Tait Sorensen – Director, Investor Relations Carlo Bozotti – President, CEO Mario Arlati – Chief Financial Officer Lorenzo Grandi – Corporate Vice President,

Francois Meunier – Morgan Stanley Tristan Gerra – Robert W Baird Gareth Jenkins – UBS Didier Scemama – Bank of America-Merrill Lynch Simon Schäfer – Goldman Sachs Sandeep Deshpande – JP Morgan Peter Knox – Société Générale Yanez Sheller – Deutsche Bank Lee Simpson – Jefferies

Ladies and gentlemen, good afternoon. Welcome to the Q4 and Full Year 2012 Earnings Results Conference Call and Live Webcast. I’m Goran, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. After the presentation, there will be a Q&A session. (Operator Instructions) The conference must not be recorded for publication or broadcast. At this time, it’s my pleasure to hand over to Mr. Tait Sorensen, Group Vice President, Global Investor Relations. Please go ahead, sir.

Thank you and thank you to all for joining our fourth quarter and full year 2012 conference call. Hosting the call today is Carlo Bozotti, ST’s President and Chief Executive Officer. Joining Carlo today on the call is Georges Penalver, Executive Vice President, Chief Strategic Officer; Mario Arlati, Chief Financial Officer; Carmelo Papa, Executive Vice President of the Industrial and Multisegment Sector; Jean-Marc Chery, Executive Vice President, Manufacturing and Technology R&D and General Manager of the Digital Sector; Lorenzo Grandi, Corporate Vice President, External Reporting. 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, please limit yourself to one question and then a brief follow-up. And now, I’d like to turn the call over to Carlo Bozotti, ST’s President and CEO. Carlo?

