Hello, hello. Good morning, everyone. My name is Céline Berthier. I'm the Head of Investor relations of STMicroelectronics. Thank you very much for joining us at our 2022 Capital Markets Day, the first in-person event we've done for a long time. Thank you for those joining us in Paris. Thank you also to those joining us on the webcast. I know there are a number of you, and some of you could not travel. In any case, I do appreciate your interest in ST. Hosting the event today will be Jean-Marc Chery, ST President and Chief Executive Officer. We also have several members of the Executive Committee of ST presenting today as well. Before we begin, please note that we have issued this morning a press release outlining our path to a $20 billion revenue ambition.
Jean-Marc and the team will reference this ambition in the presentation, as you would expect, all along the day. Here you have the agenda. Jean-Marc will shortly start with his introduction. Our product group heads will follow. Marco Monti in charge of Automotive and Discrete Group, then Marco Cassis in charge of Analog, MEMS and Sensors Group, and Remi El-Ouazzane in charge of Microcontrollers and Digital ICs Group. They will discuss their products, their key IP, technologies, and overview their business opportunities. We will then have a short break as you see around 10:45. For those joining us in Paris, I encourage you during the break to go and see the videos that are running in the main room. There are some very interesting customer testimonials.
I'm sure you will, you will like it, and also an overview of ST manufacturing, an overview of ST sustainability strategy. Don't hesitate. After the break, we will cover three more topics. Technology, manufacturing with Orio Bellezza in charge of technology, manufacturing, quality, and supply chain. We will have Rajita D'Souza on ESG and Sustainability. Rajita is our Chief Human Resources Officer and also in charge of Corporate Social Responsibility. Last but not least, we will have Lorenzo Grandi, our Chief Financial Officer. He will present the financial overview. After Jean-Marc and the team will host a general Q&A session. Our webcast will stop after the Q&A session.
For the one that are in Paris, there will be a networking lunch, served in the main room where you went through. This is an opportunity, if you wish to meet with our management team that would be available for questions. Hello. This live webcast featuring video, audio, and presentation is accessible at ST's website, CMD. The address is cmd.st.com. All presentation and material can be downloaded and are available right now. A recording, as usual, of the event will be available shortly after the end of the event. As usual, the presentations include forward-looking statements that involves risk factors and that could cause ST's result to differ materially from management expectation and plans.
We encourage you to review the Safe Harbor statement presented here and also ST's most regulatory filings for a full description of this risk. With that, I'd like to invite Jean-Marc Chery, our President and Chief Executive Officer, to take the stage.
Good morning. I hope you like the place. I guess this is a nice one. Thank you for attending ST 2022 Capital Markets Day. Well, I know that some of you cannot attend in person, and I thank them for attending through our webcast. Before I start, I would like to thank our Chairman of the Supervisory Board, Maurizio Tamagnini, our Vice Chairman, Nicolas Dufourcq, and the Chair of the Audit Committee, Ana de Pro Gonzalo, for being here with us today.
I am happy to host this event together with all ST Executive Committee. There is Marco Cassis in the new role of AMS President. There is Remi El-Ouazzane, President of MDG, and Rajita D'Souza, the Chief Human Resources Officer. This is a first Capital Markets Day. We'll see. We have also in the room Jerome Roux, President, Sales & Marketing. Okay, and Steven Rose, our Legal Counsel. Of course, we have Lorenzo Grandi, Marco Monti, Orio Bellezza, and myself, the veterans of the event. Well, I also want to take the opportunity to thank Claude a lot to have agreed to our invitation today.
For those of you who are present, I hope you have the opportunity to watch the video testimonials from our customers.
They would like to be with us today, attending this Capital Markets Day. We face altogether three incredible years, but I have to say that we move out with a stronger and closer relationship. I really would like to thank our customers and partner. Well, today, we will describe our ambition to become a $20 billion+ revenues company between 2025 and 2027 and delivering stably an operating margin above 30%. This is really the next step of the strategy we set up four years ago. First, I would like to recall the fundamentals of ST and before, of course, going through more in detail on this ambition. First of all, our value proposition to stakeholders.
It is focusing on improving the fundamental value of the company as a sustainable and profitable growth company, providing differentiating enablers to customer and a strong commitment to sustainability to all stakeholders. We pursue an organic growth model with bolt-on acquisition strategy. Our operational model is integrated device manufacturer. Of course, we have internal capabilities in product, IP design, technology, development, application, and advanced manufacturing. Our manufacturing capability, both in assembly and wafer fab, are selectively complemented with great partnership with foundry and OSAT. This should represent a proportion of about 25% of our total production activity in the next few years. 25% is an average between a wafer fab, more at 20%, and assembly, more at 35%. Our strategy stems from three long-term enablers, so the smart mobility, the power energy, and Internet of Things and connectivity.
This, of course, guides our activities, IP product design, innovation, open innovation processes, technology R&D, and manufacturing investment. We have a strong focus on Automotive and Industrial market, where we want to be a leader and broad-range provider of products and solutions, whatever our application-specific products or general purpose products. We want, again, everywhere we play, to have a leadership position. We selectively address the Personal Electronics market, targeting some leadership position with a few differentiated products and custom solutions. We leverage our general purpose product portfolio to capture high-volume applications. We also participate in the communications equipment and computers and peripherals market, addressing high-volume applications with few custom designs or differentiated products.
All is built on our customer, large customer base and with a very well-balanced go-to-market approach between the top accounts, OEMs, and our distribution partners. This strategy has already yielded in appreciable results, with ST reaching in 2021 $12.8 billion revenues and delivering 19% operating margin. I confirm today that for the financial year 2022, we are on track to deliver about $15 billion of revenues with an operating margin between 24%-26%. Now I would like to move on the critical success factor to reach our ambition, because I guess this is what you expect. Okay. What are the critical success factor? Well, first of all, it considers high single-digit compound annual growth rate of our addressable market in all the market we serve.
It relies both on our core business, where basically we have already some leadership position, we have cost competitiveness, and we will grow and we are growing in line with the market. Well, an example for the Automotive product group, okay, all the components related to the braking system is considered core business. High growth areas which are with or adjacent to our core business, where we want continuously to strengthen our position in market, in application, in IP product and technology. Here we are investing very consistently with this approach in business development, in application lab close to customers, in product, in IP, and very important, in people and talent. One objective we had in 2018, when we present ourselves to you, was to hire 1,000 engineer for R&D.
We checked with Lorenzo a few days ago. I think we have hired 1,070 engineers. We purposely attract talent consistently with our strategy. Let's now elaborate more by end-market on this high-growth areas and share with you my conviction about the revenues. Later on, I will share with you my conviction about the profitability. First of all, we have a unique position to expand and grow in Automotive. Why? Because you will see with Marco Monti, we have the key enabling product and technologies and supply chain to support really this unprecedented transformation, what we classify electrification and digitalization.
Well, what can better illustrate the electrification with the success about the programs we have with basically now 20 car makers, with the electrification of the powertrain, with our silicon carbide MOSFET. Well, I am pleased again to announce that we expect to have our $1 billion revenue generated by the silicon carbide MOSFET in 2023. Thanks to the 100 programs we have both on Automotive, I just spoken about, but Industrial customer as well. In car digitalization, as another other example, we are really supporting, enabling the customer move to ADAS and software-defined vehicles. Why?
Because we offer our capability to fulfill the specification in a high computing power, in real-time control, in power management of the various microprocessor or microcontroller units, and with the sensor. This is based both on partnership. MPUs is based on 7 nanometer FinFET with the strong partnership we have with TSMC. On MCUs, it is based on our internal proprietary technology, so the 28 FD-SOI, embedded PCM base. Power management on our proprietary technology, BCD. Then sensor, it is based on LiDAR or MEMS, which are also our own technologies. It is clear that Marco will spend time to elaborate on it, but importantly, Marco will describe the customer intimacy we have created across the value chain of this industry between the carmakers, the tier one and the tier two to support their transformation.
Secondly, there is important growth opportunity for ST in Industrial market. Why? Because this market is also undergoing a deep transformation, less known than Automotive, but a deep transformation. It is driven by the digitalization of device and systems, but including the connection integration with the cloud, and what we call the cloudification, and Remi will go more through on it. The energy and power efficiency improvement. For this market, we target three main domain. The factory automation and Industrial infrastructure, which is the largest part of the market we address, which include the automation, the power and energy management of all the machine and system, the energy transformation, test, measurement, and lighting. Consumer Industrial, which include home appliances, smart buildings and homes, and power tools, battery-based. This is what we call the electrification of everything.
Some more specialized part, okay, like the healthcare and aerospace. Considering the specificity of this market, which is very fragmented, we address it broadly through either global important OEM or more local, regional, specialized one, and of course, through our distribution channel, what we call the mass market. This is done, okay, from product to solution with a deep and strong application know-how. I would like to elaborate a little bit on, importantly, our competitive advantage. What is ST competitive advantage? The ST competitive advantage is really to offer a complete product portfolio, so from embedded processing, Analog and power solution, and sensor, and smart sensor at the edge. This is the full, let's say, a bill of material offer.
