Field Trip 2006 - London, May 23rd State of the Market Jean-Philippe Dauvin Group Vice President Chief Economist
Field Trip 2006 - London, May 23rd
State of the Market
Jean-Philippe DauvinGroup Vice President
Chief Economist
Jean-Philippe DauvinState of the Market
The World Economy in 2006The World Economy in 2006
Rest of Asia5%
India6%
China16%
Central & Latin America
8% Middle East & Africa
4%
Former SSR8%
North America23%
Europe23%
Japan7%
Estimated in purchasing power paritySource : BIPE
$50 trillion; 30% larger than 5 years agoWW Growth in 2006 around 4%
2006 growth3%
2006 growth6%
Jean-Philippe DauvinState of the Market
0
1
10
100
1000
1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005
SC Market $ Billions
-25%
0%
25%
50%
75%SC Market % Growth
SC Market % Growth SC Current Market Trend Line
Source : WSTS, ST
Semiconductor Market CyclesSemiconductor Market Cycles
Jean-Philippe DauvinState of the Market
First Quarter 2006 Semiconductor Market Results
2.9%2.4%1.1Other Memory45.4%-12.8%3.0NAND
7.3%-1.3%59.1Total Market
2.7%-5.4%2.0NOR8.9%-1.9%23.0ASP
-8.9%6.4%3.0MCU20.1%3.1%3.7Std Lin. & Logic
1.8%0.5%3.8Discrete10.5%-0.1%3.9Opto-3.3%5.8%6.6DRAM6.8%-4.9%8.8MPU
Year-on-year growth (%)
Sequential growth (%)$B marketProducts families
Source : WSTS
Jean-Philippe DauvinState of the Market
Semiconductor Market Cycle Build-UpSemiconductor Market Cycle Build-Up2004
CapacityCapacityCapacity$247 B$227 B$213 B
Silicon PervasionInventoryEnd-demand
2006 Est.
Silicon PervasionInventoryEnd-demand
2005
Silicon PervasionInventoryEnd-demand
Source : WSTS, ST estimates
19%
9%5%
2%
28%
2%7% 6.5% 8.5%
UnitGrowth
ASPGrowth
MarketGrowth
UnitGrowth
ASPGrowth
MarketGrowth
UnitGrowth
ASPGrowth
MarketGrowth
Jean-Philippe DauvinState of the Market
2006 End-Demand Assumptions2006 End-Demand Assumptions
140
178204
76150
132718
18165
14627
150M of units ’06
Personal Medical
HDD <3.5”HDD 3.5”PC LaptopPC Desktop
3G Handsets2G & 2.5G Handsets
MP3 + PMPGaming
Digital STBDigital TVAnalog TVMajor Applications Growth over ’05 (%)
10%
29%0%
17%2%
-3%
40%18%
28%110%
-6%
95%
Source : ST estimates
Jean-Philippe DauvinState of the Market
Semiconductor Inventory Level TrendsSemiconductor Inventory Level Trends
1.0
1.5
0.3
-0.7
0.1
1.0
1.8
1.00.7 0.6
-0.3
-0.7
-0.2
0.2
Q103
Q203
Q303
Q403
Q104
Q204
Q304
Q404
Q105
Q205
Q305
Q405
Q106E
Q206E
Excess semiconductor inventories relative to target
(US$B)
Source : iSuppli
Depletinginventory
Buildinginventory
Jean-Philippe DauvinState of the Market
23%26%
23%21%
Q1 05 Q2 05 Q3 05 Q4 05
Capex-to-sales ratio
%
21% 20% 21%19%
Q1 06 Q2 06E Q3 06E Q4 06E
Capex-to-sales ratio
%
Capital Spending TrendCapital Spending Trend
Capex2006 over 2005
8% growth$50B
Avg. ’0620%
Capex2005 over 2004
-2% growth$47B
Avg. ’0521%
Source : ST Estimate
Jean-Philippe DauvinState of the Market
12%
8% 8%7.3%
Q1 06A Q2 06E Q3 06E Q4 06E
Y-o-Y growth %
-1.3%
2%
5%
2%
Q1 06A Q2 06E Q3 06E Q4 06E
Sequential growth %
2006 Semiconductor Market GrowthForecast by Quarter2006 Semiconductor Market GrowthForecast by Quarter
Source : WSTS, ST
2006market growth
8.5%
2006market size
$247B
Jean-Philippe DauvinState of the Market
2006 Semiconductor Market Growth ForecastProducts Families
Source : ST estimates
26%13.4NAND
2474.4
8.596.712.215.315.717.127.136.4
$B in ’06
8.5%Total Market
1%MCU
Growthover ’05 (%)Products families
1%
6%9%
15%3%
15%6%4%
Other Mem.
