Sustainable Financial Performance

Net revenues by region of origin

Product revenues

After a decrease in demand in the first half of 2020, from the third quarter onwards we saw a much faster and stronger than expected resurgence in demand, which further accelerated in the fourth quarter.

This was driven by car production volumes, inventory replenishment across the automotive supply chain and, more broadly, an increasing need for semiconductors related to electrification and digitalization.

In terms of revenues by product group, two groups grew year over year, while one declined.

Analog, MEMS and Sensors Group (AMS) revenues increased 18%, mainly driven by imaging and analog products for personal electronics.

Microcontrollers and Digital IC Group (MDG) revenues increased 14.9%, driven by strong growth in microcontrollers from both OEMs and distribution. This was partially offset by a strong decline in RF Communications products in the fourth quarter.

Automotive and Discrete Group (ADG) revenues decreased 8.9%. Revenues from our Automotive Product sub-group decreased, mainly due to a decline in legacy automotive, partially offset by growth in advanced driver-assistance systems (ADAS) products. Revenues for the Power Discrete sub-group saw a smaller reduction, with soft market conditions for industrial in Europe and the Americas partially offset by growth in car electrification. I 103-2 I 103-3 I

Lorenzo Grandi

President, Finance, Infrastructure and Services, and Chief Financial Officer

In 2020, amid the COVID-19 pandemic and global trade tensions, ST’s transformation to support growth and demonstrate resilience was evident. Our net revenues grew 6.9% year over year driven by the breadth of our product portfolio, the diversity of the markets we address and the wide, and in many cases, intimate relationships with our customers that supported us in a challenging environment. ST has a bright future. We see significant opportunities to grow our revenues, improve our profitability and make ST financially stronger and even more resilient.”

Looking forward

We plan to invest between US$1.8 billion and US$2 billion in 2021, to meet strong market demand and advance our strategic initiatives.

This includes investments in expanding the capacity of our existing 300mm fab at Crolles (France), developing the product mix for our most advanced 200mm fabs, and the substantial expansion of our Silicon Carbide capacity.

It also includes around US$400 million of investment in strategic initiatives, including:

• continued investment in our new Agrate 300mm fab (Italy)
• R&D for Gallium Nitride power technologies
• fabrication of Silicon Carbide substrates

Extra-financial reporting

Each year, socially responsible investment rating agencies, analysts and investors evaluate our corporate behavior and performance based on a wide range of environmental, social and governance (ESG) topics.

In 2020, we maintained a strong presence in the major sustainability indices, including Dow Jones Sustainability Index World, FTSE4Good, Ethibel, EuroNext VIGEO Europe 120, Eurozone 120 and Benelux 120.

We were also included in the Bloomberg Gender Equality Index for the third consecutive year and in the CDP A list for climate change for the first time (see Focus).

Focus

ST recognized as a leader in managing climate change

Transparently disclosing our environmental data to all stakeholders is an essential part of our commitment to addressing climate-related issues.

Often referred to as the gold standard of environmental reporting, CDP is a not-for-profit organization that runs a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.

We have been participating in the CDP’s annual climate change questionnaire since 2006 and use it as an opportunity to identify emerging environmental risks and opportunities for action to ensure we stay on track.

In 2020, ST was one of the 277 companies out of more than 5,000 that was included in the CDP A list for climate change. This recognizes our commitment and actions to tackle climate change issues. We are leading on corporate environmental ambitions to cut greenhouse gas emissions and to manage climate change within our own operations and our extended supply chain.

Our sustainability performance was recognized by the Wall Street Journal that ranked ST 71^st among 5,500 publicly traded companies around the world.

In July, ST was awarded Prime status by the Institutional Shareholder Services (ISS), and ranked in the top 10% of semiconductor companies. We received the highest rating of the semiconductor industry for both environmental and social topics.

These achievements acknowledge our longstanding commitment to conducting our business responsibly and recognize our performance in many areas, ranging from business ethics, innovation, and quality, to environment and labor practices. Participating in these evaluations provides an opportunity to assess our performance within a wider context, benchmark ourselves against our peers, measure our progress, and identify areas for further improvement.

Manjit Jus

Global Head of ESG Research and Data, S&P Global

We congratulate STMicroelectronics for being included in the DJSI World. A DJSI distinction is a reflection of being a sustainability leader in your industry. With a record number of companies participating in the 2020 Corporate Sustainability Assessment and more stringent rules for inclusion this year, this sets your company apart and rewards your continued commitment to people and planet.”