State of the Market. Jean-Philippe Dauvin Group Vice President Chief Economist. Field Trip London, May 23rd

Transcription

1 Group Vice President Chief Economist Field Trip London, May 23rd

2 The World Economy in 2006 Rest of Asia 5% Former SSR 8% India North America 23% 2006 growth China growth 3% Central & Latin America 8% Middle East & Africa 4% Japan 7% Europe 23% $50 trillion; 30% larger than 5 years ago WW in 2006 around 4% Estimated in purchasing power parity Source : BIPE

3 Semiconductor Market Cycles SC Market $ Billions 1000 SC Market % SC Current Market Trend Line SC Market % 75% % 10 25% 1 0% 0-25% Source : WSTS, ST

4 First Quarter 2006 Semiconductor Market Results Products families MPU DRAM Opto Discrete Std Lin. & Logic MCU ASP NOR NAND Other Memory $B market Sequential growth (%) -4.9% 5.8% -0.1% 0.5% 3.1% 6.4% -1.9% -5.4% -12.8% 2.4% Year-on-year growth (%) 6.8% -3.3% 10.5% 1.8% 20.1% -8.9% 8.9% 2.7% 45.4% 2.9% Total Market % 7.3% Source : WSTS

5 Semiconductor Market Cycle Build-Up 2004 End-demand Inventory Silicon Pervasion Capacity 19% $213 B 28% Capacity 2005 End-demand Inventory Silicon Pervasion $227 B 2006 Est. End-demand Inventory Silicon Pervasion Capacity $247 B 9% 5% 2% 7% 6.5% 2% 8.5% Unit ASP Market Unit ASP Market Unit ASP Market Source : WSTS, ST estimates

6 2006 End-Demand Assumptions Major Applications over 05 (%) Analog TV Digital TV Digital STB - 28% 110% M of units Gaming 18% 65 MP3 + PMP 40% 181 2G & 2.5G Handsets 3G Handsets -3% 95% PC Desktop PC Laptop HDD 3.5 HDD <3.5 2% 0% 17% 29% Personal Medical 10% 140 Source : ST estimates

7 Semiconductor Inventory Level Trends Excess semiconductor inventories relative to target (US$B) 1.5 Building inventory 1.8 Depleting inventory Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06E Q2 06E Source : isuppli

8 Capital Spending Trend Capex-tosales ratio % Capex 2005 over % growth $47B 2 Capex-tosales ratio % Capex 2006 over % growth $50B 23% 23% 21% Avg % 21% 20% 19% 21% Avg % Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06E Q3 06E Q4 06E Source : ST Estimate

9 2006 Semiconductor Market Forecast by Quarter Sequential growth % 2006 market growth 8.5% Y-o-Y growth % 2006 market size $247B 12% 7.3% 8% 8% 5% 2% 2% -1.3% Q1 06A Q2 06E Q3 06E Q4 06E Q1 06A Q2 06E Q3 06E Q4 06E Source : WSTS, ST

10 2006 Semiconductor Market Forecast Products Families Products families MPU DRAM Opto Discrete Std Lin. & Logic MCU ASP/DSP NOR NAND Other Mem. Total Market $B in over 05 (%) 4% 15% 3% 15% 1% 9% 2 1% 8.5% Source : ST estimates

11 2006 Semiconductor Market Macro-Segments Telecom 10% Consumer Automotive 9% 9% Computer Industrial & Other Total market 8.5% Source : ST estimates

12 Economic Imbalances Generate Market Potential Monthly salaries (incl. charges) Euro Zone USA Japan South Korea + Taiwan Eastern Europe Brazil Mexico Russia New applications China New customers Indonesia Active population (in thousands) India Source : International Labour Office, Estin & Co, ST

13 New Application and New Customers Drive Semiconductor Market Handset low-end cost : $34 $68 Application Handset high-end 3G cost : $ Customer India cellular connections exceeded fixed-line India sixth-largest cellular market subscriber base : 75.3 million subscribers at the end of 2005, 48 million at the end of 2004 $16 $18 $4 $3 $7 $11 $32 Semi Display Battery Others (incl. Electromechanical) 2006 Subscriber growth momentum continues : 84.3 million subscribers at the end of February 2006 We project 280 million subscribers by 2010, Only 24% of population equipped Source : isuppli

14 Looking Ahead: World Electronic Systems Low growth at 2% per year Back to growth at per year US$B Annual growth rate E 2007E 2008E 2009E 2010E 15% -7% -2% 7% 10% 7% 8% 4% 5% Source : isuppli, ST

15 Semiconductor Market 12% per year 2% per year 8% per year $B world market 350 Equipping developed countries Developed countries saturated Developed countries installed-base renewal Equipping developing countries E 2007E 2008E 2009E 2010E Source : WSTS, ST

16 Semiconductor Market Forecast Product Families CAGR % 2010 Market Breakdown Opto Flash 12% 11% DRAM 10% MCU 4% ASP Std Lin. & Logic 11% 8% Std Lin. & Logic ASP 41% MPU MCU 8% 7% Discrete DRAM Discrete Total Market CAGR % 5% 8% MPU 14% Flash 11% 2010 : $340B Opto 8% Source : WSTS, ST

17 Semiconductor Market Forecast Applications CAGR % 2010 Market Breakdown Telecom Automotive Consumer 10% 9% 9% Consumer 1 Automotive 8% Industrial & Gov't 9% Computer 42% Computer 8% Industrial & Govt 7% Total market CAGR % Telecom 25% 2010 : $340B Source : WSTS, ST

18 Semiconductor Market Forecast Regions CAGR % 2010 Market Breakdown China Other Asia/Pac. Including India 18% 11% Japan 17% China 21% Americas Europe Japan Developing regions Developed regions Total market CAGR % 15% 8% Americas 1 Europe 15% 2010 : $340B Other Asia/Pac. 31% Source : WSTS, ST