Stmicroelectronics Nv · EURONEXT:STMPA
Stmicroelectronics Nv — Investor Day (December 2020)
77 slides from Stmicroelectronics Nv's investor day presentation, Dec 9, 2020
Slide 1: STMicroelectronics Capital Markets Day 2020 Strategic Update
STMicroelectronics Capital Markets Day – 2020 Strategic Update December 9th, 2020
Slide 2: Forward looking information
Forward looking information Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934
Slide 3: Introduction
Introduction Jean-Marc Chery President & CEO
Slide 4: Agenda
Agenda 1 Introduction Jean-Marc Chery 2 Markets & end-market strategies Marco Cassis 3 Manufacturing strategy Orio Bellezza 4 Financial results & priorities Lorenzo Grandi 5 Q&A 4
Slide 5: Our strategy stems from key long-term enablers
Our strategy stems from key long-term enablers Smart Mobility Power & Energy Internet of Things & 5G ST provides innovative solutions ST technology and solutions ST provides sensors, embedded to help our customers enable customers to increase energy processing solutions, connectivity, make driving s
Slide 6: We address four end markets
We address four end markets Communications equipment, Automotive Industrial Personal electronics computers & peripherals 6
Slide 7: Our strategic objectives
Our strategic objectives Automotive Industrial Personal electronics Communications Equipment, Computers & Peripherals Address selected Lead in selected high-volume applications high-volume smartphone Lead in Lead in embedded with differentiated products applications with car electrification processi
Slide 8: Our value proposition
Our value proposition For our shareholders For our customers For other stakeholders Return value in line with our sustainable, profitable growth Provide differentiating enablers Committed to sustainability objective Sustainable and profitable growth Independent, reliable & secure supply chain Our va
Slide 9: Sustainability Update
Sustainability Update Milestones • Compliance with the 1.5°C scenario (Paris COP21) by 2025 • Carbon neutral by 2027 ST will be Carbon • Sourcing 100% renewable energy by 2027 neutral by 2027 • Collaborative programs and partnerships for carbon neutrality throughout our ecosystems Renewable Net CO2
Slide 10: Rajita D’Souza, new President of Human Resources and CSR
New ST President of Human Resources and Corporate Social Responsibility Rajita D’Souza From January 2021 10
Slide 11: Markets and end-market strategies
Markets and end-market strategies Marco Cassis President Sales, Marketing, Communications and Strategy Development
Slide 12: Moderate SAM growth despite 2020 dynamics
Moderate SAM growth despite 2020 dynamics Total Available Market (TAM) ST Served Available Market (SAM) B$ B$ 500 14% 250 5% 22% -12% 2.4% 400 200 10% 0.2% 13% 1% 4% 300 150 200 100 100 50 0 0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Source: WSTS 12
Slide 13: ST SAM growth driven by automotive and industrial end markets
ST SAM growth driven by automotive and industrial end markets Communications Automotive Industrial Personal Electronics Equipment, Computers & Peripherals SAM $B +13% CAGR +5% CAGR +4% CAGR 0% CAGR 58.1 57.5 47.7 44.3 40.6 41.4 39.7 28.1 2020 2023 2020 2023 2020 2023 2020 2023 Source: Omdia 13
Slide 14: ….but at a lower level than expected one year ago
….but at a lower level than expected one year ago Communications Automotive Industrial Personal Electronics Equipment, Computers & Peripherals SAM $B +13% CAGR +5% CAGR +4% CAGR 0% CAGR 58.1 57.5 47.7 44.3 40.6 41.4 39.7 28.1 12.3 4.1 2020 2023 2020 2023 2020 2023 2020 2023 -8.5 -12.2 2020 Delta vs.
