Un year on the roller coaster. But in the end St, the Italian-French group of components hi-tech, closed with renewed certainties and a boost that comes fromautomotive and electronics, both industrial and consumer. Jean-Marc Chery, president and ceo of the group, ended its first three-year term. In this interview he talks about the next three years.
Engineer Chery, St was the protagonist of a singular story. Due to the Covid-19 pandemic, you were forced to restrictively modify your own business forecasts during 2020, only to return to retouch them a few weeks ago but in the diametrically opposite sense. What happened?
2020 was a very special year and St performed very well in the end. For the first half of the year it was very heavy and its effects were projected forward. So we communicated to the market that we would not reach the 12 billion that represents our ambition by 2022. But as we acknowledged this slowdown, the market was reacting strongly in the opposite direction. So from quarter to quarter we had to change our perspective again, this time in a positive way. The market has responded with a very strong recovery and our entire supply chain has been put under stress to be able to respond to a very strong order growth.
But what triggered the recovery? Which sector in particular?
it was a general recovery: personal electronics, smartphones, PCs, accessories, then everything started running. China has increased domestic demand for electronics. The automotive industry changed pace at the end of the summer. An unexpected recovery, which affected three of the four sectors on which the semiconductor business of St.
Let’s talk about automotive. How is the transformation of automotive power supplies impacting ST’s business?
The auto industry is undergoing the most profound transformation since its inception. Electric engines require a completely different specificity than internal combustion engines. And we are deeply involved in the supply chain of this industry. There are massive investments to increase the production capacity of electric cars and we are rapidly moving towards a rebalancing of the sector. Today the market is divided into three, between petrol, hybrid and full electric. a transition. From one to another. We are seeing the birth of a new car, where autonomous driving – another area in which we are a leader – will be ever closer, with a series of tools made available also for low-end cars. In all this digital will play a fundamental role and St ready to support this transformation.
He believes that the ongoing trade war between the US and China could impact the auto market. I am thinking above all of the components, of the batteries in the power supply. And will these factors impact St?
No, I don’t think there can be any complications for us in the automotive sector. We have had consequences deriving from the American policy on Huawei regarding communication infrastructures and then smartphones. But I don’t think the same will happen on the car market.
The ongoing trade war has touched Huawei, that an important customer of yours …
Huawei is a major customer of ours in the field of personal electronics and 5G communications infrastructure, but we have not obtained licenses for some specific products for them, while we have had few licenses to supply them with standard products. Of course, the US blockade affected our sales to this customer. But St has decided to freeze Huawei’s contribution to its accounts, despite St being an important partner for the Chinese manufacturer.
What impact did Covid-19 have on St 2020?
The first part of the year was very heavy for production activity in some areas of the world, especially when the lockdown hit China, the Philippines and Malaysia. We have seen production plants completely closed, not for a long period, from one to three weeks, with the activity completely zeroed. This has created huge problems on the logistics and supply chain. We too had a few days of closure, albeit a few, in Asia. Luckily St managed to never shut down any of its front-end factories. The governments of France, Italy and Singapore have declared our activity strategic and this has allowed us to move forward in production. But the industry as a whole has suffered serious difficulties due to Covid. Our staff has shown great professionalism, allowing us to never stop production, research and development, product development, and so on, even in the most difficult weeks. And this is a great merit of all those who work in St. If we then broaden the observation point, we see that Covid has given a great boost to all the technologies related to the effect Stay-at-home: pc, tablet, video games, etc ..
St appears stronger today than it was a year ago. And you recently spoke of St in the medium term as a $ 12 billion company. How do you expect to achieve such an important result?
The first thing worth highlighting is our product portfolio. through this portfolio that we will be able to achieve the ambition of 12 billion in turnover. Staying focused on the market, which is the most important of all. Our position, focused on some mega trends in continuous growth – smart mobility, power and energy control, e personal electronics – I am convinced he will be able to give the boost, the acceleration to our accounts, in the coming years. Capital expenditures will give us the structure to sustain this growth.
In this vision, what will be the role, the weight, of your factories in Italy?
Italian productions are essential above all to support the global automotive market in a perspective of evolution. From lighting to controlling the driver’s conditions, to the brakes, up to intelligent engines. We as St want to implement the capacity of these features by following development guidelines that do not appear in question. Specifically, I believe that the Agrate Brianza site plays a role in the development of smart power technologies. And the development of the new 12-inch factory within the Agrate site will be central not to the 12 billion turnover we are aiming for, but to the next step, the $ 15 billion ambition. As for the Catania plant, this is a world center of excellence in power, on silicon and on silicon carbide. In this field, I repeat, Catania is a point of reference worldwide.
She was born to Italian and French parents. A bit like what happened in recent weeks at Stellantis, a product of Fiat and Peugeot, or rather of FCA and PSA. How do you see this merger and what impact will Stellantis have on the car market?
My opinion, as always when making this kind of merger, that the increase in the scale of the company will certainly bring benefits to the new group. Especially in a market, such as the car market, which is undergoing a costly technological transformation. the most important transformation of the last hundred years, since the car stopped being a phenomenon of the few to become a mass market. The new size scale will allow Stellantis to have all the resources available to face the challenge of new engines, from electric to hydrogen. And this regardless of the car brand, be it Fiat or Maserati, Peugeot, Opel or Jeep. The technological content will be the prize on the market, on markets all over the world. For them the challenge will be above all in Asia. They are born very strong in Europe and in the United States, but if Asia wants to grow, the market needs to be developed. It is on that market that the transformation of the engines, from the internal combustion engine to the electric one, will be decisive for the success of the group.
Is there a particular geographic area in the next couple of years that St intends to focus on?
The semiconductor market is a world market and we want to be the European leader in this market. Let’s not forget that St accrues more than 95 of its turnover outside the markets of France and Italy and that you cannot survive in the semiconductor market if you do not turn to the global market. I would like to be able to focus our activity on the markets of France and Italy, from which St was born, but that is not possible: we would like to have leaders like Blunder but Europeans! St a global company, focused on four sectors: automotive, industrial electronics (from industrial robots to household appliances), personal electronics (smartphone, tablets, accessories) and communication networks. But very important to be a manufacturing company based in Europe, therefore that produces and does research in France and Italy.
He spoke of a global St. How do you assess the Biden administration’s arrival in Washington?
The choices of the previous American administration in the next three years will weigh on the accounts of ST, I am referring to the banning of Huawei products, for potential revenues of one billion dollars. That said, I firmly believe that America is one of the great democracies in the world. It has recently elected its new president and the new president is setting up the new administration and defining new policies. I am convinced that the new economic policy of the United States will take into account the different dynamics present on foreign markets, with particular reference to China.
But what do you expect from the Biden administration?
A period of calm, of peace, in which the vision towards businesses and partners is clear. It would be a big step forward compared to the chaos of recent months, when at a certain point the greats of social networks disconnected a President and on the other hand some states intervened in the choices of private companies. time to get back to the business and its rules.
Maurizio Tamagnini, president of the supervisory board of St, in recent days has publicly asked you to extend your commitment in favor of St, as CEO, also for the next three years. The best judgment for his first three years as CEO. What do you think?
I joined St in 1986. I started out as a customer service support engineer. From the first days my dream was to become the CEO of this extraordinary company. If they ask me to continue I have made my dream come true !.
© REPRODUCTION RESERVED