Thank you, Tait, and thank you for joining us on this call, and thanks also to those of you who attended the year-end presentation earlier today in Paris. As we enter 2013, we are energized by the new possibilities in front of us, as we sharpen our focus and build a new ST leveraging our proven leadership in important key product markets. In this regard, in December, we outlined our vision and new strategic plan, our growth drivers and confirmed our new financial model. During 2012, we prepare for this future while also managing through a difficult year as we dealt with a weaker semiconductor industry and business environment as well significant structural changes in market and end customer competitive dynamics, which negatively impacted ST. We exit 2012 with a strong position, with respect to market leadership in key areas of our product portfolio, IP leadership, and solid flexible financial position. Today I would like to begin with some key summary points and then move to a review of the fourth quarter and the year, our new strategic plan and then our outlook and initiatives for 2013. First, both revenue and gross margin were one in line with our outlook, in particular our revenue performance came in above the midpoint of our guidance even with the ongoing softness in the semiconductor market. Our wholly-owned businesses increased 0.2% and 1.6% on a sequential and year-ago basis. Based on independent market projections, we believe we gain market share in the fourth quarter in our served markets. Second, our action during 2012 enabled us to improve our net financial position at year end compared to 2011, despite the significant cash used by ST-Ericsson. So, this was a big challenge to overcome and we did. Third, we’ve been able to maintain a dividend of $0.40 per share during 2012. In total, we paid $355 million in dividends this past year. Fourth, our new product momentum represents a combination of strategy and innovation and marketing initiatives. During 2012, we made important progress in our new major accounts program with revenue from this accounts growing at 13% on an annual basis. In addition, this group of companies is well balance across our five target product growth drivers. Looking forward, we also want to be more pervasive in the mass market and our product and marketing plans and that our new strategy will drive this objective. Fifth, we are advancing our plans towards our exit from ST-Ericsson. In the fourth quarter, ST took an impairment charge of $545 million for wireless goodwill and other intangible assets, bringing investment value of ST-Ericsson on our books to a negligible amount. In addition, both Ericsson and ST have waived their loan to ST-Ericsson in the amount of $1.54 billion. For ST, this loan was reflected in our new financial position already – in our net financial position already. So our net financial position and net attributable financial position are both at $1.19 billion at the end of 2012. Turning now to the fourth quarter, let me share some key points. As I mentioned earlier, our revenue and gross margin results were well in line with our guidance. Looking at ST’s revenue results, based upon our bookings, we had expected to see relatively flat revenue results on a sequential basis. And that was the case. At the same time, we anticipated strong results for AMM, and that was the case – thanks to the ramp of our MEMS product. As expected, Automotive, Digital and Power Discrete segments, also sequential decreases, reflecting a still soft semiconductor market. AMM revenues increased 7.4% sequentially. As we had anticipated, we did see strong sequential revenue growth in our motion MEMS and environmental sensors and continued progress in microcontrollers. We also saw a quarter-to-quarter improvement in the operating margin to 13.9%. The market environment continued to be tough in Automotive, our APG group, leading to a 6% revenue decrease and the lower operating margin as a result. However, we are very well positioned in this market and once unit volumes increase we will do well here at both the revenues and operating profitability level. We also are expanding our product offerings to this key market for us, so even more content per car. Digital saw about 2% decline in revenue. The operating loss was up materially, mainly reflecting manufacturing inefficiencies related to a sharp decrease in loadings. As we announced last quarter, we are now restructuring digital to improve these operating results. We plan to capture annualized saving of about $150 million by the end of 2013. Power Discrete sales decrease 11% on weak market demand with the operating margin declining but still slightly positive. Turning to our gross margin, our results here were also inline with our expectations and slight better than the mid point. The fourth quarter results reflect the actions we took to lower our inventory, leading to significant quarter to quarter rise in unsaturation charges, $66 million in Q4 compared to $19 million in Q3. Through our manufacturing actions, we significantly reduced the inventory with a cash impact of $143 million in the quarter. Inventory in the fourth quarter improved to 4.3 turns or 84 days. Importantly, we entered 2013 much better position with respect to inventory compared to the year ago period where our turns level was 3.8 or 95 days. Turning to cash flow, we began the year with a positive quarter and we finished the year in a similar manner. Roll over CapEx and inventory were both positive contributors to the third quarter improvement in cash flow. As a result, STA reported a slightly positive cash flow for the full year in spite of significant pressures on cash flow from ST-Ericsson. A kick on point into cash flow management was our controlled spending. Capital expenditures for 2012 were $476 million down 60% compared to 2011. So you have seen during the year a recalibration of our capital expenditures adjusted for weaker market conditions. In the fourth quarter, we drew an €350 million multi currency eight year credit facility granted by the European Investment Bank in 2010 to support our R&D programs in Europe. The proceeds as quarter strengthened our financial flexibility. Turning to our future, in December we unveiled our vision and new strategy growth drivers and presented our new financial model. Our vision remains unchanged. We want to make a positive contribution to people’s lives and looking at the evolution of our product portfolio, we are reaching more parts of everyday life and as the management and settings, trust and data security, healthcare and wellness and smart consumer devices among them. Our strategy has changed taking into account the evolution of the market we’re in and the environment we see in the years ahead. We want to make sure our future success is built on a solid foundation. So our growth drivers we have outlined are those where I see as a strong leadership position today. As well as where we have the right ingredient to be successful in the future. Our five product families where we’d focus MEMS and sensors, smart power, automotive products, micro controllers and the application processors including digital consumer products are those well we have assessed the highest growth rate, improved profitability and market share gain opportunities for us. Let’s turn to MEMS and sensors, they’ve been one of our tremendous success stories and our foresight in anticipation the direction of the market and developing the right products led to 22% year-over-year revenue growth. We successfully begin high volume shipment of our MEMS pressure sensors, microphones and 6xs combos. In total ST shift over 1 billion MEMS unit during 2012 and ST market share in the MEMS mobile and handset market is up to 48% according IHS iSuppli more than twice as large as that our closest competitor. Smart Power is the second key growth driver for us. With our novelty brand of products in this market, power management for portable equipment and automation, we delivered high volumes of the new MOSFET family for the high end chargers for a leading smartphone manufacturer. For new generation 4G, LTE devices, we also introduced to several leading smartphone manufacturers high performing power saving tunable capacitors. And one measure of the market’s recognition of our success in managing power is that more than 70% of the world’s ICs for power efficient AMOLED displays are supplied by ST. Our third growth driver is automotive, where we are number one in China and number two in Europe and US. We are one of the very few companies that can address all semiconductor opportunities in the car. During 2012, a major global player selected our 32-bit microcontrollers for their vehicle safety platform because it covered the full functional range from entry level anti-lock brakes to the most complex dynamic vehicle control. We also celebrated the year of infotainment as we reached a milestone of having more than 200 million cars in the world running on ST’s leading infotainment technologies. And also this news is not part of the fourth quarter review, let me proudly announce today a collaboration with Hyundai to design the best engine management solutions to address both high performance and low cost. Moving to our Embedded Processing Solutions product segment; microcontrollers, in fact the microcontrollers is our fourth growth driver. 2012 was an excellent year for us, where our investment in 32-bit ARM Cortex and M-based microcontrollers continues to bear fruit. We introduced seven new product lines, expanded the families and most important increased billings 30% year-over-year. In imagining, we continued to diversify by delivering breakthrough technology in new applications such as proximity sensors, to earn design wins in industrial automotive, the digital still cameras and gaming. And through multiple design wins and business awards for new image sensors, camera modules and image signal processing – processors, we expanded our customer days in mobile imaging. Finally, in application processors including digital consumer and ASICs, a key objective is to offer application processors to serve many markets through a unified processing platform. During 2012, we saw fast adoption of our 40-nanometer set-top box families for cable, terrestrial and IPTV. We earn the important design wins for Orly, the world’s most powerful set-top box system-on-chip and brought 32 and 28-nanometer, and we introduce our DOCSIS 3.0 products for new high speed cable networks. And just last quarter, we gained increased traction for high-resolution multimedia monitor controllers in premium monitors and public displays with LG, Samsung and others. Also, we were awarded a major 32-nanometer ASIC with a major networking company, and we have started to work on innovative ASICs for various applications using our FD-SOI Technology. In addition to our key product areas, let me acknowledge two important technical successes. ST proprietary 28 FD-SOI Technology Platform, manufactured at our Crolles, France, 300-milimeter facility has now proven it can deliver 30% higher speed at the same power and up to 50% greater power efficiency at the same performance as bulk processes. We have proven we can do it at comparable costs, and we have significant opportunities in portable equipment, gaming and digital still camera, among others. Enabled by our advanced BCD9S technology platform, demonstrating superior device performances in the area – silicon area reduction, we won a significant award for power ASICs for automotive. So, with this product portfolio, we expect to significantly enhance our financial performance at the gross margin line, operating margin and net earnings per share as well as driving significant cash flow and growth of our net financial position. Let me turn now to our outlook. Looking at ST’s wholly-owned businesses, we are seeing some positive signs including improved bookings in January on several product lines that may be early indicators of a recovery ahead at some point in 2013. We anticipate a better than normal seasonality from our wholly-owned business leading to a sequential decrease in revenues of about 3% at the mid point while increasing about 2% year-over-year. The total revenue outlook for ST of down 7% at the mid point takes into account the fact that ST-Ericsson anticipates a very significant quarter to quarter decrease in revenues. Reflecting the lower unsaturation charges and no revenues from licensing compared to the fourth quarter, gross margin in the first quarter is expected to be about 31.4% plus or minus 2 percentage points. Following our announcement to exit ST-Ericsson after a transition period that is expected to end during the third quarter of 2013. We are finalizing our decision regarding available strategic options. Our current best estimate is that ST for it’s part would incur cash cost including the ongoing operation of ST-Ericsson during the transition period and the restructuring cost in the range of approximately $300 million to $500 million during 2013 taking into account the impact of the strategic options. To concluded, let me share a few final observations, globally there are a number of signs that 2013 may show an improving economic environment as the year advances. We are well positioned with our innovative product portfolio and customer relationships to benefit. We are especially encouraged by the traction we are gaining with our new major accounts and the expectation for a major turnaround in our distribution business. More specifically as this position to outperform the markets addressed by our two newly refined product segments. Key products expected to show the strongest growth in 2013 include imaging, micro controllers and analogue and MEMS. In addition, as the year progresses, we expect to benefit from improved loading. With respect to ST-Ericsson, we will communicate further details when they become available. We are finalizing our decision regarding available strategic options and while we do not under estimate the challenges related to the transition, we are committed to ensure a smooth and timely exit. We are resizing our net expense base, essentially reviewing it by about 30% to bring our net expense base from a run rate of almost $900 million per quarter to within a range of $600 million to $650 million, by the beginning of the first quarter in 2014. So overall we are creating a new more focused ST for the portfolio and this will add positive implication across the Board in terms of improving operating metrics and returns on adjusted. Our net financial position continues to be strong and we remain committed to protect our financial resources. Now, my colleagues and I are ready to take your questions. Thank you.