Slide 15: ST has strong positions across all end-markets
ST has strong positions across all end-markets General Purpose & Secure MCU #2 Consumer & mobile MEMS #1 Analog #4* Consumer & mobile light sensors #1 All MCU #4* PMIC for mass storage #1 MEMS sensors & actuators #4* Silicon Carbide for Power discretes & modules #4 #1 industrial & automotive •* prel
Slide 16: We serve more than 100,000 customers
We serve more than 100,000 customers Top 10 Customers* 2019 Apple Huawei Bosch Intel-Mobileye Top Ciena Samsung 10 Continental Seagate HP Tesla Globally Unified worldwide account management tailored to each account to provide global Managed coverage and service Accounts Standard process, reporting &
Slide 17: Balanced sales across regions & channels
Balanced sales across regions & channels % by shipment location % by region of origin % by customer type FY2019 FY2019 FY2019 Americas Americas Distribution Asia Top 10 Pacific OEMs 14% 38% 33% 30% 45% 24% 62% 29% 25% EMEA Asia Pacific EMEA Other OEMs 17
Slide 18: 2020 nine months showing different dynamics
2020 nine months showing different dynamics % by shipment location % by region of origin % by customer type 9 months 2020 9 months 2020 9 months 2020 Americas Americas Distribution Asia Top 10 Pacific OEMs EMEA 12% 20% 24% 39% 37% 48% 68% 28% 24% Asia Pacific EMEA Other OEMs 18
Slide 19: Automotive
Automotive Automotive Application Approach Market Approach Partnerships with Car Manufacturers, Tier 1’s Leverage broad and deep knowledge of and technology leaders Lead in automotive systems to develop solutions car electrification optimized for targeted vehicle subsystems • Chassis & Safety • ADAS
Slide 20: Key developments in market and end market strategy: Automotive
Key developments in market and end market strategy Automotive Market End market strategy • Electrification and digitalization trends remains strong • Acceleration of the ongoing actions plan to better and semiconductor content continues to increase serve automotive macro-trends • Vehicle electrifica
Slide 21: ST outperforming the market
ST outperforming the market ST is the only top 5 player growing stably ST outperformed the 2019 market in the past 2 years in electrification & ADAS CAGR 2017-2019 2019 Growth Rate > 10% 85% 25.0% + 5% Auto 11.0% + 2% Industry 22% Average Top 3 CAGR 17-19 MKT ADG MKT ADG Source: IHS, Omdia 21
Slide 22: Automotive market recovering mid term
Automotive market recovering mid term Hybrid & Electric vehicle acceleration Light vehicle sales forecast Car production volumes Hybrid & 12% Electric 26% 94 Million Vehicles 90 88 84 84 88% 79 Internal 74% 77 Combustion 72 Engine 2018 2019 2020 2021 2022 2023 2020 2023 Analyst Analyst Mid case Low
Slide 23: Automotive transformation boosting silicon value in the car
Automotive transformation boosting silicon value in the car Automotive Semiconductor TAM 2023 $45.1B Electrification TAM [B$] ADAS TAM [B$] 5.7 8.8 +15.6% CAGR 4.3 6.8 5.9 3.1 4.1 2020 2.1 $29.2B 2020 2021 2022 2023 2020 2021 2022 2023 Source: IHS, ST internal 23
Slide 24: Industrial
Industrial Industrial Application Approach Market Approach Use deep industrial knowledge to develop Target industry leaders with leading-edge solutions optimized for specific applications, products adapted to their needs Lead in embedded combined with a broad portfolio processing • Factory Automatio
Slide 25: Key developments in market and end market strategy: Industrial
Key developments in market and end market strategy Industrial Market End market strategy • Pandemic strongly impacted factory automation • Strengthened industrial embedded processing offering with portfolio extensions, ecosystem • Significant industrial market forecast decline vs. investments and co
Slide 26: ST focused on largest and highest growth industrial applications