Of course, okay, with the competence we have, we bring to the customer, okay, from product to solution. You will see during the presentation, both Marcos, so Marco Monti and Marco Cassis and Remi, that will elaborate more on that. By the way, I call this guy the Three Musketeers of Industrial market. All for one for all. I would like now to complete the high-growth areas opportunity overview with a standalone electronics market. The Personal Electronics, smartphone and connected device, well, will continue to be the centerpiece of our connected world. More and more you will have some porosity, okay, between the standalone electronics world and the embedded electronics world. That means the Personal Electronics, Industrial, and Automotive. The wealth of available data continue to expand and assist people to take smart and intelligent decisions.
Now we see the augmented reality evolving in a real, more mature platform. We see also many developers creating their space in what is well-known the metaverse. That's the reason why we are convinced that Personal Electronics will remain an exciting industry for ST to participate. Definitely outside of the digital chipset of this device, but on all the peripherals and everywhere we can create differentiation. We really focus on the smartphone, accessories and, let's say, this kind of connected device, focusing on optical sensing solution, MEMS sensor, secure solutions, power management, wireless charging, and we capture again high-volume application like the smartwatches, leveraging our general purpose portfolio, like the STM32 or our MEMS or some power devices.
This will participate to our, let's say, $20 billion revenue plus ambition. On communication equipment and computer peripheral space. Well, the digital transformation is really accelerated. As you know, you have increased need of data and to store this data, either in secure device or network. Well, here, again, we address selectively this market to capture high-growing application and leveraging our differentiation. Remi will really develop, okay, technologies and skill we have to address successfully this market. As an example, sorry, the low orbit satellite communication. Our customer engagement program is well on track and will contribute materially to reach our revenue ambition in the next few years. My first takeaway from our quick end market view about the revenue.
Well, first of all, in a high single-digit compound average growth rate addressable market, we will reach $20 billion-plus revenue at an ambition. Why? Because, in fact, the necessary condition to achieve it is based on the fact that we have many, let's say, content in the application or market we sell, and this must be add on many customer engagement programs, very specific we have. We will leverage both our core business and the high-growth areas opportunities. Well, now let me discuss the manufacturing and supply chain. Why? Because this is really the critical success factor for execution to reach our revenue ambition, but to deliver the value proposal, so the sustainable and profitable growth of the company. We are continuously investing to support our growth plan, but to improve our competitiveness and profitability, not only to support the growth.
We are transforming our manufacturing footprint with a strategic investment in 300 millimeter wafer fab manufacturing. [audio distortion] , we are moving to vertical integration. We have already a unique position in our 300 millimeter wafer fab in Crolles, France. As a high-volume manufacturer, CMOS-based technology, so embedded flash, RF mixed-signal, and specialty technologies. Ranging from 90 nanometer to 28 nanometer complexity, where basically this is the bulk of technology requested by the Industrial and Automotive market. This make ST really unique versus our peers, both in term of capacity, capability, and cost competitiveness. We continue to invest in our new 300 millimeter wafer fab in Agrate, where we want to reach full build-out by Q4 2025. Enabling by our growth in Analog, but in specialty technology as well.
We are also rapidly growing, as I said, in the wide bandgap manufacturing capability. I am pretty sure you will detect the percentage of revenue we will extract from this technology between 2025 and 2027. We are leading the technology race, moving soon to 200 millimeter for silicon carbide. Definitely, Orio and Lorenzo will elaborate more on it. I would like to speak also about enablers, not only about result, but enablers. We also need to continuously invest in business support and support function to optimize our supply chain and capabilities. Why? Because we are facing a really incremental challenge. If somebody think that the environment is stable and quiet, you can raise a finger. Constraints in our industry, but with an increasing complexity in the world.
We have invested, we are investing for the past few years continuously in machine learning, in big data analytics. We are using what the metaverse is doing, the digital twin model of operation. This is what we are doing for a long time. The fab of Agrate, the expansion of Crolles are first designed in the digital world before we start. That's the reason why we are capable to run very fast, because we completely designed the wafer fab in a digital world. For us, the metaverse is already something from the past, not from the future. All this activity is really well-supported with the partnership we have related to the cloud.
We are convinced, I am convinced that to invest in digital transformation of ST is the way to maximize our asset and improve our efficiency and productivity. Lorenzo will share with you the material investment we have done. Embedded in our ambition, we are committed to sustainability for all our stakeholders, and we are further, let's say, accelerating our effort to create technology and product for a sustainable world. Well, we have the goal to be carbon neutral by 2027, and I confirm this is the goal we have and the commitment we have. Rajita will really shortly elaborate on it and widely elaborate on it, with all the action we have and the management incentive we have to deliver this goal.
Well, I could not conclude my quick ST overview about this ambition to be a $20 billion+ revenue company between 2025-2027, and delivering stably 30% operating margin and above. Speaking about people. Over 48,000 people are the enabling force of this ambition. When we have done in Q4 the opinion survey we are doing every year, 80% of them have stated that the company is a great place to work. More than 83-85%, okay, have a strong engagement, emotional and rational, in the company. I have to say, yes, ST is a great place to work. Sometimes it's also for competitor, a great place to hunt. We will continue to invest in people and for them.
We will invest, okay, in a equitable, diverse, inclusive, and business-driven culture and easiness to work for ST to become a $20 billion revenue company, profitable and sustainable. Well, now I am pleased to hand over to the presidents, so the three musketeers of the product group. Starting with Marco and ADG. Thank you for your attention.
Thank you, Jean-Marc, and good morning also from my side and one of the musketeer. I let you decide which one I am. Frankly, I do not know. Thank you for giving me the opportunity to describe the high-level strategy of my organization. In my presentation, I describe the contribution of ADG to the $20+ billion revenue ambition of the company, as just described by Jean-Marc. To do this, I'll describe how our reference Automotive market will continue to grow in the next years, pushed by the silicon contents of legacy application and by the new disruptive trend of the Automotive industry. I'll also describe our ability to cover the needs of the Automotive market with our innovative technologies and product in all the application segments.
At the end, I will describe the contribution of my organization to the overall strategy of the company in the Industrial market. Let me start with a few numbers to describe my organization. As you know, in my organization, we do two different things. The specific Automotive products under the umbrella of ADG, and in PDG, the power and discrete products to serve the full market, including obviously the Automotive. Last year, we did $4.3 billion revenues, split between $2.6 billion in ADG, growing more than 20% versus 2020, and $1.7 billion in PDG, growing more than 50% versus 2020.
I want also to mention that despite the several closure in China due to the lockdown, we have been able to grow consistently double-digit for the two subgroups also in Q1 2021, 2022, sorry. In my presentation, I describe in detail our effort in growing more than the market in the disruptive trend of the electrification and digitalization of the Automotive. This is already clearly visible in the growth we could report in 2021 in electrification, ADAS, and 32-bit micro, where we grew over proportionally versus the market. In particular, in the electrification, we more than double our revenues versus 2020, clearly overperforming the market.
I want also you to notice that in the three product categories, we have been able to grow also in 2020, despite the very bad situation of the Automotive market, clearly induced by the COVID. In term of market coverage, as you know, in my organization, we deal mainly with Automotive Industrial markets that represent combined more than 90% of our turnover. Under this aspect, we are very well representing the overall strategy of the company, as Jean-Marc just presented. Let's turn now to describe the dynamics of our Automotive market. To do this, I would like to start with a diagram showing the trend of the average silicon provision in cars, starting from early 2000 till substantially today. Following this diagram, we can immediately notice two things. The first, the trend of silicon provision in car is constantly increasing across the period.
The second, there is a strong acceleration of this trend in the last few years. In fact, if it takes about 15 years to increase the average of silicon in car by 50%, it took only four years to more than double the silicon contents per car. Our expectation is that this trend will continue and even accelerate in the next few years. The side effect of the consequence of the recent strong silicon provision increase in car is that our Automotive semiconductor market is becoming, in some way, independent from the number of car produced. In fact, as you see in the left diagram of this chart, if the car production is not even capable to do the pre-pandemic numbers, our market is supposed this year to be more than 50% higher than the one in 2019.
This uncorrelation, as you will see in a moment, is also one of the reasons why today there is some difficulty in the semiconductor industry to follow the demand, even in a flat level of car production. This is because the semiconductor contents is growing over proportionally. At this point, why there is such increase of silicon provision in car? Or better, what about the mechanism that make our market growing so much? There are five reasons why our market is growing, and I would like to briefly describe all of them. The first is clearly the car production. Obviously, more car produce equal more semiconductor. Here, the geography plays an important role. In fact, the level of today production in China for car is overperforming the rest of the market, with cars adding a very rich silicon contents.
The second mechanism is linked to the increased silicon provision in traditional legacy applications. I will be more clear in one example in the following charts, but today, even traditional Automotive application need a quantity of silicon much higher versus the past. A third reason is linked to the introduction of new feature in cars. Because of the increased level of safety, and because they need to offer a better driving experience, new features are recently introduced. Just a basic example is the electronic parking brake or the increased level of infotainment in the car of today. The fourth reason is clearly the new disruptive mobility trends. Electrification, digitalization, connectivity are transforming the car in a complex of electronic object where the silicon contents is definitely changing scale. The last mechanism, we do not ever want to forget, is linked to the legislation.
