"In order to support ST's innovative product portfolio and to fuel significant revenue growth in 2017 and beyond, particularly from new specialized technologies and products, we expect to invest approximately $1 billion to $1.1 billion in 2017. Specifically, the Company is investing in 300mm front-end manufacturing and in back-end assembly and test to support new products. In particular, we anticipate a newly won program to ramp with substantial revenues in the second half of 2017."
The Company expects first quarter 2017 revenues to decrease about 2.4% on a sequential basis, plus or minus 3.5 percentage points. Gross margin in the first quarter is expected to be about 37.0% plus or minus 2.0 percentage points.
This outlook is based on an assumed effective currency exchange rate of approximately $1.08 = €1.00 for the 2017 first quarter and includes the impact of existing hedging contracts. The first quarter will close on April 1, 2017.
Q4 2016 - Product and Technology Highlights
Automotive and Discrete Group (ADG)
- Earned a design win for a surround-view ADAS system-on-chip with a top Japanese Tier1;
- Landed an important win in vehicle-to-vehicle (V2V) communication from a global car maker;
- Recorded numerous design wins for automotive-grade rectifiers and protection devices to be used in powertrain, on-board charging, safety, and high-speed data-line networks;
- Captured wins for several 32-bit Power Architecture-based microcontrollers for a premium electric vehicle;
- Awarded a win for a valve driver for transmission applications from a European market leader;
- Continued good expansion of voltage-regulator business with a win in an alternator from an important Japanese customer and for a voltage regulator and power driver for engine management from a Korean customer;
- Maintained growth in the 7th-generation VIPower family of high-side switches for body-control-module applications at major European Tier1s;
- Earned major awards for low-voltage advanced trench MOSFETs from several European Tier1s;
- Started production of Accordo2 for Bluetooth radios being manufactured by several major Tier1s to be used in entry-level cars by multiple OEMs;
- Announced next-generation Accordo processor for in-vehicle infotainment applications covering applications such as head units, audio/video navigation, and digital cluster with smartphone-mirroring functionality;
- Signed a strategic partnership with Valens around innovative high-speed in-car connectivity for infotainment, road safety, and automotive-control content;
- Signed an important strategic agreement with a major global premium-audio maker;
- Won a socket for intelligent power modules in a white-goods application;
- Expanded penetration of very high voltage MDMesh MOSFETs in chargers for mobile applications and adapters for home appliances;
- Registered important design wins for RF tunable capacitors from multiple Chinese smartphone markets leaders;
- Collected wins in the air-conditioning market for ultrafast power diodes.
Analog and MEMS Group (AMG)
In MEMS and Sensors:
- Gained market share with our ultra-low-power 6-axis inertial measurement unit, gyroscope for optical image stabilization, and pressure sensors in Smartphones and Wearables worldwide;
- Continued to grow in automotive and industrial MEMS Market with strong demand for multi-axis gyroscope for car navigation systems;
- Introduced SensorTile, a miniaturized wireless multisensor module that eases and accelerates new IoT-application development;
- Strengthened our position for new Android-Nougat-based products by earning Google DayDream and Tango certification for our latest-generation 6-axis inertial measurement unit;
- Agreed with Microvision to co-market MEMS mirror-based laser beam scanning solution for Internet of Things and automotive applications.
In Analog:
- Captured design wins with both SPIRIT1 subGHz and Bluetooth Low Energy wireless solutions for Smart Home and Smart Things applications, including infrared sensors, heater allocators, and presence sensors from manufacturers in Europe;
- Ramped quickly Power Line Modems for the energy meter of a major European utility;
- Benefited from strong customer engagement to gain share in HDD market with power solutions;
- Revealed a cooperative effort with WiTricity to develop innovative IC solutions for resonant wireless power transfer;
- Announced an economical, low-power high-reliable disposable wearable wireless biosensor platform we developed with HMicro;
- Received Sigfox certification of a new low-power long-range radio chip in the SPIRIT1 family that extends the reach of the IoT;
- Earned several design wins with fast battery chargers from Asian smartphone manufacturers.