(Operator Instructions) The first question is from Francois Meunier from Morgan Stanley. Please go ahead. Francois Meunier – Morgan Stanley: Yeah, hello, Carlo. I’m sorry to repeat the same question as everyone is asking but it just feels the big trends that to cost of closing down ST Ericsson and all the cash out flow between now and then – I’m sorry to say only $500 million I’m just amazed by this number, so if you could run through all the calculation again and the number of employees and the cost of adolescent?

Well, of course I cannot talk about the options today. But we have looked at our ongoing cost, the transition cost and the potential restructuring cost and we induct having this range that just to make sure we understand is cash for ST is our portion using the range between 300 and $500 million. This is the best visibility that we have today of course is based on very solid fact and we are committed of course to make a smooth and rapid transition year. We’re now finalizing the seasonal and strategic option and we will come back as soon as we have the final – this finalization. But I confirmed the range, which is the best visibility that we have, of course, is our part, and the range includes the ongoing operation, the transition and the restructuring and is between $300 million and $500 million. Francois Meunier – Morgan Stanley: Okay. So it cannot be more than 500 and also I understand from handsets the (inaudible) on the Ericsson cultures before. I mean from their part it will not be on their balance sheet anymore from Q1 and really did the same for you, so basically it will not be in their accounts at all.

Well, we are looking at this. I think what we will do, of course, is the moment we sign we analyze that we take all the necessary actions in terms of accounting. This will be done immediately. Of course, we are impair, that the impairment that we are talking in Q4 is the consequence of the season that we have communicated on the 10 of December. But as soon as the finalization will happen, we will take all the necessary accounting actions right away. Francois Meunier – Morgan Stanley: Okay. Now maybe a more interesting question on the MEMS business, which is doing very well. Of course, smartphones and tablets, you know, customers doing okay at the moment, but we have seen a few surprise to those guys having a strong, very strong, maybe unusually strong Q4 and then Q1 a bit lower than normal seasonality. So is it what you’re accounting for your guidance of minus three plus core business?

Absolutely, yes. It is taking under consideration. Francois Meunier – Morgan Stanley: Okay. Okay. Thank you, Carlo.

Thank you. Thanks.

Thanks a lot. Next question, please.