The legislation, for example, is imposing to the car makers to build a fully fault-tolerant vehicles, so vehicles that are safe and fully functional even in case of fault. This is obliging the car makers to use the concept of redundancy in case of critical safety functions, again, calling for additional semiconductor contents. All these five trends that I shortly described combined are pushing our market to definitely increase the contents of silicon per vehicle. Now if you do the exercise to translate these five mechanisms in silicon technologies needed to support them, you will immediately discover that only a broad range leader mastering multiple differentiated Automotive technology is today capable to serve properly their market in all the different growing aspects.
In fact, the Automotive industry needs today digital technologies with and without embedded memory on board, needs dedicated smart power technologies, vertically integrated technology for fault-tolerant vehicles, and complex power stages in silicon carbide, and in future, in GaN. Only the one, ST, that invested in the past, not only in R&D to have the right Automotive technology, but also in capacity, today are capable to serve properly this high-growing market. Under this aspect, I will invite you to follow the presentation of Orio that will describe the effort in this field. I mentioned before that even traditional legacy application require today more silicon than in the past. I want to describe to you this mechanism with a very basic simple example, that is the braking and its evolution, that is the vehicle stability control.
This feature is present in all our vehicle, and the basic functionality is substantially unchanged across the generations. The contents of silicon related to it is dramatically changed. In fact, if the previous generation would require only 3 IC to be implemented, the power management, the micro, and the power stages, today, the same basic functionality require about 3 x more silicon. This is due to additional feature implemented, like the electric parking brake or the safety brake booster, because of the additional requirement coming from the legislation and the overall additional complexity of the functions. The situation will further deteriorate or improve, depending from the point of view, in the next generation, when the car architecture based on zone will be implemented. The vehicle dynamic control, in fact, will require 2 x more silicon than today.
This additional silicon demand in traditional applications is also explaining why today there is a shortage of semiconductors in a flat car market production, because the same car volumes needs much more silicon to be produced. The lesson learned, and the shortage I anticipate, is that only the one working not only on R&D to have the proper technology and product offer, but also in the proper capacity planning, are today capable to serve the growing Automotive market. I mentioned before the disruptive trends in terms of silicon demand coming from the mobility concept of the electrification and digitalization. In this chart, we have the usual trend of silicon required by a full electrified car versus a traditional combustion engine vehicle.
In fact, if a traditional average car requires today about 550 semiconductors on board, a full electrified in the same class needs more than $1,300 of semiconductor. The same is for the ADAS. If a basic level 2+ functionality needs today about $350, to increase the level of autonomy of a vehicle, we need more than the double of silicon contents. Of course, in case of fully autonomous level 4 vehicle, the multiplication factor will be even much higher. Definitely those are disruptive trend as for the silicon contents.
Now, if you combine the three effects I just described, so the silicon increased contents in legacy application, the additional feature introduced recently, and the disruptive trend of the new mobility, you will understand why our semiconductor market for Automotive will continue to grow in the next few years. This with a strong accelerator trend versus the past. The general consensus is that our market will exceed $80 billion in 2025. Frankly, we consider this number even conservative. If we compare the trend of electrification and digitalization here reported with the feedbacks we received from our customer and car makers about the introduction of these features, we have the impression that the market could grow even more.
In any case, there is no doubt that our market will continue to grow consistently in the next years at two-digit compound, and that we have to be prepared to catch these market opportunities. I described how the new mobility concept require a disruptive quantity of silicon. I want you to show that we are prepared to fulfill this need, and let me start with electrification. In this chart, we reported the sub-application needed to support the electrified mobility, the traction inverter, the onboard charger, and the power management of the car. We also described a rough quantity of silicon needed to fulfill the different application that, as a sum, represent about $1,000 per car. We are perfectly prepared to support this market, thanks to the investment done timely in technology and product R&D and in capacity planning.
This is not only for the power stages in silicon carbide, and in the future, in GaN, but also with specific smart power products to manage the power supply of the different applications, the full battery management system, as well as the gate drivers companion of our power stages. We have also a dedicated family of microcontrollers, specifically designed for the electrified car, the Stellar E family, tailored for the applications such as main inverter and onboard charging. We are perfectly equipped to serve the market of the electrification, adding about $1,000 per vehicle. I cannot leave the subject of electrified mobility without describing the status of our activity on silicon carbide. Considering the three pillars of the business development, manufacturing, and strategy, we are perfectly in line with our ambition to lead this market.
In the business development this year, we will do more than $700 million turnover in silicon carbide products. Also, because of the strong success we have with our product, as Jean-Marc mentioned, we are capable to anticipate to 2023 our $1 billion target that I already described to you last year. Our revenues will be strongly in Automotive, but with an important and growing part also in the Industrial domain, representing about 25% of the total. In terms of manufacturing, Orio again will be much more detailed than me, but I want to anticipate that we are perfectly equipped to fulfill our leadership position. Singapore is in full production since last year, complementing the production capacity growing in Catania. Also, next year we will have a new, fully integrated manufacturing plant, specifically built to produce a substrate, epitaxy, and MOSFET in the same location.
Also, I want to mention that the eight-inch silicon carbide for us is no more an R&D program, but is a manufacturing one. The new plant will be eight-inch for substrate and MOSFET, and we already keep in Catania a full eight-inch engineering line to gain and anticipate the time to volumes. In terms of strategy, we have today a full product offering covering silicon carbide diodes, silicon carbide MOSFET, and also pin-to-pin compatible IGBT product when it is required by the application. Like for example, the four-wheel drive car that for the axle and front axle is made with IGBT, and for the back axle is made with silicon carbide for cost reason. This product range is capable to cover the application for 650 V to 1,700 V, sorry, to fulfill all our customer needs.
We are today in production with the third generation, and at the end of this year, we will qualify the fourth generation. We are at the end phase of the R&D phase for the fifth generation. That will be the first made with trench. We'll introduce a disruptive innovation because it will be a new trench module capable to extract all the advantage from the silicon carbide. In some way, it will merge our competence in silicon carbide with our experience in high-voltage power MOSFET. In conclusion, we are perfectly in line with our leadership ambitions. In this chart, you have some of the names of our customers supporting our leadership on silicon carbide. It's clearly far away to be an exhaustive list, but I think it well represent the panel of our customers also geographically.
There are Asian customers, Europeans, and Americans. Also, there is a good balance of Automotive leaders and Industrials. You see that there are also many car makers in this list. In fact, as I will describe later, this is one of the application that is directly driven and sourced by the car makers. Same concept of the e-mobility we find in the digitalization. This chart would like to represent our product coverage on ADAS. Same than before, you have the application split by subsystems, including vision and radar system, specific microcontrollers, and vehicle-to-vehicle and vehicle-to-infrastructure connectivity features. Also in this case, our product offer is very complete and wide. It consists of application processors to support vision-based systems, ASIC for radar system, 77 GHz radar multi-channel receiver and transmitter in our RF FD-SOI technology.
Precise position in the GNSS receiver and processor for the autonomous navigation, and also V2X connectivity ASICs. Also, power management products specifically designed to manage ADAS functions, as well as vertically integrated product and protection to grant fully fault-tolerant systems. In this case, the capability to cover the full system is complete for digital, Analog, and power product, adding about $350 content per car. Under the subject of ADAS, I would like to reconfirm our partnership with Mobileye. As you know, today we're in production with the fifth generation in 7 nm FinFET technology. Next year, we'll enter in production with the sixth generation, again in 7 nm, that will be the first chip of the market capable to fulfill the full Level 4 in one single chip.
Also, as has been announced at CES this year, we are already starting to work on the next generation, the EyeQ Ultra in 5-nanometer FinFET. This, on top to be the first 1 billion transistor Automotive ASIC on the market, it is built to be the reference ADAS and connectivity node in the next car architecture, as you will see in a moment. We are very proud of our collaboration with Mobileye, and we are proud to have more than 100 million cars today circulating with our EyeQ on board. Now let's discuss about the challenges and the opportunities that the new car architecture will give. As you know, the car architecture is moving from the current one, made up of interconnected complex ECUs, to a new one dominated by the concept of zone.
The challenge is to match the real-time requirements of the different functions that are proper of the mobility with the high computational requirements. As you see from the very high-level schematic, to solve this challenge, the new architecture requires the concurrent activity of MPU plus ASICs to manage data and connectivity node and the central computing platform of the car, surrounded by zones with more standard embedded nonvolatile MCUs to manage the real-time processing. As you see in the schematic in the bottom, there will be also less complex ECUs to manage the peripherals of the car, with functions such as the onboard charging and the main inverter. The advantages for the carmaker in the implementation of this new architecture are very clear. There will be a consistent cost saving due to the reduced number of ECUs, the reduction of the cabling, and the weight.
There will be a huge simplification for the software in terms of R&D, usability, and time to production. This architecture will be capable to introduce new important features, like the car preventive maintenance, the capability to remap the car remotely, as we are used with our smartphone, and also the possibility to upgrade remotely car functionalities. The new architecture will enable the possibility for the carmakers to have post-sales revenues. For us, the main advantage is clearly coming from the additional silicon contents. We estimate that when the full architecture will be established, the silicon contents will be up to five times higher than the current one. This is a tremendous opportunity for us, and I want to show you we have all the element to cover it.