ST focused on largest and highest growth industrial applications ST SAM Overall Industrial 2020-2023 M$ 2023 CAGR 2020-2023 CAGR 12,000 +5% +8% 10,000 8,000 +6% 6,000 4,000 +8% +8% 2,000 - Automation Power & Energy Building & Home Home Appliances Control Source: Omdia 26
Slide 27: ST has leading positions in focus areas in industrial
ST has leading positions in focus areas in the industrial semiconductor market Rank Discretes (Power) $48B 1 Infineon Sensors & Actuators $41B 3 STMicroelectronics Optical Semiconductor Rank Analog IC Microcomponents ICs 1 Texas Instruments Memory ICs 5 STMicroelectronics Logic ICs Rank Microcompone
Slide 28: Embedded processing market trend
Embedded processing market trend $M Industrial Growth Drivers 12,000 10,000 Wireless connectivity +5.4% CAGR 8,000 End-to-end security 6,000 4,000 MCU 2,000 Ultra Low Power 0 2020E 2023E Motor control and power system digitalization GP MCU embedded MPU (Industrial AP) Excluding Automotive MCUs 28 So
Slide 29: Power semiconductors pervasive in industrial
Power semiconductors pervasive in industrial Power semiconductors represent over one third of the semiconductor content in key industrial applications with high growth 34% 39% 36% 39% Average Motor Drive Transport Energy 2020 Semi Power TAM 3.8 1.2 0.5 1.5 ‘20-’24 CAGR 7.6% 5.0% 5.4% 10.8% Source: O
Slide 30: Smart connected devices enabling fast growing industrial applications
Smart connected devices enabling fast growing industrial applications Smart connected industrial devices require increasing sensing and connectivity capabilities on top of embedded processing IoT connected devices Million Units 2500 Predictive Asset tracking maintenance 2000 1500 1000 Metering Real-
Slide 31: Personal electronics
Personal electronics Personal electronics Application Approach Market Approach • Smartphone application-specific products Dedicated products for top smartphone Lead in selected also suited for other personal devices players high-volume smartphone • General purpose portfolio for broader PE applicatio
Slide 32: Key developments in market and end market strategy: Personal Electronics
Key developments in market and end market strategy Personal Electronics Market End market strategy • US-China Trade War • Development of next generation optical sensing solutions to consolidate our positions as leader • Market share shift among smartphone players • Launch of open market wireless cha
Slide 33: Smartphone opportunities
Smartphone opportunities Smartphone sales Differentiated products or custom solutions Million Units Optical sensing 1200 Secure solutions solutions 1000 Custom analog & Sensors 800 Power management 600 5G RF 400 200 Broad portfolio 0 General purpose 2020 2021 2022 2023 Microcontrollers analog 5G Oth
Slide 34: Accessories opportunities growing
Accessories opportunities growing In-ear headsets – Aftermarket sales True Wireless Stereo (TWS) Headset Million Units 600 Sensors 500 Proximity Proximity 400 Motion MEMS Motion MEMS 300 Voice accelerometer Voice accelerometer 200 MEMS Microphone MEMS Microphone 100 Wireless Wireless MCUs Analog 0 C
Slide 35: Communications equipment, computers & peripherals
Communications equipment, computers & peripherals Communications Equipment, Application Approach Market Approach Computers & Peripherals Address selected Leverage long-standing relationships with Use deep knowledge of specific networking & computer peripheral makers high-volume applications applicat
Slide 36: Key developments in market and end market strategy: Communications equipment
Key developments in market and end market strategy Communications equipment, computers & peripherals Market End market strategy • LEO satellite constellations deployment will drive • Capitalize on ST’s know-how to develop and produce ubiquitous internet access products dedicated to high data rate co
Slide 37: Conclusion
Conclusion Smart Mobility Power & Energy Internet of Things & 5G ST provides innovative solutions ST technology and solutions ST provides sensors, embedded to help our customers enable customers to increase energy processing solutions, connectivity, make driving safer, greener efficiency everywhere