The next question is from Tristan Gerra from Robert W. Baird. Please go ahead. Tristan Gerra – Robert W Baird: Hi, good afternoon.

Hi, Tristan. Tristan Gerra – Robert W Baird: Could you give us a sense of gross margin in Q1 excluding ST-Ericsson and also how we should look at the sequentially excluding Ericsson? And then additionally, what were the – on the utilization charges in the quarter and the utilization rate?

Yeah, the gross margin – I cannot provide, of course, all the numbers by business unit. But clearly in Q1, the gross margin of ST-Ericsson is heavily impacting – is impacting the gross margin negatively. In particular we will not have any licensees – any license revenues that was very material. So, this license, lack of revenues more than – impact more than the reduction of the unsaturation cost moving from Q4 to Q1 is a very material deterioration of the gross margin in ST-Ericsson, and this is bigger than the improvement that we have in terms of lower unsaturation cost. Tristan Gerra – Robert W Baird: Okay. And what about utilization rates expectation for Q1?

The utilization rate expectation – there is an improvement. It’s not a major improvement, but there is an improvement. We have done, I believe, at the end of the day, about 67% in Q4. And we – yeah.

We would expect to be – Lorenzo speaking – we would expect to be more in the range of 73 in Q1. So there is an improvement, but still the level of unused capacity charges will be significant during Q1.

Yeah. It is also impossible to – frankly, we are encouraged by the bookings that we see in January. It’s now few weeks. Basically, from the second week of the year, we are seeing strong booking performance in several families, particularly on products where there is more elasticity. But it’s pretty broad. It’s broad across the regions from microcontrollers to discrete to analog, power, etcetera. In the fabs, there are lead-times that needs to – we need to face these challenges. But at this moment, a loading of 73, 74% in Q1. And frankly, it’s difficult to load more and to produce more in Q1. Tristan Gerra – Robert W Baird: Okay. And then the last question for me, does your Q1 revenue guidance implies further reduction of inventories at distribution so in the channel and also what is your gross margin guidance implying for internal inventory days in Q1?

The inventory in Q1, there is a degree of stability in terms of absolute failure of the...

On our inventory.

You mean on our inventory or our distributors inventory? Tristan Gerra – Robert W Baird: Actually, both would be useful if you could comment.

Okay. So the – in Q4, we saw stability in the inventory of our distributors. So we did not see any material change. This is across the board in the various regions. And we expect similar pattern in the course of the first – on this year’s first quarter. I believe the level of the inventory of our distributors is at the right level, because we also need to respond to customer demand. Lead time are short and my assessment is the inventory of our distributors are clean today. As far as ST is concerned, after the major reduction of inventory in Q4, we see a degree of stability in absolute venue in dollar venue moving from Q4 to Q1 for sure in units and of course some form of deterioration in terms of stock terms. Tristan Gerra – Robert W Baird: Very useful. Thank you.

Thank you.

Take the next question.

The next question is from Gareth Jenkins from UBS. Please go ahead. Gareth Jenkins – UBS: I had just a couple of quick ones if I could. Thanks for taking the question. I just wondered on the $600 million to $650 million OpEx target, what level that sets against versus 2012. So you mentioned $900 million, does that obviously increase STR expense, I just wanted ex-STR expense more the kind of level of OpEx run rate is today than lower than the $600 million, $650 million or higher and does that $600 million, $650 million include any potential additional employee chances in from ST-Ericsson should you only partially sell ST-Ericsson as part of one of the auctions. Secondly just from the call earlier, I think you mentioned $1.95 billion to $2 billion of revenues and the $600 million to $650 million to get you to over 10% EBIT margin in 2014. I just wanted to check if that is actually the case?

No I did not mention that. In fact what I mentioned in December and also today is the 10% model requires two things. The first is of course that we execute on this expense of days reduction and we get into these ranks of $600 million and $650 million by Q1 of 2014 and second that we go back to the level of revenues that we had in the first half of 2011. I also said that with revenues in the range of $2 billion, our $1.95 billion to $2 billion our manufacturing infrastructure will not incur in any significant asset evaluation cost. But to go to the 10% level of profitability, we need to go back to the level of revenues that we had in the recent quarters. Gareth Jenkins – UBS: Sorry, go ahead.

Yeah, so in the first half of 2011. As far as, the first question is concerned and this range that we’ve given is taking into consideration the various options. So all – of course not options – not all options are the same they’re different. But in any of the options that at the end will be selected we will fall into this range of expenses. Of course, this is coming from the separation and the transition from ST Ericsson it’s coming also from the restructuring and the saving plan that we have announced in October on the digital sector calling for an annualized saving of $150 million to be achieved by the end of this year. So if you put all together that was the range, this is the range. The situation of – let’s say we are confident that we’re taking into consideration of possible options. It is clear then when you progress and you make a transition it is clear that the certain cost will come back. And again depending on the option it maybe different or slightly different but the best visibility is that we will fall into this range. Gareth Jenkins – UBS: Okay, thank you. And then so just to be absolute crystal clear, you need revenues of somewhere around 2.1, 2.2 billion to get to the 10% which is I think where you were annualizing (inaudible) 2011 level in the core business?

