Tait Sorensen - Director, IR Carlo Bozotti - President and CEO Philippe Lambinet - CSO and EVP, Digital Sector Mario Arlati - CFO Carmelo Papa - EVP, Industrial and Multi-segment Sector Jean-Marc Chery - EVP, Manufacturing, Technology and R&D Lorenzo Grandi - Corporate VP, External Reporting Claudia Levo - Corporate VP, Communications Carlo Ferro - COO, ST-Ericsson

Sandeep Deshpande - JPMorgan Simon Schafer - Goldman Sachs Stephane Houri - Natixis Francois Meunier - Morgan Stanley Janardan Menon - Liberum Capital Amit Harchandani - Citigroup Jerome Ramel - BNP Paribas Gareth Jenkins - UBS Jürgen Wagner - MainFirst Kai Korschelt - Deutsche Bank Martin O'Sullivan - Cenkos

Welcome to the STMicroelectronics first quarter 2012 earnings results conference call. (Operator Instructions) At this time, it's my pleasure to hand over to Mr. Tait Sorensen, Director, Investor Relations. Please go ahead, sir.

Thank you to everyone for joining our first quarter 2012 conference call. Hosting the call today is Carlo Bozotti, ST's President and Chief Executive Officer. Joining Carlo on the call today are, Philippe Lambinet, Chief Strategic Officer and Executive Vice President of the Digital Sector; Mario Arlati, Chief Financial Officer; Carmelo Papa, Executive Vice President of the Industrial and Multi-segment Sector; Jean-Marc Chery, Executive Vice President, Manufacturing, Technology and R&D; Lorenzo Grandi, Corporate Vice President, External Reporting; and Claudia Levo, Corporate Vice President, Communications; and finally joining us is Carlo Ferro, Chief Operating Officer of ST-Ericsson. The 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, please limit yourself to one question and a brief follow-up. And now, I'd like to turn the call over to Carlo Bozotti.

