Tait Sorensen – Director, IR Carlo Bozotti – President and CEO Carlo Ferro – CFO Alain Dutheil – COO Carmelo Papa – EVP, Industrial and Multisegment Sector

Janardan Menon – Liberum Capital Didier Scemama – UBS Tristan Gerra – Robert W. Baird Simon Schafer – Goldman Sachs Gareth Jenkins – UBS AG Peter Knox – Société Générale Guenther Hollfelder – Unicredit Research Jerome Ramel – Exane BNP Paribas Sandeep Deshpande – JPMorgan

Good morning/Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the STMicroelectronics Q4 and Full Year 2010 Earnings Results Conference call. As a reminder all participants are in listen-only mode and the conference will be recorded. (Operator Instructions) At this time, I would like to turn the conference over to Mr. Tait Sorensen, Director, Investor Relations. Please go ahead, Mr. Sorensen.

Thank you for joining our Fourth Quarter and Full Year 2010 Conference call. Hosting the call today is Carlo Bozotti, ST’s President and Chief Executive Officer. Joining him today on the call are Alain Dutheil, Chief Operating Officer; Didier Lamouche, Chief Operating Officer (Designate); Carlo Ferro, Chief Financial Officer; Carmelo Papa, Executive Vice President of the Industrial and Multisegment Sector; and Philippe Lambinet, Executive Vice President of Home Entertainment and Displays. This call is being broadcast live over the web and can be accessed through ST’s website. A replay will be available shortly after the conclusion of this call. This call will include forward-looking statements that involve risk factors that could cause ST’s results to differ materially from management’s expectations and plans. We encourage you to review the Safe Harbor statement contained in the press release that was issued with the results last night and also in ST’s most recent regulatory filings for a full description of these risk factors. As a reminder ST-Ericsson will host a conference call shortly after the conclusion of our call. Also please limit yourself to one question and a brief follow-up. And now, I’d like to turn the call over to Mr. Carlo Bozotti, Carlo?