In fact, on top of the EyeQ Ultra I already introduced, that will be capable to cover the ADAS and connectivity node on the architecture, we will have all the eight digital elements. We are working on a new family of Stellar MPU based on the 7 nanometer FinFET technology, capable to cover the needs of the central computing platform of the car. Our Stellar MCU family, already introduced to you in our 28 FD-SOI technology with embedded PCM, is designed to fit the requirement of the real-time control of the zone. Also, we have a complete family of microcontroller in 28 or 40 nanometer, depending on the complexity, to manage the periphery of the car. Under this point of view, I would like to explicitly mention again the Stellar E-family that is perfectly built to manage the requirement of the electrified car.
You see our coverage of the new car architecture is very complete, and we can report multiple awards with several customer and carmakers on this subject. Several times I mentioned our effort to support with our technologies and our product the new trends of the mobility. Of course, we'll continue to serve the traditional legacy application, and I think I gave today the good reason to keep doing it. It's clear that most of our R&D effort are dedicated to serve the new disruptive trends. This is very visible in the profile of our revenues. This year, more than 50% of our turnover will be in products related to the digitalization and electrification. This will continue in the next years, and we believe that by 2025, about 65% of our turnover will be in serving disruptive trends of mobility.
This, of course, will increase our market share and boost our profitability in terms of product mix. I mentioned many times in my presentation that we are in front of a new disruptive trend in the Automotive industry. Part of this transformation is the new role of the carmakers. The carmakers are today much more central in our strategy, and they are playing a very active role in our R&D processes. There are applications like the electrification, the ADAS, and big time, the new car architecture. They are directly driven by the carmakers that are influencing our strategy in terms of technologies and products. In many cases, these applications are directly sourced by the carmakers. ST is playing an important role in this transformation, with multiple agreements at worldwide level in Asia, Europe, and America that I will be pleased to describe in the next few months.
This is concluding the part of my presentation related to Automotive industry, and I would like to move to the Industrial domain. Here, clearly the strategy of the company is driven by the 32-bit microcontroller, the STM32, that is the brain of the Industrial application. My friend Remi for sure will describe in great detail the strategy of Micro in the Industrial domain. Our role in A DG is to support the company's strategy with our family of discrete and power technology and products. The application coverage is important here, thanks to our silicon carbide, and GaN products, and thanks to our family of discrete products. In this chart, we have four different examples where our presence and of the power and discrete product perfectly complement the STM32 presence.
Just to pick one example for time reason, charging station is perfectly complementing our Automotive strategy, and we have more than $180 of silicon contents on it. You will find also interesting number in energy application like the photovoltaic or in factory automation or in air conditioning. To complete the innovation capability of ADG, let's go now very briefly on our GaN strategy. Today, our strategy is mainly involved in the Industrial market, but definitely it is targeting the Automotive applications. As you know, the strategy is going three different segments. The first, the power GaN, covering the full application range from 100 V- 650 V. In this case, we are already in production with consumer charging application, but definitely we target Automotive charging, both in term of onboard charger and the fast charging in the infrastructure.
Our path to cover the power GaN has been strongly accelerated by the acquisition of Exagan, that now is completely integrated. Orio will describe our production capability in the 8-inch line in Tours. Second, the power RF GaN to support the strategy in 5G with our cost-effective GaN-on-silicon technology for both base station as well from the infrastructures. This is complementing the activity of [MDG] that Remi will present, and in terms of production capabilities ready for high volumes profiting from our 8-inch line. The third is the integration of GaN being a planar technology in our traditional technology ecosystem. BCD at first in Agrate, and CMOS as a second step in Crolles 300. This will grant the possibility to have a smart power and digital ASIC integrating the output stage known GaN to have a single chip solutions.
I hope I gave you the sense of our ADG commitment in supporting the $20+ billion revenue ambition of the company. I described our reference market will continue to grow with a dynamic push by legacy application silicon contents and by the new disruptive trend of the mobility. I gave you the capability of ADG to fully cover the markets, thanks to our innovation in technology and product, and counting on our extended partnership network. I also described our commitment in supporting with our power and discrete products, the overall strategy of the company in the Industrial domain. Thank you. Of course, I invite the second musketeer. I leave the room.
Thank you. Good morning. It's really a pleasure to be here. As you know, I left the dark side of the sales, but I was not imagining that getting the group, I was also getting a musketeer position. So thank you very much, Jean-Marc, for this added role. So I'm clearly not a new face to you. But I will clearly speak to you in my new role and with my new hat. I'm very, very proud to be speaking to you for the first time about the great technology and products in ST Analog, MEMS, and Sensors Group. In AMS, we have two subgroups, Analog and MEMS and sensors, that each contributed to strong growth since last time we met. We have a consistent and focused strategy, fully aligned with ST's strategic objectives.
In my talk today, I will first go through a few financial figures to show the performance across our businesses and how we intend to successfully move forward across the markets we serve. For the three business areas of AMS, I will describe first our product leadership areas. Second, the foundation of our product leadership, technologies, IPs, and so on. Third, how we plan to grow and to contribute to ST's $20+ billion revenue ambitions, of course. Let me start with a few figures. Almost, AMS is a group of almost 3,500 people, and I have to say great people, representing around one-third of ST business in 2021. Revenue grew 18% on average between 2019 and 2021.
During the same period, we exceeded $1 billion per quarter revenues run rate and achieved around $4.6 billion in 2021, out of which $2.8 billion in MEMS and sensors and $1.85 billion in Analog. How did it achieve this? Thanks to a consistent strategy addressing two mega trends that have become even more important over the past years. First, sensorization and digitalization of the world around us, with sensors creating digital data from Analog signals, bringing the real world into the digital world. The forecasted proliferation of IoT nodes in the coming years will bring exponential growth of sensors. Second, smarter and wiser use of energy for a better and a cleaner world for the generations to come. Our strategy is based on strong growth in both of our subgroups, Analog and MEMS and sensors.
In Analog, we address both application-specific product, mostly driven by large customers, and general purpose Analog products, more for the mass market. In MEMS and sensor, we focus on MEMS, both sensor and actuators, and on optical sensing solutions. Now, let me share how we did in 2021, and very important here is how we plan to develop our business. We target all ST's markets in line with the company strategy just explained before by Jean-Marc. We have a broad approach to Industrial and Automotive. In Personal Electronics, we are mainly pursuing large opportunities like sensors and power management. In communication equipment and computer peripherals, we are very selective. On the left side of the chart, you can see how our core business is currently mapped across the market segments.
On the right side of the chart, you can see how we plan to develop in the coming years. Let me summarize the 2021 performance of our core business by end market. In Personal Electronics, we had a strong year, thanks to continuous leadership in imaging and strong growth in MEMS. In Industrial, our business grew 37% year-over-year, thanks to our Analog portfolio, both application specific and general purpose. In Automotive, we had a leadership position in selected domain areas and a strong position with our general purpose Analog portfolio. In CCP, we had strong performance, thanks to our Analog portfolio for storage applications. Going forward, our go-to-market strategy is, in Personal Electronics, maintain and grow our core business in MEMS and sensors, while accelerating the growth of our Analog business in selected Personal Electronics high volume applications.
Industrial and Automotive increase our strategic focus for all product lines. In CCP, maintain and grow Analog business while growing MEMS and optical sensing solutions. This will result in a balancing of our revenue streams between Personal Electronics and the other end markets in the midterm with growth on all of them. I will now go through a review of our product portfolio, starting with Smart Optical Sensing solutions. Our leading products based on proprietary technologies are found both on the front and rear-facing sides of many flagship phones. In the past couple of years, we successfully diversified from biometrics and smartphone camera assistant solution to ambient light sensing. Also, we have extended from smartphone to PC with authentication and presence detection functions.
Going forward, we intend to continue to lead in these domains, but we also expect to grow in three areas where we see growth and diversification opportunities for our optical sensing portfolio. First, in Automotive. You heard a lot from Marco Monti about ADG broad offering for this end market. In AMS, we complement this with products from all three of our business areas, Analog, MEMS, and here, Optical Sensing solution, where we have selective focus on in-cabin sensing. This application monitors the driver's behavior. Also, we have custom LiDAR autonomous car programs running with key OEMs. Second, we believe that both factory automation and consumer Industrial will be using more and more smart optical sensor. This market is very fragmented and it takes time to develop. We have design wins already, and we see several opportunities.
Third, we see new applications in augmented or mixed reality in the consumer LiDAR space and new user interfaces. We have a number of leadership positions in the market we address with our optical sensing solutions, as you can see on the screen. These are positions we have built and consolidated over a number of years, shipping billions of leading-edge solutions to our global customers. This is a very, very solid position. How did we achieve this? We reached this position thanks to a consistent strategy. First, we invest in all technologies for 3D sensing, as they all have different figures of merit and can address various applications and use cases. Second, we differentiate by leveraging ST proprietary technologies at silicon level and on optical packaging. Third, we combine strong internal know-how and external partnerships within the ecosystem wherever it makes sense.