Thank you, Tait, and thank you all of you for joining us on today's conference call. Over the last two days there has been important announcement related to ST. first, ST-Ericsson guideline of its new strategic direction with the sharper end market and for the focus, and it blends to right-size its business. Second, ST also announced a partnership with ST-Ericsson for the development of future application processes. And third, yesterday evening, both ST and ST-Ericsson announced first quarter 2012 financial results. I want to cover each of these and then open to your questions. In addition to STs top management that we are meeting today as they just said, we also have from ST-Ericsson Carlo Ferro, Chief Operating Officer. To begin with ST-Ericsson, our joint venture unveiled a new strategy base on repositioning the whole business to play seat on the appropriate track towards excellent in execution, leadership and the sustainable profitability. Also, the joint venture needs to be right-sized in a meaningful to align its topline potential which is not what we had organically expected even as recent as a few months ago and Carlo Ferro of taking with a sense of great urgency the proper actions to resize the company. Yesterday ST-Ericsson stock about $320 million in annualized cost reduction to come by the end of 2013 giving further color to the ongoing and proposed SG&A savings and site reductions to ensure more R&D working synergies. We expected ST-Ericsson savings will fully benefits STs consolidated results starting in Q3 2012 through the completion of the saving plans by the end of 2013. These savings are based on three key initiatives. First, the R&D size rationalization; second, about 25% SG&A reduction and third, our partnership in application processes. The savings is specifically related to the partnership will be achieved in two steps. One, the transitional cost sharing model for the current generation of application processor and two, synergies related to a common ecosystem which for us is ARM-based. In addition, royalties would be paid by ST-Ericsson to ST to integrate the next-generation application processor into their ModAp platform. Overall, this initiative is an important first step in ST-Ericsson move towards leadership and improved financial returns. We will see measurable progress in reducing the quarterly operating losses at ST-Ericsson in the second half of this year, leading to a significant reduction in losses as we exit the year. Now let me give you additional details on the partnership announced with ST-Ericsson for the application processor, which is start of our plans to advance our multimedia convergence strategy. It is very clear that deliver a similar experience across multiple screens is what service and content providers are looking for. So what might seem to be individual markets are actually very related markets as consumers expect their Smart TV, car, smartphones and tablets to offer them the same experience. ST is being given unique and competitive advantage by unifying these application processor platforms. As we outlined yesterday in our press release, we are adding the wireless application processor now within ST-Ericsson through the extensive multimedia capabilities ST has already developed within its digital sector for set top boxes and TV. Now, let's turn to the first quarter financial results. ST performed in line with our guidance again this quarter. Revenue at $2.02 billion was near the midpoint of our business outlook and so was our gross margin excluding the impact of the one-time arbitration award. With respect to Wireless, total revenues as expected decreased sequentially due to a drop in sales of new products at one of ST-Ericsson's largest customers in addition to the usual seasonal effect and to the continued decline of ST-Ericsson legacy products. In the first quarter, however, ST-Ericsson reached the milestone on the new product sales side as the NovaThor U8500 ModAp systems started to successfully run at Samsung and Sony with smartphones from both now available on the market. Looking in greater depth, ST's net revenues from wholly-owned businesses were lower by 2%, better than normal seasonality as we had anticipated and shared with you. Specifically, both the Automotive and AMM product segments revenues in the first quarter were up sequentially compared to a usual seasonal decline, while PDP and Digital were down. In particular, Digital sector revenues decreased mainly due to a significant decrease in imaging revenues related to certain wireless customers. While we are not happy with this performance, we believe the quality of our portfolio offers the potential for our Digital sector to significantly grow and rapidly return to profit. Moreover, the just announced addition of the application processor activity will further increase this growth potential and the expected synergies will compensate for the cost of the additional resources. In the quarter, we made good process in expanding our wide range of innovative products in a number of applications. If we look at Automotive, for example, our innovation at first in this market allowed us to recall design wins in Japan with two top customers, a breakthrough win for our microcontroller in the safety application for a next-generation braking system and one for body control modules. Japan is one of the markets where security and safety mandates are fueling our products' adoption in cars. We are also putting MEMS in the worldwide automotive market by ramping up production of accelerometers in gyroscopes for telematic boxes in automotive eTolling systems to help companies track their vehicles. These design wins help us further penetrate the automotive market with our MEMS and improve our already strong position in eTolling. Expanding our reach into new applications like automotive MEMS does not mean we are taking our foot off the gas in our existing markets. We won significant design-in for MEMS accelerometers and gyroscopes for next-generation IM smartphones. It's driving our new ultra-compact and ultra-low power technology. In addition, we have won a significant number of designs for digital MEMS microphones at Taiwanese manufacturers for PC applications. After the year of the gyroscope in 2011, when we were sort of 1% market share up to more than 50% market share, we see this wave of new MEMS microphone design wins as the dawn of ST's year of the digital microphone. And our ARM core based microcontrollers are also achieving success. In healthcare and wellness applications, our STM32 microcontrollers and MEMS gyro both one circuits in Nike's innovative new FuelBand fitness monitoring application. We are very proud of Orly, clearly the most powerful 32-nanometer set top box system on a chip on the market, and we are extremely pleased with the interest from our customers that is now turning into design wins. We earned several in Europe and Asia this quarter in the set top box market. Let me also point out that we continue to be a strong player expanding our presence in ASICs by earning several design wins in our 32-nanometer process technology for networking applications from top tier networking manufacturers. Reviewing our key financial metrics in further details, let me share the following. First, as anticipated, our gross margin reflected approximately 350 basis of unsaturation. And as we disclosed on April 9, we incurred an additional one-time 260 basis points negative impact, reflecting an unexpected arbitration award. With one of these items significantly improved and the other one simply removed as we move forward, we anticipate the return to higher level of gross margin in the second quarter. Second, our focus in inventory management mainly dropped the unsaturation charges. With demand trends improving, our efforts put us in a good position going forward. We took aggressive actions to bring down our inventory levels in the fourth quarter and an additional $23 million in the first quarter, bringing the total inventory reduction to just under $200 million in the last two quarters. Third, our free cash flow improved again this quarter to $98 million. We entered 2012 with plans for it matches our CapEx budget than in 2011, and we can see this in our first quarter figure of $125 million compared to our $400 million in the year-ago quarter. Fourth, as this financial position improved, thanks to our efforts to reduce inventory and our prudent capital management. Adjusted to account for our 50% investment in ST-Ericsson, we finished the quarter with a positive $1.27 billion net financial position, up $100 million from December 31, 2011. Additionally, based on the strength of our capital structure, ST Board have submitted for shareholder approval the distribution of attached dividend of $0.4 per share to be paid in four equal quarterly installments. Turning now to our second quarter outlook and 2012 more broadly, let me share a few observations. Last quarter, we indicated that we believe the bookings had bottomed in the fourth quarter with billings likely to bottom in the first quarter. That appears to have been the case. We see our inventory in alignment and believe it is in good shape in distribution. So we see a recovery ahead for the semiconductor industry and for our sales. Based upon the improvement across the board in bookings, we anticipate a solid sequential increase in revenues on the 7.5% growth. We continue to be somewhat cautious as there are still microeconomic uncertainties. From a product perspective, we think that the growth will be broad, and we are even more confident that that the second half should bring a very healthy acceleration in our MEMS and analog business based upon the demand that we are seeing for our products as well as the growth of our customer base. So to summarize, let me share the following points. First, the first quarter of 2012 was the bottom of the semiconductor cycle. Second, we expect a major financial improvement of ST-Ericsson during the course of 2012 both in terms of topline and expense reduction. Third, ST's wholly-owned business bottomed in the first quarter, and we now expect the recovery across the board quarter after quarter with a strong acceleration of growth in MEMS, Analog and Power Discrete in the second half of 2012. And now, we would be happy to take your questions. Thank you.

