ST raises capex for "major product ramp"

January 26, 2017 // By Peter Clarke
STMicroelectronics NV is raising capital expenditure budget for 2017 to between $1 billion and $1.1 billion in part to support a "major product ramp" in the second half of the year.

The spending will be weighted towards the first half of the year and includes expanding capacity in assembly and test as well as in front-end manufacturing, ST said. The billion-dollar plus capex compares with $607 million capex recorded in 2016.

ST announced the capital expenditure increase as part of its fourth quarter 2016 financial results. On a conference call financial analysts repeatedly asked for more information and to be told whether it was a processor or MEMS or imaging sensor product and whether it was destined for automotive or smartphone application. Carlo Bozotti, ST CEO, repeatedly declined to give more information about the major product ramp except to say it was important and had scope for positive impact on other ST businesses.

When quizzed on manufacturing capacity expansion at ST's 300mm wafer fab in Crolles, France, chief operating officer Jean-Marc Chery said that manufacturing capacity would go from 3,000 wafers per week to 5,000 wafers per week in less than a year.

ST had fourth quarter revenues of $1.86 billion up 11.5 percent compared with the same quarter a year before. ST reported a net profit of $112 million in the fourth quarter compared with a break-even result in 4Q15.

For the full year 2016 ST reported revenues of $6.97 billion up 1.1 percent on $6.90 billion in 2015. The net income increased to $165 million in 2016 from $104 million in 2015.

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