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  Date: 25th Jan 2011

ST registers 6.6% quarterly revenue growth in 4Q 2010

ST Microelectronics reported its fourth quarter 2010 net revenues increased 6.6% sequentially to reach $2,833 million. ST calls this a record year for the full range of ST's "Sense and Power" portfolio, namely advanced analog and MEMS, as well as microcontrollers and automotive applications.

Net revenues for the full year 2010 increased 21.6% to a record $10,346 million from $8,510 million in the prior year, with IMS (Industrial and Multisegment Product Sector) and ACCI (Automotive/Consumer/Computer/Communication Infrastructure Product Groups)
increasing 45% and 32%, respectively.

President and CEO Carlo Bozotti commented, "ST had a very strong finish to the year. Our fourth quarter revenues came in near the top end of our range, increasing 6.6% sequentially on broad-based strength in analog, MEMS, microcontrollers and automotive applications. Our gross margin further increased to 39.9%, up 70 basis points sequentially, coming in above the midpoint of our guidance.

"ACCI and IMS again achieved record sales this quarter, accompanied by further improvements at the operating profit level, with ACCI operating margin increasing to 11.9% and IMS rising to 22.5%. In wireless, while operating losses remain very significant, ST-Ericsson has completed its restructuring and is now well on its way to complete the transition to its new product portfolio. Overall, ST's strong sales results, driven by our innovative product portfolio combined with our restructuring efforts, enabled ST to generate net earnings of $830 million for the year."

"In 2010, we were well prepared to take advantage of significantly better industry conditions with the right portfolio and we have started to turn our vision of leadership in 'Sense and Power' applications and in multimedia convergence into reality. In the last eight quarters, ST went through the most severe economic recession in 2009 and successfully capitalized on the 2010 market recovery. Throughout this timeframe we remained focused on our growth and profitability objectives. Today, our innovative products, which have leadership positions in highly successful applications, customer base and solid capital structure, make us a much stronger company."

Other highlights of the ST's release are:
Fourth quarter net revenues increased on a year-over-year basis by 30% in Industrial and Multisegment Sector (IMS), and 15% in Automotive/Consumer/Computer/Communication Infrastructure Sector (ACCI), while Wireless, reflecting the ongoing portfolio transition at ST-Ericsson, decreased by 21%. Overall fourth quarter net revenues increased by 9.7% on a year-over-year basis, geographically led by Greater China-South Asia with sales growth of 15% and the Americas with a 14% increase.

On a year-over-year basis, all market segments, except Telecom, posted growth, with Automotive up by 27%, Industrial & Other by 18%, Consumer by 14%, and Computer by 7%. Telecom declined by 7%. Distribution increased 25%.

Sequentially, revenues grew in all regions, led by Japan-Korea, Greater China-South Asia and Americas with 10%, 8% and 7% growth, respectively.

All market segments increased on a sequential basis, except Consumer, with Automotive higher by 16%, Industrial & Other by 13%, Computer by 10%, and Telecom by 7%. Consumer decreased by 6% on weakening demand. Distribution increased sequentially by 4%.

Wireless net revenues in the fourth quarter increased 3% sequentially to $562 million, reflecting continued strong performance from ST-Ericsson's new 2G/EDGE platforms and initial HSPA+ modem sales offset by weakness in the TD-SCDMA market and the anticipated decrease in legacy products. Wireless operating loss, excluding $24 million of restructuring charges, in the fourth quarter was $136 million. Wireless operating loss, excluding non-controlling interest, was $64 million in the fourth quarter compared to a loss of $37 million and $11 million in the prior and year-ago periods. Sequentially, Wireless results reflect increased losses at ST-Ericsson due to anticipated seasonality and currency effects, as well as price erosion due to their ongoing legacy product transition.

ST recorded $83 million of income in the fourth quarter of 2010 compared to $60 million and $59 million in the prior and year-ago quarters, respectively, reflecting the net results attributable to non-controlling interest, mainly related to the ST-Ericsson joint venture. This amount is posted below operating results in ST's Consolidated Income Statement and reflects primarily Ericsson's 50% share in the joint venture's results, as consolidated by ST.

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