(Operator Instructions) The first question is from Mr. Sandeep Deshpande from JPMorgan. Sandeep Deshpande - JPMorgan: Firstly, Carlo, you're talking about an improvement in your core businesses into the next quarter and into the second half of the year. Is this based on entirely on the new products that you're coming out with or is it based on what the customers are telling you at this point regarding where they are in the cycle that their inventories are low, et cetera? The second part of the question is on ST-Ericsson. I think what I don't understand is that clearly ST-Ericsson looks much better after the announcement of the restructuring, because their losses will reduce with the removal of the SG&A as well as removal of the R&D. But ST is taking over some of that R&D, but there doesn't seem to be a compensation to ST from your other partners. Why is ST taking over cost which maybe over $100 million or maybe we don't know what this cost, which is coming to ST, without any compensation from the partner?

I think the first part, Sandeep, seems that we see both. I think we see a strong momentum on our new products. We mentioned some of course in the press release and in our conversation today, but we also see a much stronger backlog. So it's not only based on customer information. It is also based on the present backlog that we have for Q2 as of course is reflected in the guidance that we have given for the second quarter. But also in what we see today in the backlog for the third quarter that is significantly up compared to the second quarter. So it's based on new products. It's based on information that we have from customers. It's based on the position of the inventory of our distributors, particularly in Asia. And it's based on the present backlog that we have for Q2 and also the backlog that we have for Q3. And we can compare of course on a rolling base at the same time the various periods. So it's obvious that we need to be cautious, because the micro-situation economic overall is still with uncertainties, but we are very much and more encouraged on the semiconductor cycle given the information that we have. As far as ST-Ericsson is concerned, there are three steps. I think the first is an important restructuring in terms of reduction of the number of size and focusing more on the R&D and the execution of the key programs. I would like to mention that the focus is similarly on the ModAp. So the focus is on the integration of the modem together with the application processes for smartphone and tablets, putting together the two IPs in one piece of silicon. The second important initiative that we had discussed in the past of course is a major reduction of the SG&A at a 25% reduction. Of course, this is material, particularly in a company like ST-Ericsson that is being greatly impacted by some major customers on the topline evolution. And in terms of the partnership with ST, the partnership with ST is based of course on a transfer of the application team from ST-Ericsson team to ST, but it's also based on transitional cost sharing between ST-Ericsson and ST. This of course will not change at the operating income level, but will have an impact at the bottomline for the company obviously after minority interest. And also it's based on the fact that we see now that the real opportunity to extract synergies from merging these two teams. So if the question is why not before, our consumer business was based on a proprietary microprocessor and today is based on the ARM platform. The ST-Ericsson application processor is also based on the ARM platform, as you know. So merging these two teams, we have the potential and we have the plan to extract significant synergies from the merging of the two activities. In fact, our plan is to compensate at the operating level in ST the additional cost that we have from importing the application processors team from ST-Ericsson with synergies, that's our planet that will be developed by merging the teams and having both teams basically working on the same programs and the same products, because now our digital consumer activity and our wireless activity are all based on the ARM platform, which was not the case in the past. Just in few words, the additional cost would be compensated by synergies and at the short-term, there would be of course also cash compensation from ST-Ericsson to ST. This is not changing at the level of operating income, but it's changing clearly at the level of the net income for ST after the minority interest. And on top, I did not mention on the new products, not on the products that are running today, but on the new products, there will be a stream of royalties from ST-Ericsson to ST to use our application processors in their ModAp.

The next question is from Mr. Simon Schafer from Goldman Sachs. Simon Schafer - Goldman Sachs: Just to clarify how much cost you're actually taking on from the ST-Ericsson apps processor and how much of the synergies you may be able to extract over the timeline that ST-Ericsson has talked about?

