uncertainty in how that it will translate in the semiconductor supply chain. “There will be a transformation in semiconductor demand, but it will be difficult to assess,” he commented while responding to analyst questions.

Silicon carbide continues to be a key strategic part of ST’s business, with design wins for SiC MOSFETs and diodes in applications like on-board charging and DC-DC conversion; the company will supply high-efficiency SiC devices to Renault-Nissan-Mitsubishi for advanced on-board chargers. In addition, Chery added, “We have successfully completed our key milestone evaluation of silicon carbide wafer manufacturer Norstel. Therefore, we have decided to exercise our option to purchase the remaining 45% stake. We expect to close this acquisition during Q4. It is part of our plan to install internal substrate production capacity to support the programs of our automotive and industrial customers from 2021.”

Chery was also keen to highlight the broad reach of ST’s car electrification offerings beyond the powertrain. As an example, he said, “During the quarter, we won a design with a major EV manufacturer — our 32-bit automotive microcontrollers will be at the heart of EV charging adapters.” In addition, the company also won a design slot with a European tier 1 for its automotive microcontrollers in a standalone body gateway; this is in the central communications node in the vehicle, enabling cross-domain communications and connected services.

In personal electronics, ST won design slots for its portfolio of time-of-flight, ambient-light, motion and pressure sensors. For 5G devices, ST gained design wins for digital and mixed-signal ASICs for RF-SOI designs to be used in 5G smartphones. won new designs across a range of applications. In addition, there was also a design win with its latest generation of GNSS (Global Navigation Satellite System) ICs, from an ‘important’ provider of global internet access.

As usual Chery was pressed during questions on the impact of the US-China trade war, and particularly its key in the country, Huawei. As expected, he said he couldn’t comment, but said China is an important region for ST, and that “this was an important customer.” Commenting more generically about the region, he said the company’s approach there was in line with its strategy for automotive and industrial markets, especially with a strong automotive market in China. “We target sensors, MEMS, imaging, embedded SIM and wireless chargers — and the demand is strong for these products.”

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