Well thank you Tait and thank you all of you for joining us today on this call to discuss ST’s progress during 2010 and our goals for 2011. We had our Annual Presentation in Paris earlier today. And I want to thank those of you who also participated to that event. 2010 was a year a records. Record high revenues, the highest turnover sales in ST’s history. Record quarter sales for two product segments and a record year for the full range of our Sense and Power portfolio, advanced analog and MEMS as well as microcontrollers and automotive applications. 2010 was also a year of recovery after the 2009 recession. We achieved a turnaround of more than $1.3 billion in operating income compared to 2009. In these two special years, we made significant progress in improving our financial performance and as a result, we improved our net financial position by $1.7 billion. To achieve these solid results, we focused on four key priorities which I outlined with you at this time last year. First, the market share. We said we would grow faster than our served market. And we did in ACCI and IMS, where in combination we grew 38% in 2010 or about 10 points faster than the estimated market. Second, manufacturing, we said we would increase our total front-end manufacturing capacity in key strategic areas and we did. In fact, we increased our overall front-end capacity by about 20% in comparison to the fourth quarter of 2009. We planned to achieve significant cost reductions in manufacturing and to better serve our customers after having substantially streamline our manufacturing resources. And we did both of these. Third, ST-Ericsson. We said ST-Ericsson’s restructuring would be completed during 2010 and it was. Finally, our fourth priority was to start to get the deserved from these products and we are. As anticipated 2010 was a very strong ground of the gyroscope. And during Q4, we shipped our billionth MEMS device. It has also been a strong year for microcontrollers, industrial, analog and our automotive products. For example, we are proud to confirm that in 2010, we started volume shipments both of MEM Sensors and of 32-bit microcontrollers for consumer game applications to Sony Computer Entertainment. And we started mass production of the 3-Axis Digital MEMS Gyroscope for the Samsung Galaxy Tab. So today ST is a much stronger company. As a result of our actions in 2010, ST is significantly better positioned to achieve worldwide leadership in the two application blocks that are a part of our vision, Sense and Power and Multimedia Convergence. And we are well positioned to address the four key growth application areas that we have targeted. Energy Management and Energy Savings, Smart Consumer Devices, Trust and Data Security and Healthcare and Wellness. Now let’s move to our financial performance where we delivered significant improvements all along the year in four major areas, revenue and earnings, financial returns, capital structure and strategic initiatives. First our revenues and earnings. We reached the highest revenue level in the history of ST, a record of $10.55 billion. Our two largest businesses ACCI and IMS have now set two quarters of record sales levels. And both ACCI and IMS achieved a key milestone in 2010 surpassing the $1 billion quarterly revenue threshold. At the bottom line, we delivered earnings of $830 million. Second, our financial returns. We had set key financial targets for 2010 and we met or exceeded them. With respect to ACCI, we were targeting an operating margin in the high single-digits for the year – for the year-end and exceeded it, in both the third and the fourth quarter of 2010 with double-digit operating margins. For IMS, the target operating margin was the high teens by year-end and the positive [ph] 19.7% and 22.5% in the last two quarters of 2010. For ST-Ericsson, 2010 has been a pivotal year. The path has been more difficult due to the faster than expected decline in legacy products contribution but nonetheless it is progressing towards a sustainable financial model. Looking at ST in total, we moved into our target return on net asset attributable to ST, here I mean taking into account the 50% of ST-Ericsson results which actually belong to ST, well ahead of our expectation. In the third quarter our RONA attributable to ST reached 19%. And in the fourth quarter, we were at 20.7% compared to our target range of 16% to 22%. Progressively improving operating results and the higher net asset return enabled us to achieve our target. And again we did this while also managing through this exceptional period of investment in wireless research and development. Third, our capital structure. If we look back over this two year period, ST managed through the downturn with a focus and strong cash flow generation. At the same time, we have been making important investment in new technologies, supporting ST-Ericsson product shift to a platform provider, expanding our manufacturing capacity and returning cash to shareholders through dividends. All the while significantly improving our net financial position from a net debt position of $545 million at the end of 2008 to a net cash position of $1.15 billion at the end of 2010. And this represents a positive turnaround of $1.7 billion. In 2010 alone, we improved our net financial position by $732 million. Based upon our cash position and investment requirements, we believe we can support an increase in our cash dividend in dollar terms. As usual any decision regarding the cash dividend would be made by our supervisory board and will also be subject to approval by shareholders at our Annual General Meeting scheduled in May. Fourth, our strategic initiatives. The divestiture of our Flash business with the sales of Micron. During the fourth quarter, we sold a large portion of the Micron shares further strengthening our financial position with net cash received of $319 million. At the end of December, we still had about $20 million Micron shares that are fully cashed. And now let’s turn to a brief review of the fourth quarter and a discussion of 2011. We ended the year with strong momentum. With fourth quarter revenues coming in at the high-end of our objectives, and our gross margin above the midpoint of our range, revenue increased 6.6% sequentially and increased 10% in comparison to the 2009 fourth quarter. ACCI finished the year with record sales. ACCI revenues increased 15% year-over-year and 4% sequentially. Automotive and Telecom drove these results. At the operating level, ACCI delivered a 29% sequential increase in operating income leading to an improvement in the operating margin to 11.9%. So now two quarters with double-digit operating margins for ACCI. So we came in well ahead of our single-digit goal in 2010 and I remind you that we are driving to a mid-teens operating margin over the mid-term. Similarly, IMS also completed 2010 with record quarterly sales. IMS is benefiting from advanced analog and MEMS becoming an increasing proportion of the whole portfolio as well as the success of its general purpose and the secure microcontroller families. During the fourth quarter, IMS revenues rose 30% year-over-year and 12% sequentially, with MEMS, microcontrollers, power and industrial products up sharply. IMS delivered an operating margin of 22.5% in the fourth quarter above the 19.7% achieved in the third quarter. Going forward, we see opportunities to improve the financial performance of IMS. Wireless net revenues increased 3% sequentially as legacy products decreased. As ST-Ericsson is continuing to see very good traction for its new 2G/EDGE portfolio as well as initial HSPA+ modem sales. In fact, ST-Ericsson is seeing increased traction in the smartphone and tablet markets with products such as their U8500 smartphone platform which they plan to ramp-up in the second half of the year with several Tier-1 customers. Turning to our gross margin, we have progressively improved it in each quarter of the year. In the fourth quarter, gross margin was 39.9%, a 70 basis points sequential increase. Thanks to manufacturing efficiencies and contribution from new products. We are comfortable with our year-end inventory position. Inventory returns during the fourth quarter were 4.6. Turning to our capital expenditures, we increased our investments in 2010 to $1 billion with a larger portion spent during the second half. Our investments were two-fold in nature, adding capacity to meet the higher demand for new products or really in volume production like automotive. And secondly, preparing for technology shifts on ramping new products like MEMS and the U8500 smartphone platform. In order to support our innovative product portfolio and to fuel revenue growth faster than the served market dynamic, we expect to invest between $1.1 billion and $1.5 billion in 2011 based on revenue growth. Investments over the next several quarters are planned at levels similar to this past quarter. Then as we move further into 2011, we will evaluate the market environment and adjust our investment accordingly. We want to be fully transparent here since our investment will have an important impact on our cash flow. In particular during the first half of the year as the spending plan is front loaded. In summary, we have a number of very important product initiatives underway and we also want to be positioned to respond to higher demand which is driving our above market revenue growth. Investments, we continue to be focus on MEMS, automotive and the U8500 smartphone platform and coupled with increased sourcing from foundry [ph] in the suitable technologies. Turning to 2011, let me reemphasize our four key priorities. First, we are focused on a number of breakthrough products. As a result of our strong commitment and the increase efforts over the past few years in R&D, we are for this first time introducing all in one year. System-on-Chip for 3D and connected TVs, complex 32-bit microcontrollers for our automotive applications based on the PowerPC Architecture, twin maps, a combination of gyroscopes and accelerometers, and also active microphones and pressure sensors and as well as best-in-class modems and application solutions such as the U8500 and the thin modem from ST-Ericsson to serve the smartphone and the tablet markets. Second priority, we are anticipating a recovery of ST-Ericsson starting from the second half of 2011 and everybody involved is working hard toward this goal. Third, we will continue to make well targeted investment in capacity for MEMS, automotive and the U8500. And we would placing additional focus on expanding our fast growing, higher profitability advanced analog and MEMS product portfolio. And fourth, alongside our product strategies, our marketing encompasses expansion and growth of our customer base with an additional emphasis on Korea and Japan, where we see excellent opportunities for ST. Before concluding my remarks, let me outline our first quarter outlook. In line with normal seasonality, the exposure to the New Year holidays in Asia and the accounting calendar, we are anticipating a sequential revenue decrease by about 7% to 12% which at the midpoint equates to a 10% increase when compared to the year-over-year period. As a result and based on prices entering the New Year contract, gross margin in the first quarter is expected to be about 39% plus or minus one percentage point. While ST-Ericsson call – conference call, we’ll follow after hours, I would like to highlight several points. While the first half of 2011, we’ll continue it to be challenging. We think the company is well on track to ramp into volume production with the U8500 in the second half of 2011. We believe that U8500 platform continues to strengthen future opportunities and is better positioned today than three months ago. In summary, as we look to 2011 we anticipate a good year ahead for ST. The semiconductor industry is expected to grow with our served markets increasing approximately 5% to 8% based upon the most recent industry data. Similar to 2010, we expect 2011 to be another year where ST grows faster than our served market by continuing to support our innovative products portfolio and moving forward with our marketing initiatives. Equally important, we are focused on further advancing our financial performance by improving our quarterly operating profitability and clean earnings. Now my colleagues and I would be happy to take your questions. Thank you.