Slide 38: Manufacturing Strategy
Manufacturing Strategy Orio Bellezza President Technology, Manufacturing and Quality
Slide 39: Manufacturing strategy a key business enabler
Manufacturing strategy a key business enabler France (Crolles, Italy (Agrate, Vision Rousset, Tours) Catania) • Integrated internal manufacturing and R&D for differentiated technologies and packages • Partnership with foundry and OSAT for standard China Philippines technologies and packages & advanc
Slide 40: Technology portfolio – Front End
Technology portfolio – Front End Aligned with strategic focus areas Automotive Technologies enabling solutions Personal electronics Smart Power: Specialized Optical BCD & VIP Imaging Solutions Power MOSFET & IGBT MEMS SiC & GaN – Discrete Communications equipment, Industrial FD-SOI computers & perip
Slide 41: Technology portfolio – Back End
Technology portfolio – Back End Aligned with strategic focus areas Packaging innovation focus on smart mobility, power & energy, IoT & 5G Co-design silicon - package for optimized system solutions Internal development and partnerships with subcontactors Smart Mobility Power & Energy IoT & 5G WLCSP p
Slide 42: Strategic manufacturing programs update
Strategic manufacturing programs update Wide Bandgap materials Power Modules Silicon Carbide • Capability installed at Shenzhen; Silicon and SiC • Front-end capacity expanded in Catania and new production started in collaboration with OSAT line in Singapore • Second back-end line in Bouskoura 300 mm
Slide 43: Silicon Carbide manufacturing
Silicon Carbide manufacturing Device manufacturing Normalized F/E capacity evolution In volume production with 150 mm since 2017 • High yields and automotive-grade quality • Capacity expanded almost 4X in 2020 vs 2017 ~10X Further 2.5X expansion, 200 mm tools compatible • Second fab in Singapore to
Slide 44: SiC manufacturing strategy summary
SiC manufacturing strategy summary Device Manufacturing Today 2021 additions Mid term Power MOSFET technology Gen2/Gen3 Gen4 Gen5 (trench) Front-End fabs Catania 150 mm Singapore 150 mm Evolution to 200 mm Back-End plants Shenzhen Bouskoura Substrate Supply Today 2021 additions Mid term External qua
Slide 45: Gallium Nitride
Gallium Nitride RF GaN-on-Silicon • Wafer fab 150 mm in Catania • Plan to expand to 200 mm and migrate to tighter design rules Power conversion GaN • Pilot line in Tours in 200 mm • Partnership with CEA LETI for technology development • Exagan expertise in epitaxy and design • TSMC partnership to ac
Slide 46: Power module manufacturing
Power module manufacturing ACEPACK 1 & 2 • Development competence centers and prototyping capability in Catania and Shenzen (Advanced Power Package Lab) STPAK* ACEPACK SMIT SLLIMM* IPM • Internal production in Shenzhen, supporting standard and customized ACEPACK* DRIVE solutions • External source in
Slide 47: 300 mm internal capacity
300 mm internal capacity Agrate300 Agrate Crolles300 5X Crolles Crolles modular expansion Agrate R3 ramp-up 2015 2020 2025 Potential Crolles modular expansion 47
Slide 48: Crolles 300
Crolles 300 • Modular expansion of building and facilities • Fast implementation cycle • Adding 1-1.5 Kwpw capacity, in each step Gateway 1 Gateway 2 48
Slide 49: Agrate 300 mm Smart Power, Power and mixed tech Fab
Agrate 300 mm Smart Power, Power and mixed tech Fab Mission and Size • Smart Power, IGBT, Power MOS and mixed technologies Status and planning • About 68,000 m2 total covered building space • Building completed - clean room ready by 2021 • About 13,000 m2 total clean room, at full build out • Qualif
Slide 50: Outsourcing
Outsourcing Outsourcing level at about 30%. Technology Sources Y2020: ~ 25% F/E Foundry, ~35% B/E OSAT eNVM 180 nm Foundry Crolles eNVM 90 nm Foundry Rousset Key technology partnerships to fuel future expansion eNVM 40 nm Crolles 300 Foundry CMOS FD-SOI Crolles 300 Foundry • FinFET 7 / 5 nm FinFET 1
