| In 1999, the global consumer market saw a marked acceleration toward digital consumer products: DVD players, advanced set-top boxes and many others that require a demanding combination of high performance digital processing and competitive chip costs. ST’s pioneering role in creating this market and the close relationships it has forged with key customers resulted in a substantial upsurge in orders and reinforced the Company’s position as the world’s number one supplier of MPEG-2 decoders for STB applications. The Company’s sales to the consumer segment in 1999 totaled $1.118 million and represented 22% of ST’s total revenues. In addition to its leading position in digital consumer chips, ST supplies devices for the full range of consumer applications, including televisions, video recorders, audio systems, domestic appliances and heating controls. Key customers include Grundig, Kenwood,
Matsushita, Pace, Philips, Samsung, Scientific-Atlanta, Sony and Thomson Multimedia. The consumer market is expected to grow at a compounded rate of 16% between 1999 and 2003—driven particularly by soaring demand for digital consumer products such as DVD players and advanced set-top boxes (STB). During 1999, the UK ser-vices BSkyB and OnDigital began to supply customers with free STBs, doubling the demand for products for which ST is the main supplier. ST is also strongly positioned in the rapidly growing market for DVD players, with its front-end and back-end solutions in volume production with major OEMs in Asia, Europe and the US. Although the ST20 processor is firmly established as the de facto processor core for set-top boxes, ST has successfully allied with Hitachi to develop a 64-bit microprocessor architecture, the SH-5, for future gen- erations of digital consumer products for high-end multimedia applications. 1999 also saw the sudden emergence of an exciting new market
for equipment that allows digital music files to be compressed by a factor of 10 without compromising quality. ST captured a major share of this exploding market and emerged as a clear leader, according to independent industry estimates. Early in the year, ST enriched its technology portfolio through the acquisition of Vision Group, whose leading CMOS imaging technology is used in a wide variety of applications from toys to desktop video conferencing, digital still cameras, security, biometrics and automotive systems. The potential of combining image capture and image processing functions on the same chip opens up exciting new perspectives in system-on-chip applications in all industry segments.
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