Our direct time-of-flight technology is based on single-photon avalanche diodes, is well proven, and the latest 40-nanometer generation is already on the market for more than two years, with 3D stacked backside-illuminated SPAD coming soon. Earlier this year, we launched our first 3D time-of-flight sensors, leveraging our indirect time-of-flight technology based on what we believe is the highest performance fast photodiode, an amazing technology. It uses backside illumination technology, manufactured in our 300-millimeter fab in Crolles. Our global shutter pixels benefit from our advanced manufacturing and process capabilities such as capacitive deep trench isolation and other innovations.
Both frontside and backside 3D stacked sensors are in volume manufacturing, and we continuously innovate to further shrinking the pixel pitch, reducing crosstalk, and increasing quantum efficiency. We proved in the past that our leading edge products are ready in volumes at the right time, and this will be the case also moving forward. Let me now focus on one of the growth areas of our imaging business, Automotive driver and occupancy monitoring, an application that will be present in more than half of the cars produced in 2027. At the previous Capital Markets Day, we mentioned that we had the first design wins and that revenues were about to start. This is the case. Last year, we successfully ramped our Automotive global shutter solution, and we are in production with a leading early adopter of this technology.
We had additional design wins with multiple tier ones and OEMs during the past quarters, and we continue to develop a solid roadmap of differentiated products that are gaining traction on the market. The diversification of our smart optical solution will enable long-term stable revenue streams. Moving now to MEMS. ST has a very strong position in Personal Electronics, CECP, and in some applications in Automotive. Going forward, we will continue to lead in these segments, and we also expect to grow further in three areas with significant opportunities for MEMS. First, with a multitude of sensors in emerging or fast-growing applications in Personal Electronics such as true wireless stereo, et cetera, and other innovative wearables like smart glasses and augmented reality devices. Second, we want to lead in Industrial factory automation, predictive maintenance, equipment monitoring, all create additional demand for MEMS sensors and actuators.
Finally, we want to lead in every segments where MEMS solution are supporting a smarter, safer, and more autonomous driving. In MEMS also, as you can see on the screen, we have solid leadership position that we have built and maintained over many years. We are, for example, the fastest-growing player in sensors for Automotive safety and telematics. Again, how did we achieve this? First, we invest in proprietary MEMS technologies. There are technologies such as ThELMA, PeTra, our actuator processor technology roadmap for piezoelectric materials, and something new, TMOS, a revolutionary method for sensing infrared emissions. Second, we focus on three success factors, and that we can apply to either the MEMS sensor or the MEMS actuators: accuracy, ecosystem, and artificial intelligence in the edge. These factors will allow ST to capture more value in the product as well.
While all three factors are important, let me focus on the most innovative, enabling artificial intelligence in the edge. This means processing sensor data at the point closest to where the data is generated in order to have the most energy efficient solution with minimized data transmission. Imagine, for example, a wireless home alarm where you need the system to be intelligent enough to distinguish between vibrations related to a break-in and wind shaking the window, all running on very small batteries. This is where our solution for ultra-low power application using artificial intelligence in sensor will play a key role. Innovative products will be more and more characterized by being able to perceive environmental stimuli and process the data locally to optimize data transfer and resource consumption.
ST has developed a sensor capable of perceiving stimuli, but also equipped with artificial intelligence inside to support very low power calculation. The AI algorithms are run by what we call the intelligent sensor processing unit, ISPU, maximizing efficiency and minimizing energy consumption. Now, let's look at our MEMS in Industrial and Automotive. In Industrials, MEMS sensors are everywhere, in applications like predictive maintenance, factory automation, asset tracking, and/or real-time equipment monitoring. With the move to the Industry 5.0, we will see the proliferation of intelligent sensors with embedded AI to enable augmented man-machine interactions. Here, our innovation with new technologies such as QVAR, charge variation measurement, which is an amazing technology. When you move through space in the air or in the water, your body or whatever is moving will change the charge around you. We can detect that.
If you combine these technologies with artificial intelligence in the edge, our ISPU, as I just presented before, you can basically make a sensor fusion on a very small device that is able to put together different inputs. Amazing capabilities that will help the transformation from Industry 4.0 to 5.0. On top of that, as you know very well, in the Industry 5.0, the feedback that you need to give to the operator is very important, and there is where actuators, small actuators, intelligent actuators will play the game. These are all technology that ST do have. Finally, Automotive. Here we have a selective focus on MEMS for telematics and in application into greener, safer, and more autonomous cars, where sensor and actuators are needed, such as advanced driver assistance systems, connectivity, and electrification.
Cars will be clearly more and more equipped with intelligent sensors. Again, here, our accuracy and our capability to have AI at the edge will play a key role, and on top of that, we can offer lighter opportunities thanks to our own mirroring capability, and we can be part of very complex systems. That concludes the MEMS. That basically you saw that we can be everywhere bringing value and bringing capabilities that few years ago were unthinkable. Again, the AI capabilities at the edge is a very, very good example of that. Now, Analog. Strongly linked to our high growth opportunity, as Jean-Marc explained in his presentation here, we have great opportunities of growth in Industrial and in Personal Electronics, and some of them are really linked to what we can do in Analog.
ST here has established leadership in a number of Industrial segments and applications. These include motion control, power conversion, Industrial IoT, and communication equipment, computers and peripherals. Moving forward, by accelerating the development of advanced Analog products, we will further grow in three main areas: factory automation and Industrial infrastructure, consumer Industrial, and application-specific Analog for Personal Electronics. I will give an example for each of these areas. Two of them relate to Industrial, so the smart meters and the power conversion. Here we benefit from the two main trends in Industrial, the digitalization of devices and systems, and energy management and power efficiency improvements. The third example, wireless charging, relates to Personal Electronics. The total addressable market is very large with high volumes, not just of smartphones, but also wearables, hearables, and other accessories.
Our leadership position in Analog is the result of decades of investment and innovations in applications where our technology and system know-how are key. On the screen, you can see some important examples, but the key is how we did achieve this and what are our strengths in Analog. The recipe is that we have been investing over decades in a large proprietary technology and IP portfolio. Again, as in optical sensing and in MEMS, our proprietary technologies are the key enablers. A few examples of the multiple technologies listed here. New advanced BCD portfolio supporting up to 1,200 volts, 40 nm logic and embedded non-volatile memory in order to build better and more highly programmable devices. Smart power GaN monolithics or a system-in-package for the most demanding power conversion applications.
BCD or isolated MEMS galvanic isolation to enable new system architecture and safety for the use of the most advanced and very high voltage Analog and smart power applications. These technologies, coupled with the wide application and system know-how, are the two main pillars necessary to design advanced Analog products delivering on the Analog trends, the digitalization, the efficiency, and the safety. Let me explain and expand on what we mean by digitalization in Analog and why this is a great opportunity for ST. Standalone Analog functions are not enough anymore. We need increased digital content embedded in the Analog chips. You can see here the evolution of the content and IP inside application-specific Analog ICs. The smarter the application gets, the more intelligent Analog controllers you need.
Here, our strength lies in managing different technologies with different gate densities to cover the needs of varied application and with the optimal level of integration and at the right cost structure. We are also in a unique position leveraging our large STM32 portfolio, thank you Claude and Remi, to combine Analog and digital IP, adding more intelligence and accelerating the production of higher value Analog products into the market. Here is first example of strong growth area for our Analog business. The power grid is becoming more intelligent and connected, evolving into a smart grid. Smart meters are the core of this evolution. We have evolved our offering from simple Analog functionality for energy metering to today's solution embedding connectivity, security, and artificial intelligence at the edge. The semiconductor bill of material is growing to enable this.
It is also increasing our addressable market as our solution can cover applications from electricity metering to gas and water meters, and even beyond as the user is becoming part of the network with local green energy production. Another strong growth for Analog content is power conversion, as Jean-Marc Chery presented in his introduction. Newer semiconductor technologies such as gallium nitride, combined with advanced digital control architecture, can deliver significantly higher power densities and conversion efficiency compared with pure silicon technologies and conventional Analog control system. Here, I would like to mention some of our innovative smart power devices with a high Analog and digital content. STGAP, galvanically isolated drivers enabling high-voltage power converters. MasterGaN, a new family of products combining GaN transistors and BCD drivers, delivering the highest efficiency for AC/DC converters available on the market.
STNRG, a system-in-package embedding a GaN driver, a digital power controller, and galvanic isolation. This is the first solution on the market supporting the highest density to enable small chargers. Finally, wireless charging. This is a fast-growing market with multiple applications in Personal Electronics, as I mentioned. The penetration rate in smartphones is forecast to increase from 25% in 2021 to over 50% in 2025. More and more devices from wearables and notebooks to Industrial and home appliances will use wireless charging. Our wide portfolio of technologies, the performance of our products, and our customer intimacy allow us to be successful on this market and achieve strong growth. We are increasing the value we capture with the move from low-power wireless charging receivers for smartphones to higher-power and faster charging solutions.
We will also introduce switched capacitor chargers in 2023 to offer best-in-class efficiency. Moving forward, we will offer complete turnkey wireless charging system solution. This will further increase the silicon content and volumes in Personal Electronics, as well as other markets such as consumer Industrial. Here, many application will use wireless charging, the power tools, the drones, and other battery-powered operated appliance. I would like to conclude my presentation with these last three charts. This is just a small selections and a reminder of the large and diversified customer base of more than 75,000 customer we have. We are honored to work with such strong partners, and I really want to thank them.