In the first half of 2011 we were in the range of 2.4, 2.25. Gareth Jenkins – UBS: Thank you very much.

Thank you.

Next question, please.

The next question is from Didier Scemama from Bank of America-Merrill Lynch. Please go ahead. Didier Scemama – Bank of America-Merrill Lynch: Good afternoon, gentlemen. Thanks for letting me on. Just wanted to think about the digital business, we have seen losses quite substantially in the quarter. I am just trying to understand a little bit, you know, how we improve margins from here since the digital division is really the big moving part in restoring the 10% margin. I think the overall division sales are down about 40% in the last two years versus where you were in the double-digit sort of regions of margin for the group. So you said, Carlo, this morning that you expected imaging to go back to about $160 million a quarter by the end of this year, but I was also wondering on the digital convergence sub-group how much we expected the OLE win for the cable gateway market to contribute to revenues and whether we should model digital convergence to sort of recover revenues over the course of 2013. That would be my first question.

Yes. So there are – in fact, there are three contributors and you are absolutely right. One contributor is our recovery in the imagining business and I mentioned this morning to, you know, the opportunity to go back to 160, followed by the end of this year and we are executing a number of important programs in imagining including significant ramp-up of volumes during the course of Q1. We have we believe also good opportunity in the area of our digital consumer business, and also material growth is similar to the growth that we are expecting in imaging. In digital consumer, outside the imaging we will grow in Q1. We see, first moving Q1 on the set-top box, on our monitor’s products, on our ASICs, and then a similar – a growth that is similar to the one that I describe on imaging in the course of today. And the third contributor, of course is the $40 million saving throughout the quarter, the one that we have announce in October. So, these are the three contributors here. Didier Scemama – Bank of America-Merrill Lynch: Right. So, that should bring you to profitability basically by the end of this year and try to demonstrate with the cost savings?

Yeah. Yeah, of course, and there is a transition of ST-Ericsson, there is the new organization, the new Embedded Processing Solution, there is microcontrollers, there are some additional cost from ST-Ericsson. So, we will start a new reporting, but of course we will provide the necessary reconciliation figures as we usually do when we change a product segment reporting. Didier Scemama – Bank of America-Merrill Lynch: Right. In terms of the gross margin from here, I mean, your inventories have come down quite substantially, you did a great job in a quarter. You’re talking about orders recovering, so should orders continue to strengthen, should we see a material step-up in gross margin in the second quarter?

Well, I think, the gross margin is – there is one quarter lag, because there are two effects. One is the unsaturation cost that is in the quarter, but the other one is the manufacturing cost that is not part of the unsaturation. And there are unfortunately major disruptions in the fab when the fabs are unloaded. For instance, if you look at Q4, the unsaturation cost was very material, $66 million. But the efficiency of the fab and the cost of the products that we are manufacturing in Q4 and will be sold in Q1 is impacting, I mean, because, of course, it’s not just that all the inefficiency costs are in the part of unsaturation. There are other important inefficiencies that are on the cost of the products that we sell typically one quarter after. So if we move to a good level of unsaturation, which we expect to do starting from the second quarter, we should see a material increase of the gross margin starting from the third quarter. Didier Scemama – Bank of America-Merrill Lynch: Fantastic. And then my final question, given the sort of wins you’ve announced so far for power, for microcontrollers, for engine management as well as your increased confidence for the imaging business, do you think quarter two will be sort of partly saturated, if and when ST-Ericsson goes down off the perimeter of ST?

Yes, we think so. Three are three ingredients. One ingredient is of course the logic. We have also additional opportunity to repatriate on the ST-Ericsson products. Clearly, we expect sales to go down. There is no impact in Q1, Q1 is the natural quarter. For ST-Ericsson it’s a natural quarter, it is really not impacted by the strategic decision of Q4. In any case, we still have important flexibility on certain technologies that today for ST-Ericsson will manufacture outside Crolles that we outsource and that could be repatriated if needed. So anyhow, the first block in logic, with this opportunity of flexibility. The second block is clearly imaging. In the first quarter there is a major impact in Crolles 200 on the BSI imaging technology, the backside-illumination technology for imaging and the other block the – with some delay in terms of time, in terms of volume is clearly the 90-nanometer and the 40-nanometer embedded flash. The 90-nanometer is a pretty complex product. We have products for automotive, we have product for the secure microcontroller, the secure element for instance, and this would be the third pillar of the production that we will run in Crolles in the new configuration. So it’s not only logic, it’s really three blocks of technologies and we believe we have the traction to fully log, crawl even with a significant decrease of the ST-Ericsson revenues. Didier Scemama – Bank of America-Merrill Lynch: Thank you. Thanks so much.

Thank you.

Thank you, Didier. Next question please.

The next question is from Mr. Simon Schäfer from Goldman Sachs. Please go ahead sir. Simon Schäfer – Goldman Sachs: Yes. Thanks so much. I just wanted to ask a question on – some of you said at the presentation this morning and I think you basically eluded to the house that your available market excluding ST-Ericsson would be growing by about 4% this year. Given that I think you are looking to gain market share, is that a reasonable assessment as to what you would expect sales growth to be this year just for the core residual.

