STMicroelectronics is becoming an analogue company. The No.1 priority for the immediate future is to invest in and grow its analogue business, by acquisition where necessary, it states.

"We're building a new ST, a better ST," said ST CEO Carlo Bozotti, pointing to the company's memory and wireless joint ventures, and the expansion of its analogue business, "analogue accounts for 45 per cent of our sales."

According to Alain Dutheil, COO of ST: "Analogue revenues were $3.8bn in 2007 making ST the No.2 in the world in analogue."

Dutheil added that, in application specific analogue, ST is the second biggest player in each of the three segments of wireless, computer and peripherals, and automotive, and No.1 in applications specific for industrial applications.

"Analogue is moving to a higher proportion of total revenues", said Carlo Ferro, ST's CFO, "ST is increasing its investment in high margin analogue products."

Asked if ST could make the same returns in its analogue business as Maxim and Linear which have 70 per cent gross margins, Ferro replied: "I can't disclose the margin on analogue but the gross margin is substantially above the gross margin of the company."

In fact, analogue is the second most profitable product line at ST after high margin memories (EEPROM, NVRAM and EPROM).

The executive responsible for making the analogue strategy happen, is Carmelo Papa, executive vice president for ST's industrial and multi-segment sector.

"Analogue is the core focus and strategy for the coming years for the group. We will concentrate on the very high margin and difficult products to make," said Papa, "our commitment is to high performance analogue where we have major skills in design to make good margins, and a nice 41.5 per cent growth."

Papa said that ST's analogue business has grown 29.7 per cent between 2003 and 2007, in a market where the TAM grew 13.3 per cent, and has grown 41.1 per cent between 2005 and 2007, when the TAM grew 12.6 per cent.

Asked if ST's investment into analogue would include acquisition, Papa replied: "ST is not looking for big glamour acquisitions but IP or small companies that give us leverage in the high performance analogue business."