(Operator Instructions). The first question is from Mr. Janardan Menon from Liberum Capital. Please go ahead sir. Janardan Menon – Liberum Capital: Hi, thanks for taking the question. The first question is into your Q1 guidance, can you give us a little bit of clarity as to which divisions will see the bigger fall and which will be relatively strong between the wireless ACCI and the IMS? And along with that can you also just clarify how many accounting days you had in your Q4 last year and how many do you have in the current quarter, just to put that decline into perspective? Secondly, what was your utilization level in Q4 last year and what are you targeting for the current quarter? And a last question if I may is, can you just remind us once again what is the latest field that you have on your currency sensitivity for every percentage change in the Eurodollar rate, what you expect on your gross profit as well your EBIT line? Thanks.

OK. So it’s a good package of questions. And I think Carlo Ferro will start elaborating on the Q1 guidance by division and also on the impact of the calendar. And then also on the sensitivity on the Eurodollar rate while Alain will cover, where we are in terms of fab utilization.

Good morning/Good afternoon everybody. Let’s start from the calendar. So with some housekeeping we’ve saw maybe point through all of the year 2011. Fortunately in 2011 the calendar is quite even quarter-after-quarter. In Q4 instead as you know we have experienced a longer quarter. The difference in days between the Q1 number of days and the Q4 number of days is reduction by about 5%. Then your most substantial question is about – most important question is about the trend of revenues for the quarter by product groups at year-end, we experience a substantial normal seasonality in average when you consider the calendar. And you consider that having 64% of sales shipped to Asia, we are exposed eventually more than the average of the industry to the Chinese New Year. Looking at, by product segment this quarter, the Industrial and Multisegment are expected to perform better than the average of the company. I would tend to say once again this is a very much boosted also by increase in MEMS but this generally across the board on the industrial and analog applications. Overall, the ACCI segment also is expected to do some have better than company average in general and there we have a significant booster for automotives. For automotives, this quarter by the way sales should be higher than the prior quarter. And all the rest and though the balance is on wireless that eventually due growing transition from legacy product experienced in Q1 more than seasonal pattern in respect to the prior quarter. Then the third of your question is about the exchange rate sensitivity. Yes, the rule of thumb remain substantially the same, one percentage point of difference in exchange rate affect the operating margin in a range of $8 million to $10 million per quarter. And this is obviously both the side. In order at the end to ensure and help your modeling for the current quarter please also consider our hedging policy. At this stage we have completed the hedge for Q1 about 60% of our Euro denominator expenses in cost are hedged at a rate which is very similar to the 1.32 of the reference points that you have mentioned we have associated with the guidance in our press release.

