Vision and strategy: a message from Carlo Bozotti

2005 has been a year devoted to strengthening and reshaping ST into a stronger and more competitive industry leader. We have launched a significant number of important initiatives, focusing on: Research and development effectiveness to improve our time to market, which is the key to competitiveness and profitability Sales expansion, targeting new major key accounts to broaden our base of strategic customers, and developing our presence in major countries such as Japan and China Cost reduction programs, including some painful but unavoidable restructuring initiatives, which affected primarily our European sites and the Mediterranean area.

In 2006 we are still facing several challenges, and we know it will not be easy. But we are moving fast in the right direction, and I know we can capitalize on our solid culture and values to drive our company to success. For more than 15 years, the principles of Corporate Responsibility have been embedded in our values, and we have always been conscious of our responsibility toward our stakeholders. This commitment has led us, quite naturally, to be one of the first signatories of the Global Compact in July 2000, and it has been illustrated by the results we have obtained in the area of Sustainable Development. To name a few:

• We have cut our energy consumption per unit produced by 44% since 1994
• We have cut our CO2 emissions per unit produced by 50% in the same period
• We have improved our health and safety performance by a factor of two in the last four years.

We are permanently in search of excellence; we have recently updated our company values (now called Principles for Sustainable Excellence) to share more easily our commitment to Corporate Responsibility with all our employees, and I have decided to focus our actions on four main areas in 2006:

• Integrity, the core of our business ethics, which I see as a deep ethical obligation
• Health and safety, where we will work at protecting the health of our employees inside and outside their workplace
• Our efforts to help bridge the digital divide
• And, of course, as part of our commitment to sustainable development, product responsibility and in particular energy conservation. We will make a special effort in designing and introducing new products that are more environmentally sound, particularly in the area of energy saving.

This Corporate Responsibility Report will show you how we are deploying our values and commitment in our daily activities, how we integrate a culture of responsibility and accountability in our decision-making processes, and how this leads to performance improvements. I am proud to lead a company that stands up for what is right, and has demonstrated that good, responsible business practice is also good for the bottom line.

This report has been prepared in accordance with the 2002 GRI Guidelines. It represents a balanced and reasonable presentation of our organization's economic, environmental, and social performance.

Carlo Bozotti
President and CEO of STMicroelectronics