Slide 51: 2020 capital spending
2020 capital spending Mix change, R&D, others Strategic initiatives • Smart power evolution to BCD8/9 for • Agrate 300 mm buildings automotive and industrial • GaN in Catania and Tours • Technology development • New MEMS labs in Singapore • Fab automation, quality, digitalization, equipment obsolesc
Slide 52: Takeaways
Takeaways Manufacturing is a key enabler to achieve our Key programs update strategic objectives in balanced make-or-buy strategy • SiC - continuous expansion; progress in vertical integration and 200 mm substrates 2020 capital investment plan supports ongoing • GaN internal capability, foundry ramp
Slide 53: STMicroelectronics financial results & priorities
STMicroelectronics financial results & priorities Lorenzo Grandi Chief Financial Officer President, Finance, Infrastructure and Services
Slide 54: ST transformation: growth and resilience
ST transformation: growth and resilience
Slide 55: ST transformation: growth and resilience
ST transformation: growth and resilience Growth Resilience US$M FY15 FY16 FY17 FY18 FY19 FY20E* ST Revenues 6,897 6,973 8,347 9,664 9,556 9,970 Served Market (SAM) Y/Y -1% 4% 13% 10% Flat +2.4%** ST Revenues Y/Y -6.8% 1.1% 19.7% 15.8% -1.1% +4.3% Gross Margin 33.8% 35.3% 39.2% 40.0% 38.7% 37.0% Oper
Slide 56: Quarterly revenue trend
Quarterly revenue trend ST FY19 -1.1% Y/Y ST FY20E* +4.3% Y/Y SAM flat Y/Y SAM** +2.4% Y/Y +8.5% US$B Y/Y 3.0 +4.0% Y/Y +4.4% +1.2% Y/Y Y/Y 2.5 +7.5% -4.2% Y/Y -6.7% Y/Y -4.0% Y/Y Y/Y 2.0 1.5 1.0 Q119 Q219 Q319 Q419 Q120 Q220 Q320 Q420E* *At midpoint of Q420 guidance 56 **Source: WSTS December 2020
Slide 57: Revenue dynamics
Revenue dynamics Product Group Region of Origin Customer Type -10% +14% +9% -4% +6% +7% +5% +12% -14% -9% +1% -10% +15% +10% -15% -2% FY18 FY19 FY20E* FY18 FY19 FY20E* FY18 FY19 FY20E* ADG AMS MDG Others Americas EMEA Asia Pacific Distribution OEM *At midpoint of Q420 guidance 57
Slide 58: Gross margin trend
Gross margin trend FY19 Gross Margin 38.7% 41% (70 bps of unsaturation charges) FY20E* Gross Margin 37.0% 40.3% (160 bps of unsaturation charges) 40.0% 39% 39.4% 39.3% 39.4% 39.2% 39.0% 39.0% 38.5% 38.2% 38.1% 37.9% 37.9% 37% 37.4% 36.0% 35% 35.0% 33% FY18 Q119 Q219 Q319 Q419 Q120 Q220 Q320 Q420E* G
Slide 59: Net operating expenses evolution
Net operating expenses evolution* Quarterly Net Operating Expenses Average (US$M) 622 635 - 645 610 SG&A R&D OIE, net FY18 FY19 FY20E** Maintaining strong focus on innovation and digital transformation of the company *Net Operating Expenses: R&D + SG&A + Other Expenses (- Other Income) 59 **FY20E Ne
Slide 60: Strong commitment to innovation and growth
Strong commitment to innovation and growth Achievements in the last 3 years (2018 – 2020*) Cumulated R&D expenses ~ $4.5B (15.2% of revenues) Focused and specialized R&D acquisitions to accelerate innovation and reinforce product portfolio. Total consideration of < $300M Wide Bandgap Materials Conne
Slide 61: Maintaining a solid capital structure
Maintaining a solid capital structure ST is in a solid position from a capital, liquidity and balance sheet perspective $3.53B • $1.2B of unutilized committed medium-term credit $2.87B facilities; $2.54B $2.17B $2.19B • Long-term debt contains standard conditions but does not impose minimum financia
Slide 62: Shareholder returns
0% 100% 200% 300% 400% 500% 600% -100% 12/31/2015 01/31/2016 02/29/2016 03/31/2016 04/30/2016 05/31/2016 06/30/2016 STM Range 07/31/2016 Security 08/31/2016 SOX Index 09/30/2016 10/31/2016 *FY20 estimated 11/30/2016 12/31/2016 01/31/2017 02/28/2017 03/31/2017 04/30/2017 321% 527% 05/31/2017 12/31/20
Slide 63: Company model
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Slide 64: Main variations compared to our May 2019 CMD