Okay I am Alain Dutheil. I am going to comment on the utilization rate. In fact you may remember that in Q3, we were about 90%. And in Q4, we have slightly decreased the loading of our fabs just in order to control the inventory and to make sure, in order to anticipate also the Q1 which of course we were knowing that there would be some seasonality effect. So the utilization rate of Q4 was about 85%. And I just want to remind you that this 85% refers to what we call standard line capacity, which is a kind of ideal situation. In fact we never reach 100% with this competition. So it’s about 85% and if we look at next quarter, well this quarter Q1, it’s going to be about the same, about 85% also. And by the way we have also decreased slightly – decreased our demand during this time period on the subcontractors. Janardan Menon – Liberum Capital: Okay. Thank you very much.

Thank you.

Thanks Janardan. Next question please.

Next question Mr. Didier Scemama from RBS. Please go ahead sir. Didier Scemama – UBS: Good afternoon gentlemen, thanks for taking my question, and quite frankly congratulations on 2010 results. I’d just like to start, I just have a couple of questions. I would just like to start on the MEMS business and in fact on the broader Sense and Power franchise you’re talking about. Looking at 2011, you’ve got a number of new MEMS products and touchscreen controllers as well as NFC chipsets coming to markets. Can you may be give us a sense of – the sort of incremental revenues you expect from the new products coming in addition to the sort of gyroscopes and microcontrollers that you already said as well as accelerometers? That’s my first question. And secondly, with regards to your fab capacity, is there any plan to build a second manufacturing line either in Europe or in Asia for MEMS manufacturing place?

Well thank you for the question again. I think Carlo and Alain will cover. Carlo will cover of course the prospect in terms of growth and Alain the manufacturing, the manufacturing strategy.

Didier, your question is not so easy to address with straight quantity as we’re since not providing guidance on the full-year total sales for the company is even more difficult to be specific on a single block of product. But obviously this is very important for us and you have rightly mentioned the opportunity of expanding in term of service applications and in term of products for the MEMS business. How should I say, I cannot give you a guidance but your sense that this is going to be very material to the 2010 to 2011 revenues dynamic is absolutely correct and of course very material on our level of revenues. There could be hundreds of millions of dollar of several hundreds of millions of dollar of additional sales. This is a great opportunity for MEMS to very substantially grow from 2010 into 2011.

Didier about manufacturing. This is Alain Dutheil again. On MEMS, you may remember that our major manufacturing site, front-end manufacturing site is Agrate. So our fab in close to Milan. And we are – in fact what we are doing today is creating some space there not to increase let’s say the square meter to start a new line but some space in present fab in order to increase the production. The way we are doing it is by moving some of the production which was in Agrate to Singapore. And by way as the same (inaudible) in Singapore we are moving our operation from six inch to eight inch. So to answer direct your question, we don’t plan to start a new fab for MEMS, we are going to do it in Agrate but we are taking all the steps to make sure that we have enough space there to grow the MEMS progression. Didier Scemama – UBS: Great. And if I may have a quick follow-up, in terms of just zooming in on the MEMS business just focusing on smartphones and tablets, when I look at accelerometers and gyroscope, it seems like you’re getting about $3 maybe $4 of content altogether for the device. Can you give us a sense of the in terms of the blue sky content device you could get if you were to ship the pressure sensor, the compass and the MEMS microphones in addition to the two I just mentioned please.

This is Carmelo Papa speaking. First of all we never said that the content of the silicon over MEMS is $4 dollars, I don’t remember this. It is your guess. Anyway if you had – each time you add a new sensor or like encompass or pressure sensor or it is the order of magnitude in the range of from $1 to $2 depending on the volumes. So this is the kind order of magnitude with present price on the market. And therefore the arithmetical addition is easy to get.

At the end I am sure what counts here are margin and on this respect in any event the MEMS came in with margin much better than company average. Didier Scemama – UBS: Great. Many thanks.

Thanks Didier. Next question please.

Next question Mr. Tristan Gerra from Robert W. Baird & Company. Please go ahead sir. Tristan Gerra – Robert W. Baird: Hi good afternoon. Could you give us a quick update on the demand outlook and as the number of companies have talked about lead times normalizing, is that something that you see for your products as well? And what’s the risk of potential cancellations associated with lead times normalizing and perhaps also a little bit of color on your order of visibility post the Chinese New Year? Thank you.

Well I think in general I would like to underline here that we really have three blocks of products. The first let’s start from ST-Ericsson. Here the challenge that we have is definitely not the market, I mean here we are making impressive effort in product and system R&D. And as I said 2011 is the year of the transition from the all products which were very much customs and basics into the new products that is very much a solutions and platforms. And as I said the impact would be material in the second half. So here, it’s really up to us, I mean this is new products, I mean, there is a strong endorsement from customers. There is a stronger and stronger and stronger endorsement from customers worldwide. And what we need to do is accelerating of course the introduction of all of these new products. Then there is a second block of products in ST, where we are still in pretty much stretch supply chain situations. Everything that is in APM, our Analog, Power and MEMS is still under pressure. We have – the demand is very strong and the same is for automotive. In fact, during the last two months we had to increase manufacturing resources devoted to our automotives, because we are seeing an increasing requirement in the demand from our customers. And finally there is the third block where we are experiencing flattening with some softness that are visible. And as I said already, this is very much related to the consumer business. For instance, the set-top box business but also the communication infrastructure business. And so you’re right indeed that there are some normalization and particularly on consumer products, on standard products with lead time that are being reduced. On the other hand there are still blocks of the company that are stretched in terms of supply chain. And of course the paradigm in ST-Ericsson is completely different one for us. Tristan Gerra – Robert W. Baird: Okay and then just a quick follow-up. By how much are you planning on growing front-end capacity this year following the 20% growth last year?

