Home Entertainment & Displays Group Philippe Lambinet Executive Vice President HED Group
Leader in Multimedia Convergence Solutions Home Video & Integrated Silicon Solutions Set-Top Box High Definition DVD Multimedia Player Audio Analog Audio Amplification Digital Audio Amplification Digital Signal Processing TV & Monitor Digital TV Large-LCD Driver TV Sound Processor Internet TV e-paper Display port 2
ST s Targeted Segments: Focusing on Fast Growing Markets 2007 Rankings*: #4 Digital Consumer Communications Automotive Digital Consumer Computer Peripherals Industrial Source: isuppli, March 2008 3
Digital Consumer: Positive Momentum Digital Consumer Sales (ex Flash) FY07: +10% Q108: +9% excluding Genesis Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108* *Q108 results include Genesis 4
ST Leading MPEG SoC Supplier 2007: 78Mpcs MPEG decoders shipped worldwide +24% Y-o-Y Set-top Box >10Mpcs single-chip H.264 shipped since 2005: STi710x and STi520x family of devices Majority of products in leading-edge technologies, sampling 65nm Leader in Operator markets: Cable, Satellite and IPTV Solid position in retail markets (Free-to-Air): Satellite and Terrestrial Digital TV Addressing market with STB Plug-in solutions >10Mpcs MPEG shipped in Digital TVs since 2006 Leading supplier of MPEG for European DTV market Now shipping H.264 in Digital TVs: STi710x family Acquired Genesis: integrating image and video processors into ST s product offering 5
Genesis Acquisition: Strategic Rationale Enables ST to be at the forefront of the integration and convergence trends that are reshaping the marketplace Natural strategic fit / complementary technologies (image quality and image coding) ST is a leader in digital consumer technologies, with a strong position in set-top box compression / decompression technologies and front-end processing technologies in digital TV Genesis is a leader in back-end image processing, video quality and digital interconnect technologies Ensure expanded market presence--both current and future generation DTV solutions Exploit technology leadership: video processing chain 1080p120Hz Fast execution capability at platform level Genesis s major customers include LG Electronics, Toshiba, Samsung and Dell Accelerate the penetration of DisplayPort into the consumer electronics market An innovative technology for display interconnect Improve positioning via ST s leadership in the set-top box market Synergies from sales leverage, scale, cost savings and best-in-class R&D capabilities ST to strengthen its leadership position in the fast growing DTV market 6
Genesis Acquisition: Integration Status Effective control acquired on January 17th, 2008 All-cash offer of $8.65 per share Payment of about $170M, net of cash and equivalents, at closing, for the acquired shares Annual sales of approximately $200M Actions already implemented Team fully integrated with ST s TV and monitor team Roadmap redefined and committed, leveraging both ST s & Genesis IPs 2008 Action Plan / Priorities Exploit cost synergies Tape out next-generation single-chip TV: Freeman Integration on track & clear roadmap defined 7
ST s Consumer Growth Opportunities Home Connectivity New generation H.264-65nm / 55nm idtv / Genesis IPTV HD, H.264, DTV, DVR, Video over IP 2007 2008 2009 2010 2011 8
2008: Strategies for Growth Set-Top Box Capture market share in high-value applications Provide added-feature applications early to market Partner with OEMs, Operators, CA vendors, 3rd parties Accelerate move to smaller lithographies (90nm to 80nm, 65nm, 55nm) Digital TV Leverage set-top box expertise Target new high-volume applications Leverage Genesis products, sales and cost synergies 9
