Following a flat 2019 in which full year revenue was $9.56 billion, STMicroelectronics plans to invest $1.5 billion in strategic initiatives to achieve its mid-term target of $12 billion revenue.

The investment includes additional capacity for existing technologies, in mix evolution for 200mm fabs, in R&D support, and in maintenance of manufacturing operations. Some $400 million of the capex investment will be spent on fab upgrades and new substrate technology development. This includes work on the new Agrate fab to support BCD, IGBT and other power technologies; R&D for GaN power technologies; production ramp up for GaN; and investments in silicon carbide and substrate activities following the Norstel acquisition, particularly in driving the evolution of 200mm silicon carbide (SiC) wafers at the plant.

Speaking during the company’s financial results webcast this week, president & CEO Jean-Marc Chery said its SiC revenue would grow to above $300 million in 2020. In 2019, STMicroelectronics generated 80% of its SiC revenue from just one customer, but with discussions ongoing for 50 projects with 26 customers, the company expects that in three years’ time the dependence on that one customer will be reduced to 50%.

Chery said, “We plan to return to solid revenue growth, outperforming the markets we serve. Smart mobility, power and energy management, the IoT and 5G are driving demand for semiconductor content. ST is very well positioned to support its customers across these trends, thanks to our product portfolio, enabled by our differentiated technologies.”

As highlighted in previous quarters, Chery emphasized the poor performance of automotive product sales driven by a soft automotive market, but on the other hand good demand for electrification and digitalization of car systems and platforms. He said, “The legacy automotive business, which is closely linked to the number of car registrations worldwide, faced a challenging situation, with global registrations down 5% in 2019.” He continued, “Car registrations will continue to be flattish, but the movement to electric powertrains and hybrids is a solid trend.” Marco Cassis, head of sales and marketing for ST, added, “This year, stabilization and increase of penetration of ADAS will help us grow.”

In the industrial market, ST said that while Asia saw growth, the U.S. stopped declining and was flat, and Europe was declining. Meanwhile, it saw solid demand for its key products in personal electronics in all categories, such as smart phones, accessories and wearables, and with some early contribution from 5G smartphones. From its communications equipment group, ST saw growth in products for 5G infrastructure, which compensated for the wind-down of its legacy ASICs and set-top box business.

On the outlook for the first quarter of 2020, Chery said, “On a sequential basis, revenues from all of our three product groups are expected to decline in what will be a shorter and seasonally lower quarter, though we anticipate better than usual seasonality for personal electronics products. On a year-over-year basis, main revenue growth drivers are expected to be personal electronics products — mainly imaging and analog products — general purpose microcontrollers and silicon carbide products.”