mannerisms

Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.

Bozotti’s Impossible Dream

ST CEO Carlo Bozotti told the GSA Forum this week that he has a dream.

Bozotti said that ST’s business rested on “two pillars.”

“My dream is two have the two pillars be successful. We have a $1 billion  microcontroller business; a $900 million MEMS business; this is nice, the challenge is VLSI,” said Bozotti, adding, “the first side is healthy. The second side is challenged.”

 Now ST has never built a 300mm fab of its own. The only one it has proprietary access to is the 20,000 wpm 300mm fab at Crolles which is pretty much funded by France Telecom and the French government.

 20,000 wpm is not going to give you a leadership position in VLSI.

Former CEO Pasquale Pistorio left a 300mm fab shell in Sicily with a half billion Euro grant to equip it. ST never did. It was turned over to making solar cells.

Without taking the risk of  investing in leading edge capacity, Bozotti’s dream will remain just a dream.

Now the reason ST has a $900 million MEMS business is because Pistorio took the risk of investing in MEMS ten years before the market.

If Bozotti wants to his VLSI dream to come true, he too will have to take risks.

And the Agrate culture is chronically risk-averse.

 Bozotti also told the GSA Forum that the semiconductor industry is still growing. “I think there is still reasonable growth,” he said.

 Maybe for the industry, but not for ST. 

 ST’s $2.1 billion revenues anticipated for Q2 take it back to the same quarterly run-rate as it was on when Bozotti took over from Pistorio in 2005.

Tags: 1 billion, france telecom, french government, taking the risk, vlsi

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15 Comments

  1. David Manners
    May 16, 2012 09:29

    I understand ST-E was forced on them by Nokia, Djonne, in those days, what Nokia wanted, Nokia got

  2. Djonne
    May 16, 2012 09:05

    Actually I think Bozotti and ST did a big bet, 3 years ago.
    It’s called ST-Ericsson…
    River card not dealt yet, things don’t look good though I agree, but you can’t argue no bet has been made…

  3. David Manners
    May 15, 2012 17:12

    You’re in very good company, Robertl. To quote Gordon Moore: “It’s a peculiar business. The only sane strategy is to bet the company regularly. A conservative position – trying to live with the existing generation of technology – is a strategy to put you out of business fairly rapidly. You have to keep investing in the next generation of products and technology – you’ll never get well on the old products – it’s always the next generation that drives recoveries in the business cycle.”

  4. RobertI
    May 15, 2012 16:55

    I have never worked in the semi industry, but I have designed quite a lot of their products over the years and kept an intelligent eye on it.
    It appears that to succeed you have to bet the company every few years, and that such success is by no means guaranteed. But if you don’t speculate, you are guaranteed to fail, slowly and inexorably. You must be crazy to work at the top in an industry like that for more than a few years. And some of the well-known bosses do seem to be. Bozotti isn’t crazy, so he should move over for someone who is. But the ST board would never appoint such a risk taker… Similar problems in Japan.

  5. David Manners
    May 15, 2012 14:17

    Well [Anonymous] I think most people in the industry have known for some time that Bozotti’s out of his depth. And when you’re in that postion you’re susceptible to bad influences. The numbers speak for themselves. In Q1 2012 ST’s revenues were 21% down on those of Q1 2011. And Bozotti’s compensation for 2011 was just shy of $4 million. ST’s current $2.1 billion a quarter revenue is back where it was when Pistorio left in 2005. As you say, only in a Franco-Italian outfit would such a performance be tolerated.

  6. Anonymous
    May 15, 2012 13:04

    In any other company Bozotti and his cronies would have been fired a long time ago. But what should we expect from a Franco-Itslian joint venture?

  7. David Manners
    May 12, 2012 12:30

    I’m sure that’s what they’ll do, Anonymous 2.

  8. Anonymous too
    May 11, 2012 16:10

    Why not focus on their current leadership and strength – MEMS for mobile/tablets is growing at 20% +, no other semi area is close. Healthcare and industrial will be the next huge wave to take advantage of MEMS.

  9. Bitter
    May 11, 2012 10:05

    With a locked rudder and incapacitated philosopher at the helm, sooner or later the competition will start to shoot holes of red ink in the books.
    Maybe “Wacky Valley” will accommodate some of the escapee’s when the time is due?

  10. David Manners
    May 11, 2012 09:37

    Yes, Bitter, inadequacy seems to be the problem. The response to the ST-E debacle suggests that. V slow to react then a totally unconvincing plan. Yet this is a situation that could, potentially, destroy STMicro. Rabbits and headlights spring to mind.

  11. David Manners
    May 11, 2012 09:35

    Ah, that would explain things, Mike, it does seem too late for ST to catch up in VLSI so he’s saying it’s all a dream that ST might do so. Rather poetic really, dreaming away in Geneva. Just not exactly the get-up-and-go entrepreneurialism you expect in the CEO of an $8billion revenue company. The semi industry is a war, and no war was won by sitting in a funk hole.

  12. Bitter
    May 11, 2012 09:00

    A simpler explanation would be that Bozotti et al. aren’t particularly intelligent, appropriately experienced and thus obviously don’t have the slightest clue on how to reverse the decline?

  13. Mike
    May 11, 2012 09:00

    I think he might have been being facetious David

  14. David Manners
    May 11, 2012 08:03

    Fear is why it’s taking so long, Anonymous, top ST management have plush remuneration. They’re not going to do anything risky which might lead to calls for their resignation. Success in the semi cindustry has always required big bets on future technology. Pistorio did this with MPEG2, MEMS, a global fab stable etc. The present management are too timid, probably too inadequate and certainly lack the cojones to do what Pistorio did.

  15. Anonymous
    May 11, 2012 07:30

    David, you should stop trolling the euro semi elite!
    I remember reading a supporter’s comment regarding Bozotti being educated and intelligent. I’m sure he’ll figure something out to increase revenues and profits, though, I wonder why it takes so long?