In a move to enhance performance and optimize asset utilization, ST has announced a new savings plan designed to achieve $150 million in annual savings at the ST level upon completion by the end of 2013.

A portion of the savings coming from the identified initiatives will leverage the synergies of our previously disclosed Unified Processing Platform approach by integrating the development of System-On-Chip for digital TV. The plan also involves other new initiatives, such as efficiencies in our process-technology development model and expenses related to design outsourcing. Total restructuring costs are expected to be about $25 to $30 million through completion and might affect up to 500 jobs including contractors and attritions.

As a consequence, in combination with the savings to be realized through the restructuring plan announced in April 2012 underway at ST-Ericsson and considering the 50% holding of ST in ST-Ericsson, the Company expects to capture $220 million in annualized savings benefiting operating income attributable to ST by the end of 2013 (based on Q4 2011 cost base).*

Fourth Quarter 2012 Business Outlook

Mr. Bozotti stated, "Looking to the fourth quarter, we expect a relatively flat quarter-to-quarter pattern in revenue for the Company, reflecting the weak macro environment which has translated into a decrease of our booking levels. In anticipation, we have put in place plans to better align our manufacturing with the market environment by temporarily closing fabs, repatriating activities from subcontractors and executing cost-reduction measures. These extraordinary measures target an inventory reduction of approximately $150 million and will result in unsaturation charges during the fourth quarter estimated at about $80 million.

"As we have been managing through the difficult wireless business and macro-economic issues this year, our focus has been on maintaining a solid financial position. ST's attributable net financial position exiting 2012 is expected to improve in the fourth quarter and to be stable compared to the end of December, 2011. We have significantly reduced our capital expenditures this year and now project that the full year amount will be about $500 million.

"Finally, even with the softer macro environment, in the fourth quarter we anticipate strong revenue growth in motion MEMS and environmental sensors and continued progress in microcontrollers. On a longer-term basis, we have greatly expanded our opportunities in automotive with the recently announced strategic alliance with Audi."

The Company expects fourth quarter 2012 revenues sequential evolution to be in the range of about -5% to +2%. Reflecting significantly higher unsaturation charges compared to the third quarter, gross margin in the fourth quarter is expected to be about 32.0%, plus or minus 2 percentage points.

This outlook is based on an assumed effective currency exchange rate of approximately $1.30 = EUR 1.00 for the 2012 fourth quarter and includes the impact of existing hedging contracts. The fourth quarter will close on December 31, 2012.

Recent Corporate Developments

On August 6, ST announced the completion of an IP and talent acquisition from bTendo, an Israel-based projection-technology innovator. Following a successful joint development effort leveraging bTendo's Scanning Laser Projection engine and ST's industry-leading MEMS expertise, ST is well positioned to lead the emerging video-sharing market for smartphones and other portable consumer devices.

On August 30, ST announced a cooperation agreement with, and minority investment of 6 million Euros in, MicroOLED, a Grenoble, France-based company dedicated to the development and commercialization of state-of-the-art organic light emitting diodes (OLEDs). The agreement and investment strengthens ST's presence in the emerging market of micro-displays for a wide range of portable applications, spanning from camera viewfinders, video goggles to medical and security applications.

On September 13, ST announced that Georges Penalver had joined the company and been appointed Executive Vice President, Member of the Corporate Strategic Committee and Corporate Strategy Office. Penalver, most recently a member of the executive board of France Telecom/Orange Group in charge of the Group's Strategic Initiatives and Partnerships brings wide experience in defining corporate strategies, leading businesses, and implementing comprehensive transformation processes. At the same time, Executive Vice-President Jean-Marc Chery assumed the responsibilities of General Manager, Digital Sector, while maintaining his current role of Executive Vice-President, Chief Technology and Manufacturing Officer. As a consequence of Chery's expanded responsibilities, Eric Aussedat, Corporate Vice President, General Manager, Imaging, Bi-CMOS ASIC and Silicon Photonics Group; Joel Hartmann, Corporate Vice President, Front-end Manufacturing & Process R&D, Digital Sector, and Philippe Magarshack, Corporate Vice President, Design Enablement & Services, were promoted to Executive Vice Presidents while maintaining their previous scope of activities.

