Public Society

EC10

For details of donations to the community and civil society, please see the Social performance overview.

Research & Development

We believe that Research & Development (R&D) is critical to our success, and we are committed to continue investing in R&D in the future. The main R&D challenge we face is to continually increase the functionality, speed and cost-effectiveness of our semiconductor devices, while ensuring that technological developments translate into profitable commercial products as quickly as possible.

Our policy in the field of R&D is market driven and is focused on leading-edge products and technologies in close collaboration with strategic alliance partners, leading universities and research institutes, key customers, and global equipment manufacturers working at the cutting edge of their own markets.

STE3, STS44

– Number of partnerships with universities, colleges and schools: 217

We have a number of strategic alliances and partnerships with customers, suppliers and other semiconductor manufacturers. For more details, see page 33 of our 20-F report.

Our two major technology centers are Crolles2 Alliance, France, and Agrate, Italy. Other advanced R&D centers include Catania and Castelletto in Italy; Grenoble, Tours and Rousset in France; Phoenix, Carrollton and San Diego in the USA; Ottawa in Canada; Bristol and Edinburgh in the UK; Bangalore and Noida in India; Beijing, Shenzhen and Shanghai in China; Singapore; and Geneva in Switzerland.

We cooperate with Philips Semiconductors and Freescale as part of the Crolles2 Alliance to jointly develop sub-micron logic processes to provide 90nm to 32nm chip technologies, and to build and operate an advanced 12-inch wafer pilot line. In 2005, the Crolles2 Alliance extended the scope of cooperation to include R&D related to wafer testing and packaging. We have worked with Texas Instruments since 2002 to define and promote an open standard for wireless application processor interfaces; this initiative has now broadened and is known as the MIPI alliance, which includes over 92 members that collaborate as mobile industry leaders. We have consistently maintained our R&D effort over the past years, whatever the market conditions have been, as demonstrated by the following figures:

STE4: R&D expenditures
	2003	2004	2005
US$m	1,238	1,532	1,630

STE5*: R&D headcount evolution
	2003	2004	2005
Headcount	5,254	6,003	6,570

STE5*: R&D headcount by region
	Europe	Americas	Asia-Pacific	Others	TOTAL
Employees	4,632	317	1,425	196	6,570

In 2005, we reallocated about 10% of our total R&D resources in favor of higher-priority projects for both process technology development and product design, with the aim of increasing the efficiency of our activity and accelerating product innovation.

Our success depends in part on our ability to obtain patents, licenses and other intellectual property rights covering our products and their design and manufacturing processes. To that end, we continue to seek patents on our circuit designs, manufacturing processes, packaging technology, and other inventions. We maintain our strong IP portfolio (over 19,000 patents) with a constant flow of new patents:

STE6: ST patent applications filed by region
	2004	2005
Italy	239	253
France	245	310
Rest of Europe	75	69
Americas	69	39
Asia-Pacific	86	49
Total	714	720

Governments

Taxes are part of our normal economic contribution to society, but we operate in many jurisdictions with highly complex and varied tax regimes. Our tax rate is variable and depends on changes in the level of operating profits within various local jurisdictions and on changes in the applicable taxation rates, as well as changes in estimated tax provisions due to new events. We currently enjoy certain tax benefits in some countries, and these benefits may not be available in the future due to changes in the local jurisdictions.

EC8: All taxes paid
	2001	2002	2003	2004	2005
US$m	97	146	41	168	122