There are two numbers here on the table. One number is the 320, that there's been clearly stated by ST-Ericsson yesterday. And then we will enjoy, of course, 50% of this in ST. This is obvious, because now what we are importing in terms of activity we believe is in the range of $90 million, $95 million and we expect that this is compensated by synergies that we will extract merging the activities and focusing on similar products in the same platform. Simon Schafer - Goldman Sachs: I think you're basically saying that some of these under-utilization charges down to Nokia will fade into the second quarter. I wonder what gives you the confidence to say that. Is there something else that is going to fill that particular fab that allows you to get rid of these under-utilization charges quickly?

It's MEMS. The problem with our major wireless customers of course is significant, is very material and is very material in terms of decline of revenues. And it is even more material in terms of comparing with a forecast that is not, as I said, is after all many months ago. The real big opportunity that we have and that we are exploiting today is our MEMS, because when we sell gyroscope, there is a micro-machinery portion and this micro-machinery portion is produced in a (grafting) where we are fully saturated on our MEMS lines. And in fact, we are continuously expanding the capacity to serve our customers. But there is a companion sheet that is a digital sheet that this is a kind of CMOS analog, and this is very, very similar to the products that we are and we're producing for our wireless customers for frequency and power management applications. And of course, we also hope and we are confident that the ST-Ericsson can expand the customer base. I am very happy to see this new Galaxy phone from Samsung. It's a great phone. Initially it was for the emerging market. Now, I understand it's for all the markets. I saw phone in Europe now also. And of course, we also plan to fill these fabs with the new wireless customers. But an important continuation is also given by our MEMS growth. Simon Schafer - Goldman Sachs: And just a clarification on your OpEx, I guess the one I am trying to understand better is that on a flat FX year-over-year, your cost is up a lot both on a sequential basis. The OpEx is up both on a sequential basis year-over-year and what is clearly a declining revenue environment. So maybe just to clarify as to what's happening to the underlying OpEx run rate in the core business?

Yes, overall, I think as we said already, thanks to ST-Ericsson, there would be significant reduction in the OpEx in the second part of this year. As far as the second quarter is concerned, we see kind of stability in our OpEx, pretty flattish in dollars, I would say, of course with a significant improvement in terms of expense to sales.

If you compare with last year, in ST-Ericsson, we also had some contribution from our other partner to support R&D programs for ST-Ericsson and this have of course positively impacted Q1 of last year and this was not the case for Q1 this year when comparing year-over-year but because I think this was a part of your question also.

The next question is from Stephane Houri from Natixis. Stephane Houri - Natixis: Two question if I may, the first one is obviously on ST-Ericsson, what was really not clear for me on yesterday conference call from ST-Ericsson is how ST-Ericsson is going to increase it's revenue because you are talking actually about doubling the current revenue to get to breakeven. And the follow-up would be what kind of deadline do you give to yourself to decide if you give up in the wireless space or not and/or if you take any other sense?

Well, I will comment first of all on the revenues of the first quarter. I would not consider the first quarter of 2012 as base of business we believe that is really the bottom. And right in the second quarter, ST-Ericsson has announced a graph that is slightly above the double-digit rates. So when you look at that, you just probably ready to consider what we have in Q2 this year as a starting point. Also I believe the announcement that initially that have been announced is opening the way to more steps and in fact this is important to underline in terms of partnerships on certain products as we have underline yesterday in our press release, I mean the ST-Ericsson press release and also during the conversation. And third is the new customers. This is obviously a very difficult time for us, because our European base of customers basically collapsed during the recent time. But the progress that we see, again I want to mention Samsung, because I can't mention Samsung, this is the first family of phones. There would be more to come. The success with Sony now. So all of this is giving us the comfort that the turnaround will happen and I also would like to mention the strong focus from management to make sure that the size of the company is compatible the top line realities, that is not what we expected. So the combination of these things will turn ST-Ericsson around. It's obviously a level that turnaround must be done, and we will not allow this drag-on forever. Stephane Houri - Natixis: And so what is the kind of reasonable target to get back to breakeven in 2013?

Well as you know we're not communicating on this. And I think what is good here is that we can work on the two layers, the topline and the cost base and I think important opportunities on the top line and I'm sure if needed additional opportunities on the cost base, in fact the management is continuously focus to improve on the cost base. This is an important step. So it's a combination of the two things. But we do not disclose what is the moment of breakeven at this point, of course, as I said we are strongly motivated to make this happen as soon as possible.

