STMicroelectronics NV (STM) Morgan Stanley Technology, Media & Telecoms Conference November 17, 2011 04:20 AM EST Executives Carlo Bozotti – President & CEO Analysts Unknown analysts Presentation Moderator Thank you. Carlo, CEO of STMicroelectronics, thanks for… Carlo Bozotti Good morning to everybody. Moderator Coming today. Maybe – we should start maybe with a quick summary of what happened in Q3 for ST Micro and then we start discussing. Carlo Bozotti
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Question-and-Answer SessionModerator So basically what you’re saying is that the orders have kind of stabilized and may increase a bit. But visibility remains relatively low and maybe the base line is lower than where it should be for your gross margins to be at a better level? Carlo Bozotti Yes, of course I think visibility is very short term. The absolute value of bookings somehow did improve compared to Q3. But of course it’s still at very low level and in terms of priorities for us today, the priority particularly in Q4, but I think if you understand in Q1 is inventory correction. So we have taken important measures to reduce loading in most of our fabs. So there will be a significant reduction of inventory during this quarter and as a consequence a significant improvement of the cash flow performance. Moderator Especially because you improve – you lower your CapEx as well in Q4? Carlo Bozotti Yes. In Q4 there is also very significant reduction of capital investments and intensity. But we’ll continue also. So I think overall in the year we will be in the range of 1.25 billion. But very much in the first half driven by MEMS. It’s an important investment and it’s also certain, (inaudible) power technologies and some investment also in the area of advanced logic. So there is a significant reduction in the second half and it will be significantly lower next year. Moderator So equity opportunity, but MEMs which has been really the big goal driver for ST in the past two years. How is the competitive landscape shaping up ahead of next year? We’ve heard about a new company in the field in the US, also in Asia. I think the key part for ST, especially you own and you manufacture you own MEMS at the moment, and that is probably the strategy long term as well. How do you see the MEMS market in your position doing?
Carlo BozottiYes. I think for us is of course one of the top priority in the company. We have in the first nine months of this year increased by 130%. So overall in the year we’ve basically doubled compared to one year ago. So it’s becoming an important part – important piece of business and we want to make sure that we move on with very innovative technologies, first of all with the capacity that we need to serve our customers and with new products and new applications. And I think in terms of manufacturing capability it is pretty advanced because it is all in 8 inch. These are very, very small packages. So I believe it’s a very competitive manufacturing machine. And in terms of products there are a lot of new things coming. So we want to continue with this new flow of innovation. We are working on integrated solutions. We have the solution that integrates up to 10 axis in one package. So we can really run now kind of fusion MEMS and we are addressing new applications. It’s not only of course the Smartphone and Tablet, but is many new things, including products for automotive, including products for healthcare application. So I think this is a very important priority for the company. Read the rest of this transcript for free on seekingalpha.com