Well first of all, the 4.3% is not the number coming from ST. I think it’s that WSTS figure, so it’s not our number, it’s a number that is coming from WSTS and we are reporting the number. This is for the semiconductor market that we serve reach out the part of market that is covered by ST-Ericsson. Frankly we believe that we can do better or much better and I think we have – last year, we had suffered of course because of the weaker market situation and the crises but also it was tough year for us for the major swing at our former major customer. This is very, very material. And we believe we’re at the bottom, we believe that for ST this major drop has been have solved now. This is valid for our former major customer. We believe this is (inaudible) etcetera. So in a sense, if we start now from acquisition that is cleaner and of course we believe that we can restart to grow in Q4 we believe we’re clearly gaining market share. We’re tracking and this is not probably STS because these are forecast and more qualitative indications. But we’re tracking the 10 most important competitors that we have in our business without wireless. They’re all reporting their number they’re out listed companies. And if I compare Q4, 2011 with Q4, 2012 our market share in Q4 among these top 10 competitors in Q4, 2011 was 10.9% and looking at the guidance because some of these companies have not yet reported. Looking at the guidance of these companies in Q4, 2012 our market share would be 11.4%. We’ve done slightly better than our guidance and we believe that in Q4 we have gained market share. For us there are of course all the new products that we’ve presented this morning but there are other two things that I would like to mention. Number one, that we’re at the bottom finally with the decline with our major customers of the past. And we believe we have a great opportunity of a major turnaround in distribution. If you take our distribution business in Q4 2012, last quarter, it is still about $120 million per quarter, below the level that we had in – for instance Q1 and Q2 2011. So this is, of course, is an important opportunity and we want to drive this major turnaround in distribution. Simon Schäfer – Goldman Sachs: Understood. I guess, Carlo, when you look at the numbers that some of your peers reported, I think everyone vastly pretty much talked about an acceleration of orders into January. You alluded to the same in the press release, is that – have you seen a continuation of that?

Well, when I talk about the result vis-à-vis our top 10 competitors I did referred to Q4 where many of our competitors declined, we did not and we had a small growth compared to Q4 2011. If we look at 2012, this time I think there will be clearly segments growing. I think I did mentioned consumer before. I think automotive will grow in Q1 definitely. There will be a drop in MEMS and if we will not drop MEMS in Q1 our guidance will be much better. Of course, we are dropping from a very, very strong position on MEMS in Q4. And the result of all of this is minus 3 that we have given. I can confirm that during the month of January we have seen strong booking across the board. Many families from Microcontrollers to Discrete, from the set-top box to, let’s say, all our analog automotive, so the booking is pretty strong. Is this sustainable? This is clearly premature to say, however, it’s an encouraging sign, because now its few weeks in January that we are experiencing a strong booking spend, broad range from the products and the geography point of view. Simon Schäfer – Goldman Sachs: Got it. And – so my second question is just on the net financial position, if I just adjust the investment in ST-Ericsson, the 1.2 billion, I mean just in light of seasonality, and some working capital swings since the first quarter, would you expect to have – end March with a similar or even the higher net cash balance, or is it going to be slightly lower?

No. I think it will be a slightly lower. I think that we will generate, you know, when we publish our cash flow result this includes 100% of the cash that is needed by ST-Ericsson of course. So, I think, if we consider 50% of the cash used for ST-Ericsson in Q1 that for us is about $100 million and we will post positive cash flow for – if we consider just 50% of ST-Ericsson, right, but not enough to cover completely for the dividend. Simon Schäfer – Goldman Sachs: Thank you.

And, therefore, there will be a slight degradation of the net financial position.

Thank you, Simon. Next question, please.

The next question is from Sandeep Deshpande from JP Morgan. Please go ahead. Sandeep Deshpande – JP Morgan: Yeah, hi. Thanks for letting me on. I have a question on microcontrollers, I mean, that is one of the focus areas in the new SP, if you talked to other companies in the microcontroller space, everybody is talking about ARM-based microcontroller and how successful they’re going to be in the ARM-based microcontroller. I mean, historically, the microcontroller business has been a great business to be. And I find it difficult to understand, if everybody is going to do ARM-based microcontrollers, why will this not be a commodity business like, say, application processors – not application processors necessarily, but like baseband processors that became a commodity business and highly competitive? And I have a follow-up question.