ST: # 1 in MPEG Over 465 Million MPEG Decoders Shipped Highest shipment in one year 465 465 1-chip H.264 387 IPTV & idtv 324 Terrestrial 263 ST introduces first MPEG-2 decoder ST introduces OMEGA SoC Satellite 75 100 140 195 2 6 10 18 35 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Cumulative MPEG-2 & MPEG-4 Shipments (Mu) 10
2007: ST Leading the MPEG Market Mu 80 70 60 43% 54% 21% #1 WW MPEG supplier #1 in Operators #1 in H.264 #1 in idtv Europe Solid position in FTA 50 40 30 42% 20 10 0 SAT CABLE DTT 37% IPTV idtv (in 2006) STMicroelectronics was the top supplier of MPEG-2 MP SD set top box decoder ICs and H.264 decoder ICs. instat, Jun 07 ST Others % Share Source: ST, IMS Research (Dec. 2007) STMicroelectronics led the Q307 IC market with stand-alone MPEG-2 processors shipping into DVB-T TVs. DisplaySearch Quarterly TV Report, Nov 07 11
Set-Top Box: Forthcoming Strong Market Growth 250 200 $100 Market Opportunity Ranking (2007 2012) Application Digital TV Overall Equip Semi 1 1 Digital Set-Top Boxes 2 2 150 Home Audio-System Components 3 3 PMP / MP3 Players 4 3 100 Digital Picture Frames Video-Game Consoles 5 5 6 5 DVD Video Recorders 7 7 50 Digital Still Cameras DVD Video Players 8 9 7 7 Handheld Video Game Players 10 10 0 2007 2008 2009 2010 2011 2012 $50 Analog CRT TV Personal & Portable Stereos 11 12 13 11 STB (millions of units) Camcorders 12 11 Manufacturing value ($) per box Total STB manufacturing value CAGR 2008 2012 = +10% Source: isuppli, March 2008 12
Market Dynamics: Satellite & Terrestrial MPEG-4 taking off worldwide both in HD and SD x 3 HD decoders sold in a year SD booming due to bandwidth management requirement in emerging markets U.S. HD MPEG-2 & HD DVR H.264/VC1 box production ramping Emerging Markets Growth opportunities for MPEG-4 in several countries (India/Russia/Brazil ) Europe / Asia Continuous deployment in HD H.264 ST s India MPEG-4 Shipments 1 Mu >4 Mu 2007 2008 2009 ST enabling fast market deployment with MPEG-4 in India 13
Market Dynamics: IPTV STB ST positioned with market leaders Success factors: Robust hardware + software system solutions, security, partnerships with software/security vendors ALICE CHINA TELECOM CHINA NETCOM DARTY BOX FASTWEB FRANCE TELECOM KOREA TELECOM Operators LYSE SES AMERICOM SUREWEST TELEKOM AUSTRIA TELEFONICA TELIA etc 14
Market Dynamics: IPTV STB Market-proven ST solution: Linux high-end feature set: PVR / DnP Media Center Video Conferencing Enhanced Graphics Easy migration from SD to HD in H.264 AVS solution qualified 65nm in 08, 55nm in 09 ST s IPSTB Shipment by Region 2.2 Mu >4 Mu Market highlights Europe: Strong ST position China & Emerging Markets: Very strong market growth in 2008 (H.264 and AVS) US: high-performance PVR solutions in production 2007 2008(e) 2009(e) Europe Americas Asia/Pacific* * Asia/Pacific includes China 15
Market Dynamics: Cable China Continued market growth led by ST Fast Analog to Digital transition Shipping MPEG-4 and starting HD MPEG-4 Europe ST enabling cable operators to offer Triple Play in HD MPEG-4 Market growing at steady rate Latin America & India Shipping volume, next opportunity for growth US Partner of Cisco / Scientific Atlanta Mu 200 150 100 50 0 China Cable Market 2006 2007 2008 2009 2010 Analog Digital Source: Screendigest 16
New Products Status 80nm Fast production ramp up in replacement of our previous 90nm family margin improvement 65nm 55nm Deployment in 08 with major OEMs Extension of the HD MPEG-4 product family expands addressable market 7200 Dual TV Media Center 7111 DVB-S2 & DVB-S Single-Chip Decoder 7141 DOCSIS Single-Chip Decoder PVR 55nm first engineering samples in fab 32nm First product under definition 17