The next question is from Francois Meunier from Morgan Stanley. Francois Meunier - Morgan Stanley: Just a question first on the JV obviously. I was wondering now that the main assets you put into the JV, when it was three, four years ago, is now back to ST. You still have 50% into JV. Would it make sense now that potential buyer like probably the guys you've been talking to recently like TI or Broadcom or Samsung eventually could look at it as maybe an easier business to buy? The second one is about the dividend. So, yes, it's more a question for Mario. Everyone is doing his numbers today and it's difficult to find a big EPS number for STMicro this year and next year, and it looks like the dividend will not be covered. How important is the dividend for you, because a consequence of that is if you keep on paying dividend and it's not covered and your cash flow have improved, but it's not likely to be positive this year, then you might have to raise some money. So basically what do you prefer? Do you prefer to pay a dividend or you prefer to be more flexible on your balance sheet?

I prefer to do two things. I prefer to pay dividends, and I prefer to increase the net financial position of the company at the same time. And this is exactly the program that we have this year. Even in Q1, unfortunately it was a very poor quarter, the net financial position of the company improved by $100 million. And after, of course, having paid our $0.10 per share of dividend. So we are absolutely committed, and this is very clear to the management of the company, of course. We are committed to move on with this level of dividend. But at the same time, we want to improve the net financial position of the company. Despite the big effort that we are doing in ST-Ericsson in Q1, it happened. In fact, our net financial position has improved. And we will make sure that the net financial position of the company is protected during the course of 2012, improved during the course of 2012 despite $352 million of dividends that we pay. Now, to respond to your question on what ST transferred basically to the joint venture was not the application processor. What ST transferred to the joint venture was a device that was called Mont-Blanc, that is now called U8500, and this device is exactly the same device that is now ramping in high volume production in one of the topline in Samsung. This was our contribution to the joint venture, and I think it was an important contribution. It is the fundamental part of the joint venture today. Francois Meunier - Morgan Stanley: Basically the Digital business didn't do so well in Q1. Do you expect this Smart TV to ramp-up now? Is it going to be Q2, Q3 to share with the Olympics or it's going to be delayed and maybe what size, what type of customers?

Yes, you're right. It was not a very good quarter for the Digital sector. And by the way, the main reason why it was such a low quarter compared to last quarter is actually not related to TV or set top box. It's more related to emerging revenues in a particular wireless customer we already mentioned. Now, regarding your question, we're ramping up in several places already the digital TV platform. It's not a massive ramp-up yet. However, you may have noticed that we have reported a design win in one of the top tier TV manufacturers now, which is a project which will ramp-up at Christmas. So we have a limited ramp-up at the moment with bigger volumes coming later. Francois Meunier - Morgan Stanley: So it's more like Q3, Q4 thing than Q2, Q3?

To be material, yes.

And next question is from Mr. Janardan Menon from Liberum Capital. Janardan Menon - Liberum Capital: Just two clarifications actually, one is on the previous question. You had a quite a big fall off in both Power Discrete and in the Digital area over the last three, four quarters, especially in the last quarter, which is due to the wireless customer that you mentioned, which is a situation which ST-Ericsson is also facing. I was just wondering do you need to take any actions in those two divisions, because that revenue may not come back easily anytime soon. And so, is there a need to reduce the cost structure there? Or do you think that is enough of a ramp from other customer, which should bring to back to historical levels of profitability even with a loss of this customer. Second clarification on the transfer of the apps processor development to ST, you said you will extract synergies. Can you just be more explicit on what these synergies are? When you say extract, does that mean that you will reduce cost of your existing non-ARM based development activity which is currently inside STMicro or does extract energy means that you will get additional revenue on the back of this development activity which will compensate with the cost.

Well, I suggest that just because otherwise I'm the only one talking here, Philippe and Carmelo will cover the evolution of the digital business and the evolution of the Discrete business. And Philippe will also cover what we are planning to do in terms of extracting synergies from the merging of two application processor activities.