NORASP/DSP
Std Lin. & LogicDiscreteOptoDRAMMPU
Jean-Philippe DauvinState of the Market
2006 Semiconductor Market GrowthMacro-Segments2006 Semiconductor Market GrowthMacro-Segments
10%
9%
6%
8.5%
9%
6%
Telecom
Consumer
Automotive
Computer
Industrial & Other
Total market
Source : ST estimates
Jean-Philippe DauvinState of the Market
Economic Imbalances Generate Market Potential
Source : International Labour Office, Estin & Co, ST
0102030405060708090
100110120
0 500 000 1 000 000 1 500 000 2 000 000 2 500 000Active population (in thousands)
M onthly salaries(incl. charges)
India
Euro Zone
USA Japan
South Korea + Taiwan
Eastern Europe
BrazilMexico
Russia ChinaIndonesia
New applications
New customers
Jean-Philippe DauvinState of the Market
New Application and New Customers Drive Semiconductor MarketNew Application and New Customers Drive Semiconductor Market
Subscriber growth momentum continues : 84.3 million subscribers at the end of February 2006
2006
India sixth-largest cellular market subscriber base : 75.3 million subscribers at the end of 2005, 48 million at the end of 2004
2005
India cellular connections exceeded fixed-line
2004
We project 280 million subscribers by 2010, Only 24% of population equipped
CustomerApplication
$16
$4 $3$11
$68
$18
$7
$32
Semi Display Battery Others (incl.Electromechanical)
Handsethigh-end
3G cost : $125
Handsetlow-end
cost : $34
Source : iSuppli
Jean-Philippe DauvinState of the Market
975 915 900 9601130 1200 1290 1350 1420 1500
1060
2000 2001 2002 2003 2004 2005 2006E 2007E 2008E 2009E 2010E
US$B
Source : iSuppli, ST
Looking Ahead:World Electronic Systems GrowthLooking Ahead:World Electronic Systems Growth
6%5%4%8%6%7%10%7%-2%-7%15%
Annual growth
rate
Back to growthat 6% per year
Low growthat 2% per year
Jean-Philippe DauvinState of the Market
Semiconductor Market GrowthSemiconductor Market Growth
0
50
100
150
200
250
300
350
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
E
2007
E
2008
E
2009
E
2010
E
$B worldmarket
Source : WSTS, ST
2% per year 8% per year12% per year
Developed countriesinstalled-base renewal
Equipping developed countries Developedcountries saturated Equipping developing
countries
Jean-Philippe DauvinState of the Market
Semiconductor Market Forecast 2005-2010Product FamiliesSemiconductor Market Forecast 2005-2010Product Families
Source : WSTS, ST
2010 : $340B
8%MPU
7%MCU
5%DRAM
5%Discrete
8%Total Market CAGR 2005-2010
8%Std Lin. & Logic
11%ASP
11%Flash
12%Opto
CAGR 2005-2010 % 2010 Market Breakdown
DRAM10%
MCU4%
ASP41%
Opto8%Flash
11%
MPU14%
Discrete6%
Std Lin. & Logic
6%
Jean-Philippe DauvinState of the Market
Semiconductor Market Forecast 2005-2010ApplicationsSemiconductor Market Forecast 2005-2010Applications
Source : WSTS, ST
2010 : $340B
7%Industrial & Govt
8%Total market CAGR 2005-2010
CAGR 2005-2010 %
9%Automotive
8%Computer
9%Consumer
10%Telecom
2010 Market Breakdown
Industrial & Gov't9%
Telecom25%
Automotive8%
Computer42%
Consumer16%
Jean-Philippe DauvinState of the Market
Semiconductor Market Forecast 2005-2010RegionsSemiconductor Market Forecast 2005-2010Regions
2010 Market Breakdown
Europe15%
Japan17%
Other Asia/Pac.
31%
Americas16%
China21%
2010 : $340BSource : WSTS, ST
15%Developing regions
6%Developed regions
5%Japan
8%Total market CAGR 2005-2010
CAGR 2005-2010 %
11%Other Asia/Pac. Including India
6%Europe
6%Americas
18%China