As Marco Monti has presented, also for AMS, leveraging on the brand on the STM32, and on this, Remi will expand much more, we can leverage on the synergies among the three product groups. In this chart, you can see the maximization of AMS content in the Industrial application leveraging the STM32 ecosystem. These are just four customer examples in fast-growing Industrial applications, so the photovoltaics, the factory automation, the metering, and the charging stations, but I think you can appreciate how leveraging and offering solutions we can bring high values in terms of dollars to our customers and to ST. To conclude, in AMS, we have two strong pillars of growth, with double-digit growth in Industrial and Automotive and continuous leadership in Personal Electronics and CCP.
In Analog, we are a major player and target double-digit market share in application-specific products, with a focus on fast-growing application and silicon content. In MEMS, we have the broadest portfolio in industry and are successfully diversifying into Industrial and Automotive. In optical sensing solution, we are a leader, and we are expanding through diversification in all markets served by ST. Thank you very much, and I pass the
Good morning, everyone. It's great to be with you today. I did recognize some familiar faces. I'll start by saying that there are three musketeers here, but there is a fourth one that make all the decision, and it's Orio, because he control the wafers. Orio, I'll take any names you'll give me as long as I get more wafers. I'll start by saying that the first five months feel like five years. It's been a steep ramp up for me, but I'm quite excited with what's in front of us. With great pleasure, I'm going to share with you what we're up to in my group and how it's going to contribute to ST 20-billion-dollar-plus ambition, revenue ambition. Let's start with a recap of 2021.
It's been clearly a banner year for MDG, especially reaching $1 billion of revenue in the last quarter of the year. It's also been the year where the general purpose microcontroller reached number one position worldwide. It's been actually an amazing achievement done organically, and I'd like to emphasize this. Maybe as importantly, it's been a year where we've been expanding our lead in the market we care a lot about for GPMCU using Industrial market. We've done that leveraging both our foundry partners as much as our internal IDM capabilities. Last but not least, it's also been a turnaround year for the RF&C business in the gigahertz wireless market. I'm pretty excited by what we're up to in this market, and I will get back to this subsequently in my presentation.
Without any further ado, I'm going to get into the gist of what I wanted to share with you today. To start with, I wanted to show you the way we look at the future of the connected world we live in. We call this the cloud-connected intelligent edge. We see all things in this Internet of Things becoming way more autonomous, and at the same time, all these things will be cloudified, connected to the cloud, and increasingly, not only creating data locally, but also processing it locally. In short, we believe in a world where of smart everything, where everything is more secure, more connected and more intelligent. We intend to build on that vision to develop and grow two key pillars of growth for the company to support our $20 billion plus revenue ambition.
The pillar 1 relates to the brain of the autonomous thing, the STM32. We like to think of it as the de facto edge computing engine behind the world's digitalization. The growth pillar 2 relates to the next-generation gigahertz wireless RF both the edge infrastructure level. These new RF frontends are enabling disruptive application in bringing affordable, low power, high data bandwidth RF frontends to many consumer and Industrial use cases. What I'm gonna do now is double-click on each of those growth pillar to give you a bit more information, starting with the brain of the autonomous thing, the STM32. Over the past 10 years, the digitalization of the world has resulted in the growth of the 32-bit microcontroller market.
The 32-bit GPMC growth has consistently been faster than the world GDP growth, and the gap between the two is simply increasing in time, as you can see from the chart. We expect the 32-bit GPMC TAM CAGR to be roughly 9% over the 2019-2023 time period, which is going to be three times the GDP forecasted CAGR of 3%. This gap acceleration is a testament of a secular trend around digitalization and cloudification. Now, this trend can be seen in a few examples. Robot mowers. The numbers of 32-bit controllers has increased from four in 2013 to 12 in 2019, as you can see from the Husqvarna example on the chart. Circuit breaker went from 0 - 2.
Power tools, the numbers of 32-bit microcontrollers has increased from one doing motor control to three doing motor control, battery management, wireless connectivity. Same example on drone. This trend is simply accelerating. In 2021, we have improved again our position in the general purpose MCU market, and we reached 23% market share, and we became actually the number one supplier worldwide. I insist this was done organically. 32-bit general purpose MCU are used in various application in all market segment, as you can see from the chart. Among them, and in dark blue, the Industrial segment is the most promising one.
It represents 52% of the GPMC TAM, and some segments, like home appliances or manufacturing and factory automation, are to grow either double-digit or high single-digit from between 2021 and 2026. This Industrial market growth is fueled by key drivers, and you know them, energy efficiency and electrification of home appliances, wireless connectivity and power tools, or smarter, safer, and more energy efficient buildings. Altogether, we expect the 32-bit GPMCU Industrial segment to grow faster than the other market segments and reach 65% of the 32-bit GPMCU TAM in 2026. Now, I need to share with you what I discovered was the best-kept secret that has been the foundation of the STM32 growth, the STM32Cube. Establishing and maintaining leadership required continuous investment in attracting and delighting embedded software developers.
The STM32Cube is a comprehensive developer framework providing necessary bricks to ease and accelerate embedded designs. It combines hardware development kits for prototype reference design purposes, embedded software developments like drivers, middleware, implementation examples, development tools, as well as development resources. There are more than 150 expansions from ST and external partners enlarging the framework today. Among them, STM32Cube extensions that focus on specific functions like AI, with a STM32Cube.AI framework, motor control or cloud connectivity, I will get back on that, or function packs, which are application level implementation references, such as what we do on face recognition or together with Marco Cassis on MEMS sensing. This framework is consistent across the entire STM32 portfolio and leverages ST worldwide support channels and communities. Okay, that's great, but now let's talk about numbers.
Over the past five years, the framework enjoyed 2 million cumulative developers, 8 million SDK downloads, 2 million SDK shipments. As you can see from the graph at the bottom line of this chart, we have achieved a very solid developer growth adoption with a 27% CAGR. I'd like to insist on the notable acceleration over the last few years. This, ladies and gentlemen, is a foundation of the STM32 business that we intend to continue to invest in and grow. Now, as you already know, we've built over time a very significant base for the STM32. We serve more than 100,000 customers, some of them represented here. The numbers of people developing application on the STM32 is a multiple of this.
Today, and in the future, we intend to capitalize on this exceptional install base to grow the business, and this will be achieved through two distinct approaches. First, increasing the existing sockets value with more security, wireless connectivity, AI, and other ST adjacencies like Analog, MEMS, and power. Second, capture new higher value MPU sockets with the ongoing deployment of the STM32 embedded processor family. What I'm going to do next is to walk you through each of those swim lanes and give you a little bit more details. Let's start with security. The increasing cloud activity is a tremendous opportunity for ST to create value for our customers using our proven security assets.
We provide a unique set of security capabilities with a combination of our 32 MCUs and MPU, which are certified up to SESIP and PSA level 3, and with our Common Criteria certified security element, the STSAFE product. Our cooperation and certification by major cloud service providers, combined with IoT board, such as a U5 discovery kit you're looking at right now, allows us to provide turnkey solution for our large developers. As we just announced yesterday, with both Microsoft Azure and Amazon Web Services, through this, we end up enabling and monetizing the secure connection of a wide range of devices from tiny portable devices like the Milwaukee device you're looking at, to highly complex systems like the SpaceX system you're looking at.
Security is a fundamental differentiator for the STM32 that we intend to keep investing into. Now, let's move to wireless connectivity. As I said before, the cloudification of our customer base is happening as we speak. It's shaped with diverse wireless technology, MCU type, and when combined with cloud and services, allow the deployment of new application like asset tracking or predictive maintenance. In 2020, we increased our wireless technology portfolio through acquisition to address the main wireless protocols of the market. This is of importance as our STM32 wireless connectivity SAM, as you can see, will grow 2.5x over the next five years. The good news is that our share of the SAM is mid-single-digit today. We have a lot of room to grow, and I will get back on this subsequently.
Now, one should ask, how can we become a leader in this wireless connectivity space? We have a few reasons for that. First, it's the breadth of the wireless portfolio that we are putting together, certainly the largest in the industry. Second, I get back to the STM32Cube. It allows seamless software migration for our developers from wired STM32 to wireless STM32 in a matter of day, as a matter of fact. Third, we build on our strength, and we provide the highest level of security to a wireless connectivity product, completely aligned with the GP MCU security offering. Last, we enhance our ecosystem with best-in-class cloud connectors, such as what we offer in collaboration with our CSP partner, Amazon Web Services or Microsoft Azure, like we've announced yesterday.
It's a combination of those four things that we believe will allow us to successfully migrate our customer base to our STM32 wireless connectivity portfolio. Now, let me give you some proof points. As I just told you, with the STM32Cube solution, we enable seamless migration from wired to connected application while reducing the pain to our developers. We have two examples here in front of you, one related to BLE and the other one to LoRa, where our customers move from a competitor wireless solution to our own, leveraging STM32Cube in the process. We have many, many examples like this. Customers from many industries, Industrials, healthcare, lighting, have chosen ST to build their wireless application, benefiting from the value proposition that I've mentioned earlier.
