In 2002, Geneva, Switzerland-based STMicroelectronics NV, one of the world's largest semiconductor manufacturers, formed the Crolles2 R&D alliance with two of its competitors. CFO Carlo Ferro says the alliance allows the company to share the high R&D costs of a capital-intensive business without losing a competitive advantage. The alliance currently is working to advance standard logic technology to enable the production of semiconductor chips that have higher functionality and can accept a higher number of transistors in a given area of silicon.

IW: What prompted ST to form this R&D alliance?

Ferro: In the technology arena and especially with respect to the process technology arena-I am referring to the foundry of silicon and not to the design, which is the proprietary area of the company-there is the possibility of leveraging on pooling of resources, ST has had for a long time a significant and positive experience with this form of cooperation on process technology together with Philips Semiconductor. And when the time came [to develop a 12-inch wafer manufacturing facility], ST and Philips have decided to continue this pooling of interest, eventually extending the alliance to an American partner ... at the time, the semiconductor division of Motorola, which is today Freescale. We are all three developing the logic technology. If we combine our revenues, we have significant power in spending on R&D since the three companies together exceed $20 billion in revenues. So, basically, [by] joining forces we are among the world's two largest semiconductor companies, therefore with the largest power of spending in R&D, We all benefit on pooling our resources, which results in a) ensuring time to market, b) being excellent in technology and c) mitigating the cost of technology development to an extent compatible with the level of financial return that investors require and in the range of the lower margin and profitability situation, which has been the industry trend in the past few years.