Look, you know you had seen that as we gave a range in term of capital investments. This is to give us a flexibility to increase if needed, but frankly, we don’t have a very clear picture or very precise picture on how much we are going to increase the capacity. It depends mainly on the market condition. But of course we are really if needed to increase our capacity. So last year it was quite obvious, I mean quite easier I would say to plan on capacity increase because the market was booming, the need was absolutely clear. So we could say we are going to increase by 20%. Here we will adjust with the market condition.

Yes. And there are areas where we will have – we are increasing a lot because with particularly on these new products, I mean for instance before the Electronica Show in Munich in November our visibility for automotive was to grow 15%. Now we know that this is not enough. And of course here the capital investment is more on the smart power technologies that we need for our automotive applications. And of course MEMS is booming and here what we want to do is absolutely to follow the demand of our customers. There are different angles we can look at that. There is the angle of the expansion of the gyroscope business. Last year only 10% of the tablets and the smartphones had gyroscope and this is continuously increasing. In other angle is what has been mentioned before. So there are new functionalities for tablets and smartphones like for instance the active microphones or the compass etcetera. But we also have new applications for instance industrial applications or healthcare applications. And it is very important for us not only to innovate in this area in maintaining the lead in terms of new products and new technologies but also to make sure that we can follow the demand of our customers properly in terms of manufacturing capacity both in front-end and in back-end. So it’s very focused automotive and MEMS on the one block. On the 8500 is of course also to prepare 2012. And is focus products and focus technologies. That’s big because we see good prospect of course. Tristan Gerra – Robert W. Baird: Great, thank you.

Thank you.

Thanks Tristan. Next question please.

Next question Mr. Simon Schafer from Goldman Sachs. Please go ahead sir. Simon Schafer – Goldman Sachs: Yes, thanks so much for the question. Actually, I also had a follow-up question on ST-Ericsson. I understand that perhaps it’s difficult to predict an exact size or slope of the ramp that you’re expecting for the new product. But there is obviously still a significant portion which I think yourself have described as a legacy, some of the ASICs that are rolling off. So would you be able to give any sort of color as to how quickly you would expect that run rate to disappear for some of those legacy products?

Listen, we have, I mean ST-Ericsson has a conference call that is about one hour what time is that.

5:00 at Central European.

5:00 Central European Time. So of course there would be a many interesting questions and discussions on the ramp-up. We have a clear visibility, I mean we have visibility at this point from the customers. We are preparing manufacturing plan. This is part of our budget. It’s part of our manufacturing budgets for the ramp-up of these products and these technologies. Of course we cannot disclose these figures. We know exactly what the expected ramp-up of these new products at this moment. It is pretty steep ramp-up. And we also have a visibility of the decline of the legacy products. Of course we cannot communicate all the details of this different pieces of businesses. Simon Schafer – Goldman Sachs: Understood. Thank you. And my second question was just on the core industrial business, TI last night was clearly saying that maybe lead times have come in which I think is a favorable thing. It probably means that the risk of double ordering isn’t as pronounced perhaps. I was just wondering on your perspective as to what’s happening with lead times. So is this now a more comfortable situation as it was rather than just what seemed to be maybe a slightly somewhat overheating period that we saw at the end of last year? Any color on that would be very helpful in the core industrial area?

Right, Carmelo will take that.

Well for the industrial, I would say that you have the OEM industrial which is typically following the seasonality. And the industrial which goes through distribution. Here it is a variety of technology and products. On some, we’re still under pressure. For instance some high voltage analog drivers for lighting application and the pressure. Those that come from BCB technology in particular or the most of them sell IGBT devices for automotive in the consumer application not typical industrial are still under pressure. So it’s a composition of many things. And overall this will allow us to have a seasonality better than normal in Q1 for all industrial – in overall IMS I would say. Simon Schafer – Goldman Sachs: Got it. Thank you very much.

OK.

Thanks Simon. Next question please.

Next question Mr. Gareth Jenkins from UBS AG. Please go ahead sir. Gareth Jenkins – UBS AG: Yes, thanks. Similar question I guess just on the auto side, I think you mentioned a growth rate potential of 15% this year. And I just wondered what some of the parameters are within that. So what are the unit volumes that you’re expecting from the industry overall? What content growth do you expect for this year? So that’s the first question and just related to that, I just wondered whether you could give an outlook for the 32-bit microcontroller market into autos and what you see there. Thanks.

