STMicroelectronics (ST), a long-time leader in the China semiconductor market, was one of the first semiconductor manufacturers to set up operations in China when it opened its first office in Beijing in the mid 1980s. Since then, ST has established a strong integrated presence in the country, encompassing not only a highly successful Sales and Marketing organization but also important manufacturing, design, and research operations. Today, ST’s Greater China organization employs around 4500 people in the country, of whom more than 1000 are dedicated to design, application support, and sales and marketing. Since 1999, the Company’s sales in China have steadily outperformed the market. ST sales in China have been growing at a compound annual growth rate of 31%, compared to 24% for China’s semiconductor industry as a whole, while the worldwide semiconductor market has grown at 7% annually over the same time period. In 2006, ST was the fifth largest semiconductor supplier in Greater China (China, Hong Kong, and Taiwan). The region is expected to make up one fifth of the global semiconductor market within the next five years. ST’s strengths in multimedia, digital consumer, telecoms, and industrial applications are particularly well aligned with the needs of the Chinese market.

ST’s products were first distributed in China through its sales office in Hong Kong but when China opened its doors to the world in the 1990s, ST immediately recognized the opportunity and set up liaison offices in the mainland. This was followed by the establishment of a strong network of distributors and sales/liaison offices across the country, with main sales offices in Beijing, Shanghai and Shenzhen. In 2002, ST opened an advanced logistics facility in Shanghai’s Waigaoqiao zone, consolidating the Company’s distribution and warehousing operations in a market characterized by its huge geographical area and fast-changing dynamics.

In keeping with its principle of establishing a truly integrated presence in the major macroeconomic regions, ST set up its first assembly and test plant in China in 1994. Located in the Futian Free-Trade Zone of Shenzhen, the plant is one of the best in the world with its state-of-the-art technology. Operating as part of a joint-venture agreement between STMicroelectronics and Shenzhen High Tech Industrial Company Ltd (SHIC), a subsidiary of the Shenzhen Electronics Group (SEG), the Shenzhen STS Microelectronics back-end facility packages and tests a wide range of semiconductor components, including PowerMOS transistors, application-specific ICs, camera modules, and standard linear devices. It is one of the largest packaging and test facilities in China, currently employing more than 3000 people.

In November 2004, ST announced a joint venture with Hynix Semiconductor of Korea to build a front-end wafer manufacturing plant for memory chips in Wuxi City, Jiangsu Province. ST's participation in this leading-edge facility, which is now in full production, has been transferred to Numonyx™, an independent semiconductor company that combines what had been ST's NAND and NOR Flash activities with the NOR activities from Intel.

Complementing ST’s manufacturing presence in both back-end and front-end are ST’s design centers in Shenzhen and Shanghai, established to cater to the growing local demand for microchips tailored to the Chinese market. Established in 1996, the Shenzhen Design Center’s ability to provide world-class silicon design from specification definition to volume production has won the center recognition from the Chinese government as one of the most advanced custom IC design facilities in the country. ST’s design activities in China were further extended in 2002 with the creation of a joint ASIC design center set up with the Shenzhen Graduate School of Tsinghua University. This center’s charge is to design and develop application specific integrated circuits (ASIC) using advanced digital and mixed-signal technologies, in which ST is a worldwide leader. Another design center was opened in Shanghai at the end of 2004 to serve the flood of new companies that were setting up operations in the vicinity.

The Company’s commitment to providing world-class support to local customers was further enhanced with the establishment in 2002 of a competence center in Beijing dedicated to providing design, development, and engineering support for advanced chipset solutions to meet particular domestic requirements. This center actively works with major universities, research partners, and local companies in China on joint projects. Current projects tailored to specific Chinese technology requirements include developing competence in China’s particular digital TV technologies and the cooperation with China’s Institute of Computing Technology on the development and commercial exploitation of high-performance, low-power microprocessors for computer systems.

As localization of solutions for China customers becomes more important, ST has also set up competence centers in Shanghai and Shenzhen staffed with technical specialists to handle the design and development of reference solutions, technical support, and joint development work for a wide range of applications. These competence centers supplement ST's existing centers in other parts of the world and allow the Company to deploy its worldwide resources and broad portfolio of leading-edge technologies to meet the particular local needs of the Chinese market.

As a further sign of full commitment to the area, in 2005 the Company created a new ‘Greater China’ region, covering its operations in China, Hong Kong, and Taiwan, and appointed a fully dedicated Corporate Vice President to manage it. The establishment of the Greater China organization has been a vital step in strengthening ST’s success in the world’s fastest growing economic zone.

In April 2008, ST opened its new Greater China Headquarters in the Min Hang District of Shanghai. The $25 million building, which can house 1,200 people, underlines ST’s ongoing commitment to the region and the future growth of China’s IT industry.

April 2008