At the same time, ST also announced it will present its new strategic plan in December. The objectives of the plan are to continue to accelerate the company's roadmap towards its already announced financial model, taking into account the changed market environment and some specific customer dynamics, and to continue to ensure the future success of the company in total, with the two pillars, the Analog and the Digital businesses, both becoming as quickly as possible sustainable segments of ST.

-----
(*) Adjusted net earnings per share and operating income attributable to ST are non-U.S. GAAP measures. For additional information and reconciliation to U.S. GAAP, please refer to Attachment A.

Q3 2012 - Product and Technology Highlights

During the quarter, ST made strong progress with important new-product introductions and significant design wins in its key growth areas, including energy management & savings, trust & data security, health & wellness and smart consumer devices.

Automotive

• Contributed to safer, more reliable electronics systems in vehicles by introducing the only surge protection devices certified to the automotive industry's preferred specifications.
• Established a joint laboratory to drive innovation in Automotive electronics with the FAW Group of China.
• Collected multiple design wins on three continents for 32-bit automotive microcontrollers that manage critical safety systems in the car, including airbags and vehicle stability control.
• Confirmed its leadership position in car-body applications with two major design wins at major automotive-electronics manufacturers in Europe and Korea.
• Awarded a design win in the power supply for an Engine Management System (EMS) at one of the world's largest automotive players.
• ST's chips were selected to regulate voltage in automotive alternators by a major car maker in Korea.

Digital Sector
Digital Convergence

• With the introduction of a new, tiny set-top box (STB) chip, enabled end users to enjoy the prospect of smaller, cheaper portable STBs that allow broadcast and OTT (Over-The-Top) multimedia services beyond the confines of their home.
• Secured multiple design wins with major PC makers and display manufacturers for high-speed active-protocol routers.
• Earned an important win for a 40nm System-on-Chip to power a new series of IP set-top boxes from one of the largest players in the global market.
• Collected a design win for the Orly System-on-Chip in IP set-top boxes from a leading Asian service provider.
• Delivered to a major networking OEM samples of integrated circuits for 100Gb/s long-haul communication, manufactured in 32nm process technology.

Imaging, Bi-CMOS ASIC and Silicon Photonics

• Collected important design wins for an image-improvement processor chip in multiple smart phones from a leading mobile handset brand.
• Co-developed, with CMOSIS, a full-frame 24-Mpixel image sensor for a high-end digital still camera for a leading European camera and optics manufacturer.

Analog, MEMS and Microcontrollers

• Introduced high-efficiency cool bypass switches for photovoltaic modules that reduce the cost/W of renewable energy by enabling an even higher percentage of harvested energy to reach end users.
• Earned a design win for a power supply and control IC for digital satellite receivers at a major Chinese manufacturer.
• Ramped production of power-supply controllers for the newest all-in-one computer from a leading US manufacturer.
• Unveiled our smallest (3x3x1mm), lowest-power and highest-performance chip-scale gyroscope for advanced motion-sensing applications.
• Won the accelerometer and gyroscope sockets for a new smartphone from a leading consumer electronics manufacturer.
• Awarded the dual-core gyroscope by a major mobile vendor to perform Optical Image Stabilization in its flagship smartphone.
• Entered in the fast-growing touch-screen market, by ramping up production of IN-cell touch-control ICs for Samsung's latest smartphone.
• Awarded the microphone socket in a popular tablet from a major US corporation.
• Built further STM32 momentum with important design wins for a new keyboard at a major Consumer OEM and a pedometer/fitness-monitoring device from a leading US manufacturer.
• Collected wins for STM8 microcontrollers to manage power consumption in gaming accessories from major OEMs.
• Won a slot with a leading Asian healthcare equipment manufacturer for the 2-Mbit EEPROM memory in a respiratory aid system.
• Ramped volume production of the new Visa-certified Advantis/TIBC smartcard banking system-on-chip in Latin America.