Yeah. Well, of course, I mean, the good news for us is that we were the first in the market with our ARM-based microcontrollers. I mean we stand clearly we were the first in the market visibly. Today, we have 350 32-bit microcontrollers type numbers. We have a strong ecosystem. We are working to even reinforce our existing microcontrollers. And it covers, of course, general purpose microcontrollers that is the base of our discussion here. But we are using the same core, the same technology and the same libraries to make secure microcontrollers. And one of the important growth drivers that we have this year in this field is the secure element for the newer field communication applications in the smartphones. This is very high volume, and we are driving this very aggressively. Clearly, we need to maintain the lead. We’ve been the first. So we are investing. We have another two that many of our competitor do not have. Some have – some of them have. And this is the application connotation. We are adding the condition to our customers’ complete application solutions including microcontrollers, for instance, low power microcontrollers including sensors, our MEMS and also including the power management, the radio frequency interface, etcetera. So we are working on many axis, of course we want to maintain the lead, 30% was a good growth for ST on the 32-bit. I mentioned some specific competitive advantages that we have in ST, for instance, our capability to manage security and therefore to be strong and present in the area of secure microcontrollers. I mentioned the application connotation in the fact that we can embed in one single application and offer solutions to our customers with low power microcontrollers, with MEMS and RF, power management, etcetera. But of course we need to continue to lead and push. This I believe is a good business. I think it’s also very fragmented from a customer point of view, so believe it’s more stable. I think it is a good business for distribution also, I think is – I am convinced that it’s a good growth driver and good business to stay and focus on. Sandeep Deshpande – JP Morgan: Thanks, Carlo. One more on your MEMS business, clearly, I mean, you are by far market the market leader in the MEMS market. And in December when you were around here, you talked quite extensively about the potential in that market. One question there is that still for you remains mainly a consumer driven market. You are in the tablet market, you are in the handset market. Whereas, the most sticky markets, such as automotive, which is where you -in other business have been very well, in automotive you’ve still not made much headway with MEMS sensors in automotive. Can you talk a little bit about that – about any potential in more sticky market?

Yes. Clearly it was a choice. We decided to go more aggressively in gaming and the smartphones. We are convinced that these smartphone business will evolve into a number of harps, so what we see is an evolution where in the smartphones there will be three arms, one arm for motion MEMS including the brain, one arm for audio MEMS with the new microphones and one half for the environmental kind of MEMS. We want to drive this because you are right. This is less sticky, but they are not in any company that can offer really I would say there is only STE that can offer a number of mental MEMS have, a motion MEMS have and an audio MEMS have, which is our microphone. Having said that, we decided to go first on gaming and smartphone because it was faster growth. Now we are absolutely committed to auto market. We will have started to win very well that we are now that auto market take a little bit longer of time. We have already important wins in the auto market and we will derive this very, very aggressively. On top of this, the resolve healthcare and on the fitness, the wellness this is an area where potential is I believe is huge. The pervasiveness would be very, very important. Again in healthcare this takes longer. You know the FDA approval cycle etcetera. But this is another area where here we’re really pushing. Now we should not of course we should never underestimate competition we know that there is and there would be strong competition here. But we are global we want to cover everything in sensors and we want to cover from gaming to – from automotive to healthcare fitness and well above. Sandeep Deshpande – JP Morgan: Thank you, Carlo.

Thank you.

Thank you Sandeep. Next question please.

The next question is from Mr. Peter Knox from Société Générale. Please go ahead. Peter Knox – Société Générale: Thanks for taking the question. You mentioned about cash flow and the dividend you paid it through this year, can you give us any color what you’d like to put at AGM in terms of dividend moving forward?

Of course, this is something that I cannot comment today. This is not – of course there would be proposal for management and there would be a Board approval and then there would be decipher with the AGM that is at the end of May. Of course, we are very committed to protect on one side the financial position of the company. And on the other side to keep continuity but today I cannot take a firm position on this. I believe last year we’ve done despite tough market environment and despite a major drop at one customer for us. We managed to distribute dividend and at the same time we have slightly improvement at financial position. My motivation the managed motivation of course is to continue to do so. But we will have to go through the formal process. And of course, we will understand the business also, the evolution of the bookings and all of these things that we have done in the past and the motivation of the management is to continue with this in the future. Peter Knox – Société Générale: Okay, thanks a lot.

Thank you, Peter. Next question, please.

The next question is from Mr. Yanez Sheller from Deutsche Bank. Please go ahead, sir. Yanez Sheller – Deutsche Bank: Yes, thanks very much for taking my question. Two questions actually, one, just a final clarification of the 10% margin target, so it basically means you have to get to 2, 2.5 – sorry $2 billion, $2.5 billion of revenues as a run rate and that is just the core business, or did I get that wrong? So that’s executing ST-Ericsson. And then the second question is around your secure element Microcontroller shipments, could you just remind us here of your market position and who you are shipping with, maybe if you can give us an overview, you have given that – is supplying a lot of the android handsets. That would be quite useful. Thank you.

Yes. Well, yes, on the first one I confirm, I think, the point, of course, is that we did this in the past, which is not too long ago. And, of course, during this last two years we have to suffer the market and on top we have the major block of our traditional and mutual customers. And today, as I said before, with these customers we are at the bottom. Hopefully we get that growing again. And we are very much motivated to go back to the levels we say we had not only in 2010 but also in the start of 2011. This is the good range for us and at this level we expect to achieve our financial model. As far as the secure microcontroller is concern, well, I think this is a great opportunity. I think, it’s more than opportunity. I think it’s important, important wins that we have for 2015, we are now improved production and this will materially contribute to the growth, we have good products. There is 32-bit products, there is ARM products. We master security since many, many years as you know, and I think we have a good technology here, a good silicon technology, and I think there would be a number of customers, including major customers using our secure microcontrollers in 2015. Yanez Sheller – Deutsche Bank: And just to confirm as a follow-up, I mean, you have a public partnership I think with Gemalto, will all of those secure elements use resolutions?