Among them, you can see in the middle, we can mention Metco again, that recently made the switch to STM32WB BLE platform. All of this translate into us accelerating our business momentum and enlarging our customer base. I'm glad to say that we anticipate to reach for the first time ever over $100 million in BLE revenues this year with a major portion in the Industrial market. This is still modest, but a definitive step in the right direction. We are step by step getting there because we innovate. The STM32WB MCU, BLE MCU, that you can see at the bottom right, was the world's first wireless MCU embedding security services as anti-cloning or anti-hacking. I actually can't wait to announce our next-generation BLE product. Now let's talk about AI. It's one of my favorite topic.
Bringing intelligence to the edge is a major trend that we are addressing through both hardware and software initiatives. On the hardware front today, I'm proud to pre-announce the STM32N6. It's a big deal. It's a high-performance STM32 MCU with our new internally designed neural processing unit. The N6 will deliver the AI performance of a quad-core MPU augmented with a hardware acceleration for AI. At one-twelfth the power dissipation and one-tenth the bill of material. This is a complete game changer, and this is going to open a brand-new range of application for our customers, and more importantly, allow them to democratize AI at the edge. I'm excited to say that we're on track for first samples of the STM32N6 by the end of this year.
Now, I'm even more excited to announce that LACROIX will leverage this technology in their next-generation smart city products. This is on the hardware side. On the software front, our goal is to facilitate the creation and deployment of edge AI solution across any of our MCU, and over time, monetize that software. To this end, we are leveraging one of our incubation project, NanoEdge AI Studio, that is, originated from our Cartesiam acquisition. NanoEdge enable the creation of small, super energy-efficient machine learning models in 95% less time and in a very small hardware footprint, read memory here, typically 5x to 10 x smaller versus what you can achieve, nominally. I want to show you two example today. One is a company called Oxitronik. They're developing fully operational multi-purpose sensor, and they are now in production at several CAC 40 companies.
They got their first prototype out in less time than it would have taken them to recruit one data scientist. The other example is from ALTEN. It's an engineering company, large one, more than 47 employees worldwide. They actually have announced a NanoEdge AI practice, and they've engaged on a project at Airbus to optimize Airbus cutting tools life and with a goal to reduce that by 30%, which they did. Airbus has now commissioned them to go and expand to more cutting tools. They are both examples running on mid-range MCUs and demonstrating that many AI workloads will be built on the STM32 portfolio moving forward. Now, you've seen a similar slide from Marco and Marco, and actually this was on purpose.
The brain of a typical Industrial application is the STM32 MCU or MPU, we'll see that forward, and it's specialized software. The eyes, the arm, the legs of the application are the right set of sensor, actuators, power converters, and discrete. The combination of our wide Industrial portfolio together with our large Analog power sensor and discrete portfolio allows us to build solution with one goal, lower the time to market for our customer. Once these customers have selected the STM32, what we do, we make it easy for them to develop the rest of the bill of material. We use this STM32 ecosystem, leveraging many Industrial application segment. I'm illustrating here, for example, in fast-growing Industrial application, photovoltaics, factory automation with IO-Link, metering, as well as HVAC. Just to be clear, we have a myriad of example like this.
As you can see, the ST dollar attach rate ranges from 2x to up to 8x the STM32 content. Now, given the strong CAGR of our MCU business shown earlier, this complete bill of material strategy will only contribute to ST continuous growth over time. Now I'd like to move to the second growth driver of the STM32 franchise, the MPU. In 2019, we decided to add microprocessors to our STM32 MCU portfolio, which is, as you know, comprised of wireless, ultra-low power, mainstream, and high-performance MCU. It was a natural evolution to extend ST leadership in embedded processing. The microprocessor SAM was $3 billion in 2021. It's growing 7% CAGR to $4 billion in 2026, and it's actually in key areas where ST is already quite present and leading actually the MCU market, Industrial, consumer, communication.
Here again, the good news is that our share of this SAM is low single digit today. We have tremendous room to grow. With over 100,000 customers using our MCU, we have an incredible opportunity to provide a natural continuity to software developers who need microprocessors. To simplify this journey, the developer journey that is, we are adding strong differentiation. OpenSTLinux, which has become the reference for 32-bit communities and is the best open source software distribution, making STM32 essentially MPU plug-and-play in Linux. The STM32Cube tools, which are used by millions of developers to select and configure hardware and software components and build your applications. Those two assets are key in our ability to go and bring customers on board. Now, I'm also going to show you some proof points. First, I wanted to introduce our first MPU foray.
It's the STM32 MP1 series. It's offered in 24 product references with single or dual Cortex-A7 core. It embeds a real-time domain controller, STM32Cube compatible, based on a Cortex-M4. It embeds Industrial interfaces like gigabit Ethernet or CAN-FD, and a GPU coupled to display interfaces. Now, thanks to a three-year growth year-on-year since 2020, we should expect roughly 10 million products equipped with the MP1 in the field by year-end. It's going to be adopted by a little bit over 150 customers in applications such as home, a smart home, point of sales, factory automations, and more. You can see here just a few names of leading companies who chose the MP1 to build their next-generation product. Soon, we'll announce a major extension of the MP1 series. We call that the MP13x.
It's actually a sub-$3 MPU designed to address the IoT security constraints as well as point of sales application, which require payment card industry standard. This new product will be ramping soon as selected OEM. I can't name it, but today we are proud to announce that a world leader in point of sale devices have adopted the MP13X for its next-generation devices, and we thank them for that. Let's now recap this, STM32 specific session. From 2021 to 2026, the overall SAM will expand from $15 billion roughly to $23 billion when compounding the wireless connectivity and MPU SAM to the general purpose MCU SAM.
We expect our GPU, GPMCU revenue to grow in line with CAGR in units and more than that in dollars, leveraging our accretive value add coming from high-performance MCU, security, and AI, like I've just described. Our wireless connectivity sales revenue will be growing much faster than the SAM. This is thanks to portfolio expansion, established customer base, and growing momentum. Similarly, we expect our MPU revenue to grow much faster than the SAM with new enriched and accelerated product line introductions. All in all, combining all of this, we think that we have a very solid growth of the STM32 franchise over the coming five years that we can put in place. Now, let's move to the second growth pillar of our cloud-connected intelligent edge vision that I've described earlier, the gigahertz wireless market. What is it?
The gigahertz wireless market has two components. The first one is the infrastructure market made of the 5G massive MIMO and millimeter wave markets, as well as the LEO satellite broadband communication market. That's one side of it. Second side is the edge market. It encompass the LEO satellite user terminal market, as well as Wi-Fi 6 and cellular IoT market. To be clear, we are intentionally excluding the smartphone industry from our targeted markets. Our product approach is very focused. We are designing products for the RF front ends like PA module, low power pre-drivers, and the beamformer part of the radio system. Business model-wise, we have chosen a path of deep collaboration with our customers, and we are adapting our business model to their need of differentiation. Its range is really from ASSP down to COT-type engagement.
This flexibility and intimacy with customers allows us to tailor our offering to their exact needs, and in turn, allow us to focus on the thing that matters, make our technology shine. The value of the gigahertz wireless market we serve was worth $1.4 billion in 2021 and is promised to a strong growth in the next five years, up to $5.7 billion in 2026. The growth drivers, they are the one that you're looking at right now. There is still growth in LEO satellite communication deployment. The continuous growth of the 5G market being fueled by massive MIMO today and millimeter wave private wireless tomorrow, but also the continuous momentum of wireless IoT market. The good news is that our share of the SAM is mid-single digit today year again, and it's a theme, we have a lot of room to grow.
Let's get a little bit into technology. The gigahertz wireless is characterized by a number of technological disruptions. The phased array antenna and massive MIMO structures are calling for more RF front-end ICs as they multiply the numbers of elementary antenna components forming the final beaming array. As the numbers of RF chains surge, dedicated electronics are also added to form and steer the beam. We call that the beamformer IC. In the receiving part of those next-generation systems, in the receiving path, noise figure has become the key parameter, and it's directly linked to the system performance and essentially, the effective throughput. In the transmitting part, individual power amplifiers are behaving at reduced peak power, opening the opportunity for much better power efficiency. Finally, this market is really scattered, many bands.
From sub-Gig to millimeter wave, it's actually constantly searching for more bandwidth. All of this is really calling for new core technology optimized to these new market targets and ready for consumer-like volume. That's what I want to talk to you about. We have developed those core technology consistently with our IDM model. The first core technology is BiCMOS. It's providing the best-in-class noise figure performance with high volume capacity. It's a longstanding technology at ST. It's already in large volume production for RF front-end IC used in satellite communication. The newborn B55X BiCMOS process has figure of merits that are mind-blowing. Bipolar transistor fT over fMAX that have characteristics that are twice better than competition. 20 GHz low noise amplifier gain that beats out any equivalent technology in noise figure with a 0.2 dB improvements at 6 dB higher gain.
Believe me, when you're compounding this on thousands of antenna elements, this is becoming a big freaking deal for our customer. We are taping out major product in the second half of 2022 with this technology. Today, I'm very proud to officially disclose SpaceX as a customer of this amazing technology. We've been up to great things with SpaceX over the years, and we are completely delighted to count them as our customer. The second core technology is what Marco talked about earlier, GaN-on-Silicon. It's providing the best performance volume cost compromise technology for the 5G RF power amplifier. GaN-on-Silicon for RF is developed in our fab in ST Catania. It's based on the same investment that we've done for power electronics.
