ST's CEO plays down Philips merger option
Carlo Bozotti, president and CEO of STMicroelectronics NV, has played down the possibility of a merger with, or takeover of, Philips Semiconductors, raising the lack of geographic complementarity as an issue.
"A merger with Philips Semiconductors is not on the agenda," said Bozotti in response to a question posed at a press and analysts' conference in Paris that was broadcast over the Internet.
The questioner asked whether STMicroelectronics had any interest in Philips Semiconductors, now that Royal Philips Electronics has said it intends to put the semiconductor division up for merger to try and achieve greater economies of scale and first mover advantage in a consolidation of the semiconductor industry.
Philips Semiconductors' CEO Frans van Houten had also raised geographical complementarity as a consideration when asked a similar question a few days before.
Earlier in the press and analysts' conference Bozotti had spoken about alliances and partnerships saying that alliances and partnerships were pending that offered the possibility of adding scale to ST's operations. However, this discussion took part in the context of ST's memory business.
STMicroelectronics executives had also emphasized that collaboration with Freescale Semiconductor Inc. and Philips Semiconductors at Crolles-2, a joint research facility near Grenoble France, had intensified in 2005. The collaboration moved from just manufacturing processes to included wafer-level testing, packaging and the development of common intellectual property (IP) libraries and IP blocks, the executives said.
"We have a roadmap of alliances with customers, but also with competitors. We have initiatives that we will announce shortly," Bozotti told the audience.
"The five-year plan of the company is based on organic growth, not on acquisition. Of course we are vigilant and in a position to look at opportunities if opportunities may come," he said.
But Bozotti said a number of things had to be considered to make an acquisition or merger right.
"The first is return on investment. Other considerations are the synergies in terms of products, the complementarities and efforts of restructuring. Lastly there is geography, which is very important. We have European roots. We would have a different approach if the partnering opportunity was in Japan where we are still marginal, or in the United States."
- Peter Clarke