I will first answer the question on the business situation in emerging and the fact we're loosing revenue from one customer, and now that the plan has been for a while to diversify the customer base and to diversify the application base, so not to be focused only on smartphones and phones but to use that optical sensing technology in other applications so that plan is well underway. And although this quarter and most probably next quarter we're going to a phase of rather low sales in that area, we have recorded very, very significant design wins in several applications and not only phones, although we do have some very good design wins in the smartphone sector with customers who are going in very high volumes but we've also recorded very good design wins in other areas, in consumer, in automotive for example which makes us extremely optimistic for 2013. So this year, yes, we are not enjoying particularly good short-term outlook but we have succeeded in diversifying our customer base and diversifying our application base. So that's the good news and we look forward to much increase in sales in the near future. So that's what saw that situation. In terms of the synergies, that we will exploit there is some positive synergies, sales opportunities and some synergies related to avoiding to do twice the similar things by unifying the resources, the teams between ST-Ericsson and ST, inside ST. We will avoid duplications, we will avoid doing things twice and will be a lot more efficient and clearly we'll be able to save cost, internal cost inside ST, R&D cost but also cost of third-parties because if we have to do only one software boarding of the given platform, it saves a lot of money rather than to do it twice. So that's pretty obvious and of course we will extract cost synergies. Now on the topline synergies, I want to say something which is the application process in market is estimated to be more than 2 billion units per year by 2015 and smartphones it's already half of that bucket. So there is of course a great opportunity in smartphone base and to working together with ST-Ericsson of course will capture as much as we can in that particular half of the market. But the other half is where ST is strong, it's consumer, its automotive, it's industrials, it's medical, there is a lot of applications for application processors and with this combination, we do intent to explore also topline opportunities. So that's also part of our strategy and that's a very important reason why we are unifying our single platforms in all the market, not on wireless, not only set top boxes, but across all segments. Thank you. Carmelo, if you want to cover your part.

The question was on Power Discrete. I am right now in Taiwan, visiting customers. I can tell you that one good reflection of how the quarter goes depends on distribution, which is a good chunk of our sales, and we are confident that Q2 will be much better than Q1. It still remains the fact that there is no long-term visibility for Q3 and Q4 which leads us to be still cautious for the remaining portion of the year. But Q2 will be much better than Q1 according to some distributed that I have visited. This leads also me to say, that it's an remarkable events, our level of profitability will go to the level that that we were used to before and which will remain our medium-term commitment, also because we will get rid of the unused capacity that has impacted us in the past and also because our product portfolio has never been so healthy as today. We have in the second half of the year considerable sales in modules with IGBTs, with MOSFET, with Power Discrete overall. We will have these Discretes complementing our smart power technologies in these applications, not only for the voltaic, but also our metering. And then there will be also new design in coming for our EPOD that has been suffering a lot in the last few quarters. So all in all, distribution visibility and also OEM customers make us confident that the Q2 will be better, cautious on the second half of the year because we have don't have these long-term visibility, but committed and capable to reach the level of profitability that we used to perform in the past.

Because of course you mentioned one problem we had with one customer, there are also some good news in this respect in the sense that we have some other major customers that will take the place in the second half of this year, replacing what we were used to do with our major customers of the past. And this is important too, because of course life is moving on. What we had in the past is not any longer there, because it is what it is. I mean for us it's difficult to digest so quickly, but we are. And in the second part of the year, we will have major growth on both protection products and power MOS at certain very key customers for ST now. Janardan Menon - Liberum Capital: Is that non wireless or is that wireless?

I cannot say, I am sorry.

It's both.

And next question is from Mr. Amit Harchandani from Citigroup. Amit Harchandani - Citigroup: My question is centered around the automotive market. How do you see the dynamics planning out for automotive in terms of end demand in Q2 and going forward into the second half? And as a follow-up, could you also comment on the recovery in the demand for the industrial products?

I think in automotive, we grew 40%. A year ago, we grew 18% last year. I think the visibility that we have with our customers and in general, we have, as you know, long backlog, I mean backlog covering several months. So pretty good visibility from the point of view of the administration of the business is the supply chain system is very, very much aligned between ourselves and our customers. We've methodologies that are based on controlling inventory and then pulling from the inventory. So we believe that despite the situation over certain part of the automotive market is not black and white, certain part of the automotive market today. We believe that Q1 is clearly the bottom, and we expect a growth quarter-after-quarter, but not at the same level that we've enjoyed during the last two years. So there will be somewhat mitigated growth, but still growth. So I think we are starting from 390, and I think this is now important, so I can mention this. And this will improve quarter-after-quarter, but not in an exclusive manner as it was in 2010 and 2011. This is for the automotive. Industrial is wider. I think Carmelo mentioned the smart metering initiatives that are very, very important for us. We are now big way starting in China. This is a fantastic opportunity for ST is our on chipset. But it's also very much related to our distribution business and much has been done during the last two quarters to reduce inventory at our distributors. And I have also met recently the CEOs of our key distributors. And there is a moderate optimism in the sense that clearly we believe Q1 is the bottom and we should go back to much stronger position in the second quarter and in the rest of the year. But of course, this depends more on the macroeconomic situations. And this is why again we need to remain cautious particularly in terms of capital investment, because at the level of macroeconomics, there are still uncertainties. But what we see today is much better. The inventory has been depleted. Distributors have started to buy again. This is the kind of visibility that we have. And this is important for the fragmented-wide industrial markets. And on top, there are new products. For instance, we never talk about our IGBT. This is a new family for us. This year will make a significant jump, but Carmelo can and must do much, much better on IGBT.