I cannot comment on customers. I mean, I think it’s broad and it’s big this year, but I cannot make any comment on customer. Yanez Sheller – Deutsche Bank: Thank you very much.

Thank you.

Thank you, Yanez. Next question, please.

(Operator Instructions) The next question is from Mr. Lee Simpson from Jefferies. Please go ahead. Lee Simpson – Jefferies: Hi, good afternoon, gentlemen and thanks for taking my questions. I just maybe start-off in generic gross margin question, beyond the reversal in the unsaturation charges that, you know we’ll see later this year on the back off some of those revenue drivers you talked off, can you give us a sense for how much the underlying gross margin could increase perhaps as a result of the cuts in CapEx, you see in the last couple of years feeding through has lower depreciation and COGS? And I’ve got a couple of follow-up questions as well.

Yeah. I think in terms of products, I mentioned three lines to contribute to our growth. One is MEMS, one is microcontrollers and one is the imaging. The first two is significantly accretive in terms of gross margins. The third is not, but it’s good business and as we’ve already shown in the recent past, in fact, that we can be a double-digit profit in this business with a reasonable volume. In terms of depreciation, we expect some material decrease of depreciation in the course of the year. And of course, these are all contributors. I think depreciation may decrease by about $100 million and $150 million or so.

Not all in the cost.

But this is not all in the cost of goods sold. There is also a portion that is in the expenses. But clearly, the contribution will come from loading because this is the major detractor now. And it’s not only the unsaturation cost. It’s the unstability is that is the inefficiency in the fabs. The second is, of course, selling more analog and MEMS and microcontrollers which will help. And the third is a material reduction of the deprecation. Lee Simpson – Jefferies: Got you. And maybe just on the analog business lines. I mean, do you have any sense for what sort of CapEx spend you expect on capacity for, in particular the MEMS business. The way I’m looking at this is, this continues to be a very bid end market potential for you. You’re moving into other end markets now. I just wondered if there is – as you see it today, there’s sufficient capacity and even types of equipment there, may be your packaging type changing, your pin codes are changing. I wonder if that necessity is a big CapEx spend at the end of the year?

No, there is come CapEx but it’s tens of million, few tens of million. And I have to say that it’s not too intense. There is some CapEx, I think it’s tens of million of dollar on...

Yeah. We have some CapEx on that became the part of the packaging on these kinds of things that MEMS started out, let’s say, definitely needed that, these kind of CapEx. But this is not really product line that is very much in line with respect to others in compare of the two lines. So...

The MEMS is also a line where we are continuously shrinking the dyes, because we need to continuously shrinking the packages. We need to really continuous – we need to continuously focus on miniaturization and making the packages smaller and smaller and an integrating functionality so we need to shrink these dyes and – but anyhow I think it’s more in the range of tens of million of dollars for MEMS and is not – this is not aligned, it is really very intense in terms of capital spending. Lee Simpson – Jefferies: Got. You. May be one quick question on quantification, I think I heard you mention earlier that the – I think the free cash flow wouldn’t cover the dividend in Q1, did I hear that right, or was there a subtlety to what you were saying there?

Yes, in Q1 we expect to have a modest degradation of the net financial position, yes. So we expect that if we cut by two the right way, the capital, excuse me, if we cut by two, the cash – the cash requirements for ST-Ericsson because 50% is us and 50% is Ericsson. If we do this, the free cash flow will be positive in Q1, but this level is not enough in Q1 to fully compensate for the dividend spending. So we expect a modest degradation, deterioration of the net financial position, but we are starting from a pretty solid level today and this remains a very important priority for us. Lee Simpson – Jefferies: Perfect. Thanks for the answers.

Thank you.

Thank you, Lee. I think at this point we will go ahead and close the call. Carlo if you have final comments.

No I think of course we are working very hard on three priorities this year. We want to go back to grow. I believe that Q4 and Q1 is kind of turning point because if we look at year-over-year we have the first initial growth both in Q4 and in Q1 and this is clearly a top priority. I mentioned the major turnaround in distribution is very, very important for us. There are several growth drivers. The second priority and obviously is the transition from ST-Ericsson and we want to make sure this transition is smooth and rapid and consuming a level of cash that is in the range of what we said today. And the third priority is to drive our 600, $650 million expenses per quarter initiative. This is a very important initiative in ST because we want to land at the beginning of 2014 with this level of expenses and we want to make sure that this will be level of expenses that the company we have not just in 2014 but also during the next three to four years. And enjoy then the growth and a much better level of profitability. Thank you very much.

Ladies and gentlemen, the conference is now over. Thank you for using choosing Chorus Call and thank you for participating in the conference. You may now disconnect your lines. Good bye.