STRATEGY ANALYTICS: Freescale - ST Alliance Puts Squeeze On Infineon In $16 Billion Automotive Semiconductor Market; Partnership To Expand PowerPC Market Position

Business Wire, Feb 15, 2006

BOSTON -- Freescale and ST Microelectronics together last week announced the establishment of an IP cross-licensing agreement intended to reinforce their respective positions as leading semiconductor suppliers to the automotive electronics industry. Freescale's 32-bit PowerPC microcontroller core and ST's high voltage PowerMOS and IGBT technology IP will be shared, their 90-nm embedded Flash process technologies aligned, and a microcontroller joint design team created. In the current Strategy Analytics Vendor Market Share analysis, the two companies are shown to jointly control 21 percent of the $16 Billion automotive semiconductor market.

This Strategy Analytics analysis demonstrates that, based on 2004 sales, Freescale at $1.8 Billion, and ST at 1.3 Billion, hold the number one and number three positions in the automotive semiconductor market, sandwiching competitor Infineon, which sold $1.4 Billion (9 percent).

"With severe price pressure coming down the supply chain from the automotive OEMs, Freescale and ST are expecting the alliance to help control rising new product development costs and help entrench their positions in the market against such rivals as Infineon and Renesas," said Chris Webber, VP Automotive Practice at Strategy Analytics. "More importantly, Freescale's PowerPC faces tough competition in the expanding automotive 32-bit processor market. This joint microcontroller design and licensing alliance with ST is intended to help secure the future market position for the PowerPC architecture."

Automotive Semiconductor Top 5 Vendors

               Automotive Sales 2004
Vendor              (Billion $)            Market Share (%)
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Freescale              1.8                      12.0
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Infineon               1.4                       9.1
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ST                     1.3                       8.3
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Renesas                1.0                       7.0
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NEC                    0.9                       6.2
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Strategy Analytics, Inc. - a global research and consulting firm - provides timely insights and strategic business solutions to companies operating at the convergence of information, communications and entertainment technologies. With worldwide headquarters in Boston, MA. and principal offices in England, France and Germany, Strategy Analytics focuses on market opportunities and challenges in the areas of Automotive Electronics & Multimedia, Digital Consumer, Wireless Strategies and Enabling Technologies. For more information, see www.strategyanalytics.com