One another thing which is coming and visiting OEM customers, delighting market that is very important for these three devices that has been dragging for many quarters now is starting. They see some visible signs of restart of this market due to many factors, the housing, the other things. So this is a one good sign as well for the general market.

The next question is from Mr. Jerome Ramel from BNP Paribas. Jerome Ramel - BNP Paribas: One quick question on automotive. How do you explain the 500 basis points of EBIT margin gap between you and your main European competitor? And the second question would be what about the capacity utilization rate and how you forecast it to be in Q2.

As far as automotive is concerned, I think that the main difference is on the digital products. I think we have started few years ago now, a new automotive products and this new family of products does not yet play any significant role in the automotive business, but it's a great family. I think today we have in excess of $1.3 billion of design wins. Of course, it's a power PC microcontrollers. And this is not yet playing, and what we are dealing today in the area of microcontrollers is somehow reducing the profitability in our automotive business. So this is I would say the key difference. But we've been working during the last few years in cooperation with Freescale, as you know, and we are very happy about this cooperation. I would like to mention again there is of course $1.3 billion of design wins on this kind of new microcontroller ease along the life of the products. But we are not enjoying yet the results of this (inaudible) in R&D. And our saturation level would be slightly above 80% in the course of second quarter from slightly below 70% in the course of this quarter.

Our next question is from Mr. Gareth Jenkins from UBS. Gareth Jenkins - UBS: You touched on this within industrial. I just wonder whether you could give a sense of how your channel inventory is shaping up by area, what you're seeing at the moment how tight things are or otherwise? And secondly in terms of the OpEx guidance, I just wanted to understand, you're saying that you thought that OpEx expense could be flat quarter-on-quarter despite the adoption of $90 million to $95 million of additional cost from ST-Ericsson, do I understand that correctly?

As far as the channel is concerned, I think it's not exactly the same when compared in the various geographies. I think we have noticed the situation in Asia is cleaner, and we're ready to restart strongly. And while we see POS improvements basically everywhere, in the various regions, I think we do not have the same degree of healthy, not yet, completely healthy situation in Europe and in United States. And as far as the addition of the resources, as I said, you will not see an increase of expense in units. First of all, it's not in Q2. So the problem is from the July 1, but you will not see an increase, because basically this will be compensated by cost-sharing mechanism, which in other terminology means cash from ST-Ericsson into ST to compensate for the transitional design activity. Gareth Jenkins - UBS: And just one follow-up, just again, bifurcation that you expect that these two business to be up quarter-on-quarter, every quarter this year?

Yes, this is what I said. I think materially out what we believe and despite the situation in imaging, this is what Philippe was saying before, our real problem today is dependence on a couple of wireless customers. In this case, it's a couple of wireless customers on imaging. And as we were saying before, we have been working to compensate of course, and I'm not going to mention the customer of course, but we have now added any thoughts on new customer in the imaging business. This is the part of the Digital sector that will not really contribute to quarter-over-quarter improvement during the course of 2012, but there would be a very significant improvement in imaging in next year for sure. And the contribution to the growth quarter-over-quarter is very significant in ASICs and is very significant in the area of set top box and TVs.

(Operator Instructions) And next question is from Mr. Jürgen Wagner from MainFirst. Jürgen Wagner - MainFirst: I have a question on financing at ST-Ericsson, by how much are you willing to raise the credit lines that you will provide to ST-Ericsson. And second question, could you please update on your CapEx trend for this year?

We've of course discussed with ST-Ericsson and my comment is clearly related to the second quarter. I cannot provide a number of course. But this is the same methodology that we have used in the past is an increase of the credit line that the two parents are supporting to finance the operation of ST-Ericsson. So it will be exactly the same methodology that we have for the second quarter, exactly the same methodology that we have had in the past. CapEx will be significantly lower than last year. We've done $125 million in Q1, and it is definitely below 10%. We do not have the need after the investment of MEMS and automotive plus tier to have other major programs this year. So I think likely it will increase from the $125 million of Q1, but not too much, and we'll end up at the 8% to 9% CapEx to sales ratio.

