STMicroelectronics: Diversification strategy
Global semiconductor industry is continuing its weakness. Market giants’ strategy usually can give an indication to small participants. Let’s see how STMicroelectronics positioning markets.
To grapple with difficult market situation, ST has three strategies worldwide with increasing market shares as the focus. “We hope the market size in the second half of this year can exceed last year,” says Carlo Bozotti, CEO of STMicroelectronics.
Other two points include: Effective management of capital and assets to keep financial stability in difficult times; achieve sustainable development of digital consumer and wireless services.
Five Keys in China
Chinese market has always been an important battlefield for global semiconductor industry, especially when comparing its over 7.5% growth with overall weakness of worldwide economy.
“China is essential for ST, with revenue in Greater China and South Asia representing 45% of overall takings,” says Carlo Bozotti, “In the next coming years, ST will focus on five key markets and three potential fields.”
Five emphasizes cover automotive, set-top boxes, sensors, power management and MCU. As the largest automotive chip supplier in China, ST will continue its advantage and in-depth cooperation, such as setting Car Electronics Joint Lab with FAW to jointly promote technology development in powertrain, chassis, security system, body, automotive infotainment systems and new energy.
In the set-top box field, ST products are widely used in cable box , satellite TV set-top boxes; and ST also introduces supporting- HD video high-performance products. On the power management side, ST released smart meter products,
Three potential markets are medial, energy saving and data security. The goal of ST in medical application is to fully integrate electronic information technology to reduce health care costs. Currently, ST products can support cardiac monitoring, insulin injections and other types of medical applications.
Diversification strategy
Diversification strategy requires companies not to over-depend on one customers; resilient space plays an important role in offsetting market change and risk. Carlo Bozotti particularly highlights this aspect.
“Among ST customers, Asia, Europe, America takes up one third, respectively, which enables ST to go ahead. It is hard to own two thirds business outside European markets. This proves ST has excellent products and technology,” says Carlo Bozotti.
Carlo added “A company can not rely on one major customer too heavily, this is very critical. If a main customer contributes to 20% of revenue, the risk is too great. Enterprises should diversifies customer base, and achieve balanced development.”
In 2009, a customer accounted for 18% of ST revenue; but now the proportion has dropped down to around 5%.