STMicroelectronics and Freescale Launch Broad Technology Agreement for Automotive Applications

Collaboration on PowerPC® 32-bit microcontroller architecture drives automotive innovation

AUSTIN, Texas, and GENEVA, Feb. 7, 2006 -- Freescale (NYSE:FSL, FSL.B) and STMicroelectronics (NYSE:STM), the two leading semiconductor suppliers to the automotive industry*, are teaming up to establish a wide-ranging initiative to reinforce their respective strengths in automotive applications. The two companies will create a joint microcontroller design team, align process technologies and share intellectual property, including high-power MOS technologies

The agreement between the companies covers high-performance, cost-effective 32-bit microcontrollers based on PowerPC® cores; the basic Intellectual-Property (IP) for automotive and navigation applications; alignment of 90-nm embedded Flash process technology; and high-voltage Power MOSFET (Metal-Oxide Semiconductor Field-Effect Transistors) and IGBT (Insulated-Gate Bipolar Transistor) technologies.

The jointly designed products will use the market-proven PowerPC architecture with ST and Freescale’s well-established expertise in embedded Flash, providing robust and cost-effective solutions to customers. At the same time, Freescale will use ST’s high-power technologies for applications such as hybrid electric vehicles.

The new microcontrollers resulting from the joint efforts of the two companies will meet industry demand for more power and enhanced intelligence to drive control-intensive products in all segments of automotive electronic systems. Target applications include high-volume solutions for engine and transmission control up through multiprocessing capabilities for fault-tolerant systems required by applications such as Drive- and Brake-by-Wire, advanced vehicle control and driver information systems.

The joint design program will be co-managed by the companies and will be headquartered in the Munich area. The project will initially combine the expertise of more than 100 existing designers from the two companies, and will define, manage and design products to complement each company’s ongoing independent roadmaps. ST and Freescale will manufacture the microcontrollers using aligned process technologies, starting at 90-nanometers, and will market them independently, assuring a dual source and securing a better supply of these devices for customers.

“Electronics has clearly become a major differentiator in the automotive market,” said Paul Grimme, senior V.P. and general manager, Freescale’s Transportation and Standard Products Group. “And the PowerPC architecture, the leading 32-bit architecture in the automotive industry, is a driver of that differentiation. The combined design and manufacturing resources of ST and Freescale will give automakers a broader portfolio of world-class, 32-bit products for increasingly complex control functions within the car.”

“This partnership of the two leading automotive IC suppliers is set to better serve our customers and partners by bringing the combined design strengths of Freescale and ST to an ever wider range of automotive applications, from high-end power train to advanced safety and driver-information systems,” said Ugo Carena, corporate V.P. and general manager of the Automotive Product Group of STMicroelectronics. “Furthermore ST’s proven manufacturing expertise, along with its ability to meet the needs of the market by leveraging the knowledge accumulated from its strategic alliances with automotive leaders, will make a solid contribution to the success of the cooperation.”

According to Strategy Analytics, the worldwide automotive semiconductor market is forecast to rise from $16 billion-plus in 2005 to more than $22 billion through 2009, an annual growth rate of 8 percent. The research firm has identified the 32-bit and 64-bit microcontroller (MCU) segments as the two fastest-growing segments of the automotive electronics market, with the 32-bit market expected to become the dominant automotive MCU architecture by 2007-2008.

This agreement, though independent of previous collaborations, is another in a long history of successful collaboration between the two companies. Freescale and ST began working together in the Crolles2 Alliance in 2002. The companies’ cooperative efforts have encompassed IP, packaging and process development.

*according to iSuppli’s preliminary 2005 rankings

About STMicroelectronics
STMicroelectronics is a global leader in developing and delivering semiconductor solutions across the spectrum of microelectronics applications. An unrivalled combination of silicon and system expertise, manufacturing strength, Intellectual Property (IP) portfolio and strategic partners positions the Company at the forefront of System-on-Chip (SoC) technology and its products play a key role in enabling today's convergence markets. The Company's shares are traded on the New York Stock Exchange, on Euronext Paris and on the Milan Stock Exchange. In 2005, the Company's net revenues were $8.88 billion and net earnings were $266 million. Further information on ST can be found at www.st.com.

About Freescale
Freescale Semiconductor Inc. (NYSE:FSL) (NYSE:FSL.B) is a global leader in the design and manufacture of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. Freescale became a publicly traded company in July 2004. The company is based in Austin, Texas, and has design, research and development, manufacturing or sales operations in more than 30 countries. Freescale, a member of the S&P 500(R), is one of the world's largest semiconductor companies with 2005 sales of $5.8 billion (US).
www.freescale.com