Q: For the first time since 2007, STMicroelectronics posted a profit in Q1 2010 as consumer demand significantly rebounded from the recession. To meet increasing consumer demand, the company also announced plans to expand its capacity. In what areas is the company increasing capacity?

A: In line with our continuously upgraded product range, we are working hard to serve growing customer demand, and we continue to focus on improving the company's profitability. We are also improving our supply and capacity in several key areas:

• We are growing our 8-inch capacity in smart power technology in Italy.
• We are adding 12-inch capacity in advanced CMOS technology in France.
• We are expanding the procurement of wafers from silicon foundries.
• We are increasing the throughput of our 6-inch power and analog facility in Singapore.

Q: In 2008, STMicroelectronics and NXP merged their wireless chip businesses. Then in early 2009, Ericsson Mobile Platforms and ST-NXP Wireless merged to form ST-Ericsson, further transforming the industry. As we are now in 2010, do you still believe more consolidation is needed in the wireless chip industry? If so, why?

A: ST-Ericsson was the first to consolidate, and we continue to see consolidation worldwide as the market is still too fragmented. Currently, the top five mobile phone vendors are supplied by 15 semiconductor vendors. However, this situation is not sustainable for most of these semiconductor vendors because of increasing costs. Technology development moves rapidly, and success in this market requires substantial research and development (R&D) investment. And of the 15 semiconductor suppliers, only a few can afford to make this significant scale of R&D investment.

Q: In March, STMicroelectronics was named one of the "World's Most Admired Companies" in the semiconductor category by Fortune magazine largely because of its R&D efforts. And it is well known that R&D costs are high in the sectors that STMicroelectronics participates in. Therefore, how does ST go about providing the high-speed innovation that its customers demand and at a low cost?

A: ST has one of the broadest technology and product portfolios in the industry. We restlessly seek and leverage synergies across the company's product lines to meet our customers' high-speed and low-cost needs. We believe that this serves us well in an era of convergence. ST also leverages partnerships, with each company focusing on its core competency, when it makes business sense to co-develop technologies with competitors. Two examples of this would be our participation in the International Semiconductor Development Alliance (ISDA) for advanced CMOS development and our collaboration with Freescale for the development of Performance Optimization with Enhanced RISC - Performance Computing (PowerPC) microcontrollers for automotive applications.

Q: STMicroelectronics is supplying a wireless microelectromechanical systems (MEMS) sensor in Sensimed AG's medical product Triggerfish, which will enable the better management of glaucoma patients during earlier diagnosis and treatment. What other healthcare areas does the company plan to target with its technology? What differences lie in working with medical electronics suppliers compared to other industries?

A: Molecular diagnostics is an area that is of interest to us. ST leverages the microfluidics capabilities that we developed in our print head products for DNA diagnostic microsystems. We also use microfluidics for micropumps which can be used in glucose delivery systems for diabetes treatment. Remote patient monitoring systems, from sensing vital body signals to local signal shaping and processing and wireless transmission to monitoring stations over the network, is another area of great interest to us and is of potentially great value.

The key difference between serving the medical sector versus others is the qualification process required. While ST and other companies in the semiconductor industry have always had high-quality standards, the IC qualification process for medical applications requires an understandable level of tracking along the manufacturing process that is far higher than what other markets require. As we aim to create entirely new medical applications with the use of silicon, we have to understand our technology and educate all the players along the healthcare value chain about its benefits and useability.

Q: STMicroelectronics announced plans to release a new generation of "3-D ready" set-top box (STB) ICs. With recent debate concerning the health effects associated with 3-D technology, do you expect it to remain an exciting emerging market? What will be needed to accelerate the use of 3-D applications?

A: Consumers have shown great interest in 3-D entertainment, and our customers are looking for this capability in the chipsets they want to buy. We need 3-D content, so this market will take off.

The two factors that will accelerate the use of 3-D television and entertainment are the increasing availability of 3-D content and the increasing affordability of STBs and TVs that display 3-D content. We saw a similar ramp in the high-definition (HD) market, and we'll see that ramp in the 3-D market as well.

The increased adoption of 3-D applications will stem from native 3-D content that is increasingly produced as well as from self-produced 3-D content enabled by stereoscopic camcorders, cell phone cameras and features that add a pseudo third dimension to existing 2-D content. The user interface will also exploit 3-D displays.

Q: STMicroelectronics has promoted creating a sustainable business through green practices long before the industry took notice of its importance. How has the company helped customers and the industry reduce its environmental footprint?

A: ST's products strive to consume less power when active and are extremely energy-efficient in standby mode. In addition, our products make the systems in which they are used in increasingly efficient. Over the last 15 years, ST has reduced its consumption of water and electricity by 50 percent and 70 percent, respectively. Furthermore, we have reduced the waste and carbon dioxide (CO2) generated for each wafer of equivalent diameter produced by 15 percent and 70 percent, respectively.

In addition to the environmental benefits of consuming less energy and water per unit of production, and producing products that help our customers consume less energy, our environmentalism has produced significant bottom-line benefits. For example, ST's total savings and net savings in 2008 were an impressive $303 million and $262 million, respectively. And total savings from 2000 to 2008 exceeded $1 billion. These are extraordinary results, and we are exceptionally proud of our environmental achievements, proving that "green is back."

Q: ST's Chief Executive Officer Carlo Bozotti is a member of the European Commission's key enabling technologies (KET) initiative which seeks to improve European competitiveness in high-technology industries. What areas do you feel Europe currently excels in and can leverage to command greater global share?

A: European companies will continue to lead in competitiveness, developing vital technologies in the automotive, communications and industrial fields and bringing these technologies to market. From the days of Gottlieb Daimler, who is widely credited with founding the automotive industry, Europe has always been a leader in the automotive market. Think of the leading automotive names, and many of the names that quickly come to mind are European. And these companies are supplied by other European leaders such as ST. Europe has experienced similar success in the communications market. Again, think about who the largest manufacturer of cell phones is. Europe has also done extremely well in the industrial market.

There is also a range of emerging markets wherein Europe's expertise can be applied for the benefit of the European and global society. These markets include energy conservation and healthcare. Europe has a strong interest in addressing the aspirations and expectations of its people and of those around the world in these two areas by using its broad, multi-disciplinary science and technology research; tradition for collaborative research; and its leading system companies. First, we need to ensure that energy is consumed as efficiently as possible to allow the world's nearly seven billion people to develop their societies to their fullest capabilities without exhausting the world's energy resources. And our efforts in healthcare are meant to enable people to live life to the fullest while keeping costs under control and medical resources—doctors, hospitals and labs—operating efficiently. European medical applications that show promise include remote patient monitoring and disease diagnosis, which take a doctor's observation skills and technologies from hospitals, offices and labs directly to the patient. One particular technology that can contribute to these capabilities—and in which Europe is in a very strong competitive position—is MEMS.