Main variations compared to our May 2019 CMD 2020 – 2023 Cumulative size expectations for ST SAM* decreased by a low single digit percentage with significant differences by end-market: Market • Automotive and Industrial decreased about 20% • Personal Electronics increased in the low teens • Communic
Slide 65: ST SAM growth driven by automotive and industrial end markets
ST SAM growth driven by automotive and industrial end markets Communications Automotive Industrial Personal Electronics Equipment, Computers & Peripherals SAM $B +13% CAGR +5% CAGR +4% CAGR 0% CAGR 58.1 57.5 47.7 44.3 40.6 41.4 39.7 28.1 12.3 4.1 -12.2 -8.5 2020 2023 2020 2023 2020 2023 2020 2023 20
Slide 66: Technology evolution
Technology evolution Revenues at $12B by Technology Category $12B Revenues Revenues from High CAPEX Technology Revenues from Low/no CAPEX Technology CMD 2019 CMD 2020 Visibility Visibility CAPEX for capacity and mix change to sustain growth in new technologies 66
Slide 67: Currency impact
Currency impact Revenues 11% 89% COGS 36% 64% OPEX 60% 40% Euro USD Quarterly effect of +/-1% change of €/$: -/+ $8M to $10M on Operating Income 67
Slide 68: Path to mid-term financial model
Path to mid-term financial model* FY19 FY20E** Mid-Term Model ST Revenues $9.56B $9.97B $12.0B Gross Margin 38.7% 37.0% 39% - 40% Operating Margin 12.6% >12.0% 15% - 17% CAPEX $1.17B $1.2B $1.5 – 1.7B EBITDA Margin 21.5% ~21.5% 25% - 26% Free Cash Flow*** $497M ~$500M > $1B * See Forward Looking Inf
Slide 69: Mid-term revenue dynamics
Mid-term revenue dynamics* $12.0B $9.97B Revenues FY20E** Trade War Impact Traditional Automotive Car Electrification Engaged Customer Other OEMs Revenues Mid-Term OEMs and Digitalization Programs in Personal and Mass Market Electronics and CECP * See Forward Looking Information for full disclosure.
Slide 70: Mid-term Operating Margin Dynamics
Mid-term Operating Margin Dynamics* 15% – 17% >12% Operating Margin One-time FX Sale Price Mix Unsaturation Additional Manufacturing Net OPEX Operating Margin FY20E** Grants Improvement Charges Depreciation on Productivity Leverage Mid-Term Catch-up Net Revenues Improvement before FX * See Forward L
Slide 71: Focus on mid-term
Focus on mid-term* 40%-41% Gross Margin 39%-40% €/$ 1.12 €/$ 1.16 Mid-Term Mid-Term CMD 2019 view CMD 2020 view Revenues $12.0B $12.0B Mid-Term FX Product Mix Additional Sale Price Productivity Mid-Term CMD 2019 Improvement Depreciation Improvement CMD 2020 Gross Margin 40% - 41% 39% - 40% on Net Re
Slide 72: Product group profitability evolution
Product group profitability evolution* Product Group Mid-Term Operating Margin Margin Expansion Drivers 19.5 ADG • Focus on growing business in smart mobility 18.5 applications driven by electrification and digitalization • Move skills and R&D resources to enlarge product MDG portfolio and market co
Slide 73: Capital allocation plan
Capital allocation plan Sustain Growth Shareholder Return Capex Dividend Mitigate spending via Share buyback outsourcing Targeted strategic acquisition 73
Slide 74: Value proposition
Value proposition
Slide 75: ST value proposition for shareholders
ST value proposition for shareholders Commitment to organic Strong focus on and self-financed growth Long-term value creation Significant opportunity Capability to increase to increase profitability shareholder value 75
Slide 76: Appendix
Appendix • Net financial position (non-U.S. GAAP measure): represents the difference between our total liquidity and our total financial debt. Our total financial resources include cash and cash equivalents, marketable securities, restricted cash and short-term deposits, and our total financial debt
Slide 77: Thank you
Thank you © STMicroelectronics - All rights reserved. ST logo is a trademark or a registered trademark of STMicroelectronics International NV or its affiliates in the EU and/or other countries. For additional information about ST trademarks, please refer to www.st.com/trademarks. All other product o