Yes, what we see today is that the 15% growth in automotive is not enough to support the requirement of our customers. And so with our customers we are working on plans to move up the bar. And we see a very, very important driver coming from China. We have western customers that are particularly successful with their high-end cars in China. And on those high-end cars, the content of electronics is increasing enormously. In fact, I can say that many of the high-end cars that are being sold in China today have 100% of the optional. And this is a very important driver. And we are participating, I think this is of course it’s very good news is not only the demand per se coming from Asia but is also of course the content of electronics that is continuously increasing. There are also some technological changes for instance, the traditional lamps in the car, the technology is changing and we are moving to Power LED and for lighting in the car. And this is calling for real much more electronics. So, important drivers is new technologies in the car but very much from Asia and the continuous increase of the electronic content. And the 15% growth this year over last year at this point is not adequate to support our customers. So we have prepared a more aggressive plan that is now formalized. The second question was 32-bit, while this is an effort in R&D that we started in 2006. And we did not have enough for 32-bit microcontrollers for the automotives. Of course I am talking about car electronics excluding car radio where the car multimedia systems are based on our processors. Other effort is (inaudible) ARM. And this is going to be the first year, we start selling our new 32-bit microcontrollers for automotive. These are based on the PowerPC technology. We are expanding the number of designs with our customers. And this is a new area that of course will pay off in the next years and is an important area of course our pleasant offer on the microcontrollers for the automotive electronics is based on 16-bit and is quite on all products. So this is a new interesting areas for ST. And we’ll start from this year. It’s one of the breakthrough in terms of new products for 2011. Gareth Jenkins – UBS AG: I was just going to just follow-up just on that the more than 15%. Can you give us a sense of actually what you’re planning for, and then just another follow-up on CapEx, the kind of $1.1 billion to $1.5 billion. Is that seen as a multiyear CapEx number or should we bring that down in future years or will you grow into in terms of capital intensity by growing your revenues in future years? Thank you.

Well on the automotive, we are today working on a plan of 25% increase of course. And it is at this moment the visibility that we have from our customers, we have been working in the month of November and December to make sure that we can deliver on this upsides. And we are focusing of course particularly on the smart power technologies where we see this demand growing. As far as capital investment, now I think this is a very special year. This is a very special year because of the MEMS, this is a very special year because we are preparing U8500 ramp-up not only for the second half of this year but even more importantly for 2012 of course. And it is also a special year for what I just said for this continuous growth in the outer markets. So I believe that’s structurally with the manufacturing infrastructure that we have, with our strategy to continuously increase outsourcing. We are below 10% of CapEx to sales ratio.

Thanks Gareth. We’ll move onto the next question.

Next question Mr. Peter Knox from Société Générale. Please go ahead sir. Peter Knox – Société Générale: Yes, thanks for taking the questions. In terms of the actual rationalization program at ST-Ericsson, I think you mentioned that most of the cuts or actions for cuts being taken in place. Can you quantify how much is actually left in terms of unrealized savings have to yet to come through H1 this year?

Carlo Ferro is taking the question obviously again during the ST-Ericsson call my friend Tim Lucie-Smith can be more specific on the or whether there are two points important. One is the plan in term of the cushion has been completed at the end of fourth quarter 2010. Most of the saving came into the Q4 2010 result as the plan has been completed during the quarter. There is still a tail of some few million dollar per quarter savings to come and to be visible from Q4 into Q1. Peter Knox – Société Générale: OK, thank you. And just as a sort of follow-up. In terms of R&D spending and OpEx spending I know Q4 was particularly heavy in terms of the number of days. But could you give us some guidance as you see OpEx sales in particular R&D sales moving forward?

Yes, I would say that at the end the sequential dynamic as you said from Q3 into Q4 has been very much driven by the number of days. And by the way I believe when we talk three months ago we have anticipated that these dynamic for the current quarter. And as a mirror you may expect the operating expense is in absolute dollar to go down from Q4 into the Q1 of 2011. Of course Q1 is a quarter impacted by seasonal pattern. So in term of OpEx to sales ratio you may instead expect some slight increase as from a Q4 into Q1. But make sure that the calendar impact that have affected of the Q4 would not affect the Q1. Peter Knox – Société Générale: On a full-year basis?

On a full-year basis of course as horizon, the time horizon of the question is longer as it may as where it has to be more general, right. You will understand about that. What I can say the current level [ph] the Q4 at 32% I believe is something that overall on a full-year is something, I would not expect a bigger surprise in this respect of modeling. What is important is at the end this is of course very much affected today by the situation of ST-Ericsson as in the second half of the year. The ST-Ericsson revenues will increase ramping the new product and their OpEx to sales ratio is expected to improve. We believe that we may exit and we target to exit Q4 2011 with an OpEx to sales ratio lower than the one, we experienced last quarter. Peter Knox – Société Générale: Okay, thank you.