ST Designing Low-Power Transition to low-power advanced process ST deployed MPEG-4 HD in 90nm, moving existing designs to 80nm 65nm Low-Power technology 55nm 7111 HD MPEG-4 DVB-S2: lower than 2.5mW Best-in-class performance Active management of power savings ST optimized solutions involving HW / SW know-how Other advantages for Energy-Saving initiatives: Silence, slim design, resistance to heat, extended lifetime, cost reduction Ahead of international ruling and supporting sustainabledevelopment initiatives 18
Market Dynamics: Digital TV Market expectations: MU 300 Bigger screens better image quality, full HD & 120Hz Built-in DVR, time shift Watch Internet Video content 250 200 150 100 50 Analog TV Dig. Ready TV idtv Support H.264 HD broadcast (Europe first) Support for multiple front-ends (terrestrial, cable, satellite) 0 2007 2008 2009 2010 2011 2012 CAGR 08 12: Dig. Ready TV: +6% Integrated DTV: +25% Total TV: +5% Source: isuppli Q1 08 19
Faroudja - Established Brand Equity Recognized Name in Home Theater 38 year history Over 65 video patents Focus on exceptional video quality Faroudja Video Processors Winner of 3 Emmy awards Manufactured exclusively by Meridian Installed into high-end home theater installations Badge of Excellence 20
TV Roadmap Mid Range Performance Douglas MP: MP: Now Now Sequoia MP: MP: Now Now STi710x Douglas STi710x Sequoia Global H.264 Platform MPEG2 H.264 Plug-in Extensible to DVR & Network Connectivity Global H.264 Platform DVR + Network Connectivity Freeman Genesis & ST IP combined into unified architecture Building block for rapid deployment of next-generation devices High Quality 10-bit video proc Multi-standard MPEG-2/H.264/AVS DVB-T Demodulator WW Analog Audio Flash DVR FRC Advanced MediaVUE Entry Hudson II II MP: MP: Now Now STi5163 Hudson II II Low cost SD MPEG-2 Analog TV SoC Digital TV SoC DTV Decoder 2008 2009 21
Douglas: Key Value Add Latest Faroudja DCDi Cinema Processing Single-footprint worldwide DTV solution WXGA/1080p at 50/60/100/120Hz, ATSC/DVB/China Built on proven, mature H/W & S/W technologies High-performance Audio / Video / Graphics Scalable / Customizable to OEM requirements Competitive BOM cost Turn-key solution for quick time to market 22
Douglas Design In/Wins LG 50PG60XX, 42LG60XX (Europe) In Production!! Japanese Tier 1 OEM In Design Europe, China Models Large Taiwan ODM In Design Europe Models China ODM In PP US, China Models China OEM In PP China Model 23
The DisplayPort Ecosystem Test & Measurement Semiconductor Solutions Cables & Connectors PCs & Monitors 24
DisplayPort Compared to External Legacy Standards DisplayPort DisplayPort VGA DVI DVI Range Difference = 10m! 0 3m 6m 9m 12m 15m DisplayPort is digital, faster, secure, extends over higher range, has the smallest connector DisplayPort can be used for external and internal displays, unlike legacy standards DisplayPort specification is evolving, unlike some legacy standards 25
Emerging DisplayPort Application in 2-Box TVs Application: Wall-mounted, super-thin 2-unit HDTV systems DisplayPort s Value Proposition for this Application High-Bandwidth Digital Interconnect for 1920x1080, 120Hz HD Video and Audio Optimum Range supports FHD over 15m cables HDCP Hollywood-approved content protection 1Mbps, 2-way AUX Channel enables Remote Control functionality Set-Top boxes Console DisplayPort DVD players Game Consoles 26
What s Next for DisplayPort? VESA is developing evolutionary enhancements to DisplayPort that address specific user needs while maintaining compatibility with DisplayPort 1.1 DisplayPort enhancements are planned for specification in 2008, and they are. High Speed Auxiliary Channel Eliminate need for USB cable to monitor Single cable DisplayPort connectivity Multi-Monitor Support Over Single Connector Multiple remote displays Simple notebook docking Simplified multi-monitor support for desktop & signage Mini-Connector Enable DisplayPort use on ultramobile PCs Complements standard DisplayPort connector Simple passive adapter supports use with standard DisplayPort cables 27