And next question is from Mr. Kai Korschelt from Deutsche Bank. Kai Korschelt - Deutsche Bank: Excuse me if this question has been answered before. But just want to follow up on the net cost savings from ST-Ericsson on an STM Group level. It seemed to be have been indicated yesterday that perhaps the quarter or maybe slightly more of the cost savings would be moved back to STMicro. So just wondering how we should think about the net savings on the STMicro Group level over the next 18 months that could materialize? Should we be thinking about those $250 million that sort of range or would it be meaningfully higher or lower than that?

No, it's simply 50% of what ST-Ericsson as announced yesterday. So ST-Ericsson yesterday has announced $320 million, and we have a plan to fully enjoy our quarter of the saving. And our quarter of course is 50%, and this is what the planning is. And the plan of course is based on first of all ST-Ericsson executing on the reduction of the number of size, ST-Ericsson executing on the 25% SG&A gap, but also is based as far as the portion of restructuring that is related to the transfer of the application processor that they had even quantified before in the range of $90 million to $95 million. Well, this portion will be compensated by two things, in a very short term by cash compensation from ST-Ericsson for the transitional work, and of course as soon as we are together starting from July 1, we will work very intentionally and Philippe Lambinet will work with strong determination to extract all the possible synergies from the fact that today we have in ST a consumer business that the new products are ARM-based and the future products are ARM-based. The same is for ST-Ericsson application processors. And merging these activities, we will develop less products. We will use software development cost, et cetera, et cetera. So it's exploiting the synergies. So our plan is to enjoy fully the 50% of the savings of ST-Ericsson.

(Operator Instructions) The next question is from Mr. Martin O'Sullivan from Cenkos. Martin O'Sullivan - Cenkos: I'm just wondering what is there to say about your extreme analog high margin products in terms of expansion of the customer base and (inaudible) for this year, and isn't MEMS potentially $1 billion this year?

Well, I have seen just some statistics for iSuppli. We are number one in MEMS now for all markets, I mean globally. In fact, the way ISuppli is reporting includes microfluidics that is of course another form of MEMS. In fact, for us was even the seat to start with the MEMS business. I think there is many new things. I think first of all is the microphones that they have just mentioned in my address before, but is also for instance the pressure sensors. This is an another important program is the expansion of the MEMS into the automotive business, the expansion of the MEMS into the wellness business like the Nike applications, the expansion of the MEMS into indoor navigation systems, the expansion of the MEMS for the stabilization for the image optical stabilization. This is a great new opportunities that we see in Japan. So it's many, many things. And I believe we will move on with strongest determination to keep the lead here. But I would like to mention other products which are maybe less glamorous than MEMS. I mean recently we have introduced a new family of advanced analog, more traditional family of advanced analog like operational amplifiers and comparators is maybe less known and less visible. But we are working very hard on a number of priorities including for instance medical, including the high-end analog products. So it's not only MEMS here. We are continuously working to expand the customer and take for instance the microphone and we did not have the microphone. So we will have to gain all the customers in the microphones like we have done for the gyroscopes and the accelerometer or the pressure sensor. We were not in this business. And we will gain all of these customers. We are very confident on this business. I think what we should do here is and we have already have is to repeat the success story of the gyroscope and accelerometers in new MEMS families for new applications and also for other as you said extreme analog products and we have number of focus are, very specific but potentially very high volume solutions.

Thank you, Martin. At this time, we'd like to go ahead and close the conference call. I would like to take the opportunity to remind everyone we will host our Annual Investor Day and Analyst Day in New York on May, 23. So with that, we would appreciate that we'll send out information very shortly thereafter. So Carlo, if you have any closing comments.

No, the closing comment is just on the determination to fix the ST-Ericsson problem. I mean this of course is a challenge. It's a challenge because our customer base in Europe disappeared. And this was not planned, but we are confident that with the drive of Didier and Carlo, we will resize this company and we will turn the company around quickly and this is a real priority for us. And we are working with the strongest determination to make this happen, as I said, very rapidly.

Thank you, Carlo. We'll conclude the call.

Thank you very much, ladies and gentlemen. The conference is now over. Thank you for choosing the Chorus Call facility and thank you for participating in the conference. You may now disconnect your lines. Good bye.