Thanks Peter, next question.

Next question Mr. Guenther Hollfelder from Unicredit. Please go ahead sir. Guenther Hollfelder – Unicredit Research: Yes, hi. I was wondering about your manufacturing technology, you already mentioned it. Whether you could provide some more details concerning the process shrinks you are expecting here for 2011 but also maybe for 2012? And maybe as a follow-up, also whether you can say what percentage of total production you will be responsible probably in 2012 for second half of 2011 coming from ST-Ericsson? Thanks.

Yes, on the process technology of course there are some – large part of our progression is not on the leading edge technology because it’s not needed like for example MEMS, you know, we don’t need to follow the model [ph]. But what we are doing, the only plant where we are really improving the model is on our (inaudible). And here the 45-nanometer technology is in production, I don’t know if it’s what you are looking for. And we have installed the 32-nanometer as R&D too. So that’s where we stand. But of course we have also developed some outsourcing at subcontractors for this advanced technology and we are now ready to start also on 45-nanometer for example. Guenther Hollfelder – Unicredit Research: And could you say with the 32, when you would go into production or volume production?

Next year.

Yes, next year we’ll be in production of course, yes. We have started to install the tool and then we’d be involved in production next year. (Inaudible) so last year was the backorder was the 45, this year is 40-45 and next year will be the 28-32. Guenther Hollfelder – Unicredit Research: Okay. And concerning this ST-Ericsson, can you say anything how much of its output you think you will produce as a foundry going into second half of 2011 or 2012?

In fact what we are – of course we are working very closely with ST-Ericsson and we are making decision on where to do what. And the last part of that production is going to be inside especially on some proprietary technology. We still have some production which is coming from (inaudible) which is increasing. So all in all probably 50% from us and 50% from foundries.

Yes with a point, in general if you take the advanced CMOS we have about two-third of the activity that is outside and one-third that is inside. But it’s obvious that we outsource also some proprietary technologies not all proprietary technologies. For instance, we do not outsource any MEMS. But overall, ST-Ericsson is in the range of 50-50, 50% inside and 50% outside. Guenther Hollfelder – Unicredit Research: Okay, very helpful. Thank you very much.

Thanks Guenther. Next question please.

Next question Mr. Jerome Ramel from Exane BNP Paribas. Please go ahead sir. Jerome Ramel – Exane BNP Paribas: Yes, good afternoon. Could you help us to give some granularity on the EBIT margin on ACCI? And maybe to quantify the impact on the EBIT margins once your fab in Phoenix will be closed? Thank you.

Yes, Carlo Ferro is taking your question Jerome. At the end I would say maybe my colleagues at the ACCI should say thank you for the questions. This gives also the opportunity to highlight that ACCI met in Q4 and also last quarter already met, we would exceed the overall profitability target that we shared with you in June at the Analyst Day in London. You remember at that time we have target midterm operating margin for ACCI in the mid-teens and anticipate the ACCI to exit the year in the high single-digit. Indeed now its two quarter in a row that they perform at 11.7%, 11.9% last quarter. So it’s an overall 12%. How to characterize it with respect to the product group. I would say that the idea that we have a computer and communication infrastructure group which is already in the mid-teens. We have the imaging business that has reached some level of profitability which is nice of course, imaging is less important inside on the total and is not a targeting profitability to the average of the business. And then yes we have two good opportunities, one is for automotive and the other one is for the digital consumer. I would say that today automotive is similar to the total of ACCI to the average of ACCI, we were manufacturing including as you have mentioned at the closure of Phoenix but overall I would say across the board on different fabs and technology still has to provide a contribution of improving for APG. And also of course leveraging on growth and Carlo just mentioned about the growth opportunity of APG in 2011 will further boost margin for APG. Yes, the one is the digital consumer. Digital consumer, last quarter posted an operating margin like below the average for ACCI, you know here set-top box delivered very nice margins with a high gross margin, digital TV is currently an investment in respect to the P&L of the group. And of course all the opportunities on growing revenues in digital TV and display port are the most important booster for the profitability of (inaudible).

Yes, absolutely in ACCI this year we are going to enjoy the first material revenues on two important new product families. And of course this is still R&D investment, right. So the first one is the digital TV. The high definition 3D connect with internet connected TV. And the second one is the 32-bit microcontrollers for our automotive applications that as we said is powerful space. And this is very important because this has been intense R&D effort for the company for a few years. And this year will start paying off in terms of sales and we start from here and we believe that this would be very important opportunities for us to grow in the future. And finally the imaging again I think, imaging now we are back to some good profitability and we have decided that not to focus any longer on the wireless. So we are redeploying resources from wireless into other sectors. I am talking about imaging, right. So and we are going to target much higher margins targets in terms of new product introduction. So on imaging first of all now we are profitable. Number two, that would be some redeployment of resources and number three, we are reconverting the business moving from wireless into higher margin application targets. Jerome Ramel – Exane BNP Paribas: Thank you.