Microcontrollers and Digital ICs Group (MDG)
- Unveiled the STM32H7 series of microcontrollers delivering record performance and advanced secure services for the IoT;
- Introduced new STM32F7 lines and a new Discovery Kit, based on the STM32F769;
- Extended the STM32F4 Access Lines targeting always-on sensor acquisition and general-purpose industrial applications with highly featured STM32F413 and STM32F423;
- Began delivering STM32L0 to USI for their low-cost stand-alone LPWAN module supporting LoRaWAN;
- Ramped production of the ST33G1M2 secure MCU for a leading smartphone manufacturer;
- Expanded the STSAFE secure element family with latest Trusted Platform Modules (TPMs);
- Received certification for the ST33J2M0 secure MCU from the CFA (China Financial Authentication) for mobile payments in China;
- Won sockets for ST25 dynamic NFC tag in a Home Gateway and Wi-Fi Router at a major consumer OEM;
- Started production ramp of a WLCSP EEPROM for a major Japanese smartphone camera module OEM;
- Achieved record quarterly volume shipment of memory ICs;
- Won multiple new designs in 55nm BiCMOS process technology at a leading optical module manufacturer for next-generation 400G on-board transceivers;
- Landed first design win in 7nm FinFET technology from a leading long-haul optical-cable supplier;
- Released 28-FD-SOI ASIC to production for a key customer.
Imaging Product Division (IMD)
- Expanded market leadership in Time-of-Flight ranging sensors with additional design wins and growing volume shipments to multiple leading smartphone manufacturers.
Use of Supplemental Non-U.S. GAAP Financial Information
This press release contains supplemental non-U.S. GAAP financial information, including operating income (loss) before impairment and restructuring charges, operating margin before impairment and restructuring charges, adjusted net earnings per share, free cash flow and net financial position.
Readers are cautioned that these measures are unaudited and not prepared in accordance with U.S. GAAP and should not be considered as a substitute for U.S. GAAP financial measures. In addition, such non-U.S. GAAP financial measures may not be comparable to similarly titled information from other companies.
See the Appendix of this press release for a reconciliation of the Company's non-U.S. GAAP financial measures to their corresponding U.S. GAAP financial measures. To compensate for these limitations, the supplemental non-U.S. GAAP financial information should not be read in isolation, but only in conjunction with the Company's consolidated financial statements prepared in accordance with U.S. GAAP.
Forward-looking information
Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended) that are based on management's current views and assumptions, and are conditioned upon and also involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those anticipated by such statements, due to, among other factors:
- Uncertain macro-economic and industry trends, which may impact end-market demand for our products;
- Customer demand that differs from projections;
- The ability to design, manufacture and sell innovative products in a rapidly changing technological environment;
- Unanticipated events or circumstances, which may impact our ability to execute the planned reductions in our net operating expenses and / or meet the objectives of our R&D Programs, which benefit from public funding;
- Changes in economic, social, labor, political, or infrastructure conditions in the locations where we, our customers, or our suppliers operate, including as a result of macro-economic or regional events, military conflicts, social unrest, labor actions, or terrorist activities;
- The Brexit vote and the perceptions as to the impact of the withdrawal of the U.K. may adversely affect business activity, political stability and economic conditions in the U.K., the Eurozone, the EU and elsewhere. While we do not have material operations in the U.K. and have not experienced any material impact from Brexit on our underlying business to date, we cannot predict its future implications;
- Financial difficulties with any of our major distributors or significant curtailment of purchases by key customers;
- The loading, product mix, and manufacturing performance of our production facilities;
- The functionalities and performance of our IT systems, which support our critical operational activities including manufacturing, finance and sales, and any breaches of our IT systems or those of our customers or suppliers;
- Variations in the foreign exchange markets and, more particularly, the U.S. dollar exchange rate as compared to the Euro and the other major currencies we use for our operations;
- The impact of intellectual property ("IP") claims by our competitors or other third parties, and our ability to obtain required licenses on reasonable terms and conditions;
- The ability to successfully restructure underperforming business lines and associated restructuring charges and cost savings that differ in amount or timing from our estimates;
- Changes in our overall tax position as a result of changes in tax laws, the outcome of tax audits or changes in international tax treaties which may impact our results of operations as well as our ability to accurately estimate tax credits, benefits, deductions and provisions and to realize deferred tax assets;
- The outcome of ongoing litigation as well as the impact of any new litigation to which we may become a defendant;
- Product liability or warranty claims, claims based on epidemic or delivery failure, or other claims relating to our products, or recalls by our customers for products containing our parts;
- Natural events such as severe weather, earthquakes, tsunamis, volcano eruptions or other acts of nature, health risks and epidemics in locations where we, our customers or our suppliers operate;
- Availability and costs of raw materials, utilities, third-party manufacturing services and technology, or other supplies required by our operations; and
- Industry changes resulting from vertical and horizontal consolidation among our suppliers, competitors, and customers.