This is for ACCI.

Thank you Jerome. Next question please.

Your last question comes from Mr. Sandeep Deshpande from JPMorgan. Please go ahead sir. Sandeep Deshpande – JPMorgan: Yes hi, thanks for taking my question. Just a quick question on I mean, given that you’ve already done your restructuring, the restructuring of ST and ST-Ericsson is over in the latter half of last year. Are there any remaining effects of the restructuring on costs this year that is there are further cost cuts which are still to be factored into your numbers in 2011? Secondly, given that you’re already at 12% margin in ACCI, 22% margin over in IMS, I mean this is at your target margins essentially, and given that you seem fairly bullish overall into – with the MEMS trends and other end-market trends in 2011. Are you saying at this point that this is where the margins will stay or are you saying that your OpEx will increase or something or are you going to say that actually margins will go up this year?

Yes, Carlo will take and maybe I will comment also.

Yes, I will start from the restructuring initiative at the end has been a very intensive. It has been intensive for industry manufacturing in the ST infrastructure and moreover in ST-Ericsson in these two years. The plan is substantially complete obviously, you know about the eight inch manufacturing in Phoenix that we’ll finally phase out in this quarter, by the way the last wafer start was already launched. And these may provide some – offer some margin improvement to the Automotive Product Group which is today so client of these fab and it is the one that is somehow currently paying the heavy cost of wafer due to the phase out of the fab. Apart from that, there are no significant or major initiates either in ST or in ST-Ericsson whether of course both ST and ST-Ericsson, we’ll continue to streamline towards efficiencies, towards some focusing. And these of course will keep a constant control on operating expense as well of course devoting some appropriate R&D effort on the core areas of growth. Carlo has mentioned about the strategy for imaging. Obviously the key ingredient of these strategies that these business does not need any longer going forward a specific or derivative of CMOS technologies. And these will be of course an year of savings in the P&L of imaging. The redeployment of the resources at the end should go in three fold direction. One is supporting the penetration of new applications other than wireless. The second one is going eventually for some redeployment in areas like analog or digital consumer instead of adding resources on the total obviously. And the third one which of course is the one growing bottom line to the P&L of the company is some nice savings on the overall basis.

Yes fine. So this is on the cost right, Carlo? Now, on the prospect I mean of course we are not satisfied, I mean.

Sorry, the other was (inaudible).

I think we are not side of I think IMS has done good progresses, I think we can do better. We can do better for instance, driving a much stronger mix in IMS. I think we will have a portion of the IMS business that is composed by analog MEMS and microcontrollers that will grow at accelerated pace. In fact this morning we presented this block that in the presentation in the morning we defined as AMM, that is Analog MEMS and Microcontrollers, right? And we have posted for Q4 on this block 24.4% of operating profit. And you can see this of course on the ST website. It’s in the presentation that we gave this morning. And this is an area where we see opportunities for accelerated growth and frankly not only MEMS, also on the more traditional analog products. So this is a very, very interesting opportunity that we have in IMS. But the same is for power discreet. We have new technologies for power discreet. But for sure the portion on analog and the portion on microcontrollers, the portion of MEMS will grow at a much faster pace. I would not comment on ACCI because I’ve already described before what are the three most important initiatives, again the digital TV, the PowerPC and the redeployment and the reconfiguration of imaging that should drive the improvement in. So of course it’s a continuous improvement process. And we are not yet satisfied of what we are doing. On top of this there is a major turnaround on ST-Ericsson. Sandeep Deshpande – JPMorgan: So what you are saying is if you’re revenues keep growing, your margins should grow. So you’re not saying that you’re about to be hiring a lot more people to increase the operating expenses for instance?

Well I think we have been very cautious. In the last year we have invested $2.35 billion in R&D on a consolidated basis but we need to always to keep in mind that there is a good $500 million that from an economic point of view is of confidence of our wireless partner, the Ericsson Group. I think we see leverage if this is the question. We see leverage in IMS. We see leverage opportunities in ACCI and of course we see the potential of turnaround in wireless. Sandeep Deshpande – JPMorgan: Thank you very much.

I think at this point we will close due to our time limitation. And Carlo any closing comments?

No, I think we have covered most of the things and maybe one closing comment rapidly. We went through this let’s say two very special years with 2009 that was strong collapse of the demand, disruptive from many points of view, and then a strong, strong rebound in 2010. I would like to underline the fact that ST after these two special years is much stronger than the ST of two years ago. Not only from the point of view of course of the financial performance, they are visible in the numbers. We are much, much more solid from capital structure point of view. We are much stronger in terms of delivering better and increasing earnings performance. But we are also much stronger in terms of product portfolio. We can address important areas of applications with tremendous growth opportunities. So we are confident of the next steps. Thank you very much.

At this point we’ll conclude the call. Thank you for participating.

Thank you.

Thank you.

Thank you.

Ladies and gentleman, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Good-bye.