It allows a drastic improvements in power efficiency versus the usual NLDMOS technology, and it's way more cost-effective than GaN/SiC with larger volume capability in 200- mm. Qualification is in progress for this technology. We're sampling to customers now. This, ladies and gentlemen, is a technology breakthrough opening big horizon for 5G players. It's one thing for me to say it, but it's another for our partner at MACOM to echo it, and I'm thankful for their quote in our presentation today. Now, with this technology, we are today sampling new products for the gigahertz wireless market. We have several front-end ICs in Ku- band for LEO satellite user terminal using BiCMOS. And for the 5G infrastructure Tx lineup, we have a wideband pre-driver in BiCMOS as well as our internally developed PA module using GaN-on-Silicon that we are sampling.
Over the next 12 months, we have a lot of work ahead of us. We intend to work on few things, supporting higher frequency band and expanding our portfolio, integrating more by leveraging system in packages advances we have in place in ST, migrating part of the portfolio to our B55X technology that I mentioned earlier. Last but not least, optimize cost through high volume production. We are truly committed to build a great gigahertz wireless market. In summary, we are riding a very fast-growing gigahertz wireless market, like I've just explained, and we are planning to grow even faster than this market.
We intend to do that by leveraging our core technology innovation I've just described, both on BiCMOS and GaN-on-Silicon, capitalizing on our early success in the LEO satellite market, expanding in the 5G infrastructure market, and continuing to build on an early momentum in Wi-Fi 6 and cellular IoT front-end. This is going to create additional value for ST shareholders, clearly beyond traditional market already addressed by ST. The break is coming. This is the last slide. Let me bring back everything together for you guys, okay? We in MDG intend to support ST $20 billion-plus revenue ambition through two strong pillar of growth that you can see. First, the STM32, leveraging our established customer base, our STM32 ecosystem to expand the SAM that we're targeting.
Second is the gigahertz wireless market, where we intend to leverage ST technology, innovation, and leadership to build new product line in fast-growing markets. It's a combination of those two things that provide, I believe, a strong potential for incremental revenue over the next five years that we intend to make accretive to the company operating margin. Thank you very much. I'll pass the baton to Céline.
Thank you very much. I will be super short just to say that we are a little late. If you don't mind, we will just do a quarter, 15 minutes break, and we'll reconvene around 11:15. For the one on webcast, we will stop the webcast for a quarter of an hour. Thank you very much.
Hello again. I'm assuming everybody is nearly back. Thank you for coming back. Now it's my pleasure to introduce Orio Bellezza to present manufacturing and technology.
Okay. Thank you, Céline. Good morning to everyone. Good news is that my presentation will be much shorter than my colleagues' ones, but it will be complemented by a nice video to, let me say, complement my information I will give you on manufacturing. I'm pleased to give you an update on the ST manufacturing strategy. Let me start introducing to you our vision and model. As you know, we are an independent integrated device manufacturer with in-house manufacturing complemented by outsourcing. Our manufacturing strategy is a key enabler, we assume, for the company ambition to reach and exceed the $20 billion revenues and to grow profitability, even more important. We offer our customer the highest level of service, and in the last two years we have accelerated our capacity investments to cope with the unprecedented semiconductor demand growth.
Our internal production relies on 14 content and test sites focused on the manufacturing of specialized and proprietary technologies supporting our differentiated product portfolio. We outsource about 25% of our total production, and the collaboration with silicon foundries and Asian test subcontractors are an integral part of our strategy, providing additional capacity and granting the access to the leading-edge FinFET technologies and advanced packages. Today, I will give you an update on our midterm strategy, starting with the plan to double our 300 mm internal capacity, followed by an update on the manufacturing programs for wide bandgap technologies, silicon carbide and gallium nitride, and finishing with the outsourcing. Before going there, let me confirm that we continue to invest in the development of our proprietary technologies that represent the base of our differentiated product portfolio, as widely discussed before by my musketeers, business colleagues.
These charts report the complete map of our front-end technology portfolio. For time constraints, I will not go through all of our technology bricks, and I will just mention a few important areas of leadership. First example is the smart power platform, including BCD Automotive, BCD GaN, galvanic isolation. You have heard about this from my colleagues before, and mostly for Automotive and Industrial applications. Second, power discretes including SiC and GaN, of course, but also still silicon-based power MOS and HBT, where still a lot of innovation in terms of products and technology are going on.
Third, to close with the examples, of course the FD-SOI platform going across many application, developing now at 80 nanometer and 10 nanometer nodes, enabling leadership performances and differentiation in digital for ADAS, in embedded flash for microcontrollers, as well as radio frequency application. Assembly testing technology and manufacturing are also instrumental to ST competitiveness and customer service capabilities, addressing our key product applications. We develop and manufacture in-house a huge variety of packages, and we complement our internal production and technology offer with selected collaboration with subcontractors. Out of many areas of technology leadership you can see here, let me just mention power modules packaging, a very important sector where we see fast growth thanks to our increasing portfolio of solutions. We develop and manufacturing at our Shenzhen and Bouskoura plants power modules of various flavors and complexity, embedding both silicon and silicon carbide solutions.
Let's move now to our major strategic manufacturing programs, starting with 300-millimeter expansion plans. Here we are transforming our internal manufacturing base, increasing our 300-millimeter footprint by expanding capacity at Crolles in France and starting our second 300-millimeter fab at Agrate, Italy. We are projecting to double our internal 300-millimeter capacity by 2025. Covering many technology nodes, as Jean-Marc anticipated, spanning from 90 nanometers to 28 nanometer, that will remain in strong demand for the next many years for the Automotive, Industrial, and consumer markets. Such an internal manufacturing technology span, I confirm, of course, what Jean-Marc said, in 300 millimeter is quite unique if we compare ourselves with our peers, IDMs.
In silicon carbide, we are expanding the 150-millimeter front-end capacity in Italy and Singapore and working on the Industrialization of the 200-millimeter production. We are also expanding internal assembly and testing plants. Our substrate pilot line in Sweden is delivering wafers in limited scale production to our power MOSFET fabrication fabs. We're investing in a new infrastructure that will enter pilot production, and we start delivering 150- and 200-millimeter wafers by 2023. In gallium nitride, we have installed full internal process capability, and we are preparing for 200-millimeter volume production by next year, by 2023. While preparing for internal capacity, we have entered the GaN market with our products by manufacturing in TSMC. Now a little more insight on the 300 millimeter.
In Crolles, we have further expanded, increased our production of about 50% from 2020 to 2022, mainly in 40-nm embedded flash for microcontrollers and 28-nm FD-SOI for Automotive, Industrial, and space applications. We are executing further steps of expansion through modular increase of the building and facilities, and going forward, we have room for an additional 50% step up of the capacity by 2025. In 2022, we will also deliver the first wafers from Agrate 300. I will describe a little bit more in detail in the next chart. Considering both Crolles and Agrate contribution, we project to double our internal 300-mm footprint from now to 2025.
The growth in 300 millimeter, of course, is instrumental to our path to the $20 billion-plus revenues and profitability, of course. By 2025, about one-third of our total wafer production will be in 300 millimeter, doubling the today percentage. We will also continue to convert wherever makes sense and wherever possible the more mature technology from 150 - 200 millimeter. Of course, this evolution of our wafer diameter mix will accelerate our growth and will dramatically improve our manufacturing cost. Here are a few more information on the Agrate 300 fab. The first set of tools is under installation, and we plan to start wafers by Q3 this year, reach qualification and ramp up in H1 2023.
Going forward, our objective is to bring the fab to the full build-out and reach full saturation by the end of 2025. As you probably know, we have established a collaboration contract with Tower Semiconductor, aiming to develop manufacturing synergies and cooperate for the fastest possible capacity ramp-up. Agrate 300 will start delivering Analog mixed-signal and BCD technologies, and we plan to phase in embedded Flash technologies at a later stage. The Agrate and Crolles tool sets and systems are fully aligned to grant flexibility and interoperability between the two fabs. We set a sort of twin fabs kind of organization. Let's move now to the wide bandgap technologies. First, in silicon carbide, we have accumulated impressive experience during the last six years of volume production of Automotive-grade products. We have shipped over 125 million dice to the Automotive market.
In the last two years, we have increased our capacity by 2.5 x, and we continue to invest, expanding our manufacturing plants in Catania and Singapore, planning to double our total capacity again by 2025. In 2023, we will start the first 200 mm production, and going forward, we will sustain our growth by adding 200 mm capacity and gradually converting part of our 150 mm lines. Concerning the vertical integration of silicon carbide and silicon carbide substrate, I can say that we are progressing very well in our strategy for the vertical integration of the silicon carbide supply chain in order to improve our product cost and strategic independence. We have established a limited scale production at our Sweden STSiC plant from which we regularly deliver to our 150 mm device production lines.
From the Sweden plant, we are also delivering 200-millimeter wafers, and moving forward, the device production conversion to 200-millimeter will rely on internally produced substrates. We are progressing in the construction of the new silicon carbide plant that will start pilot production in 2023, delivering substrate, epitaxial wafer, and later, 200-millimeter power MOSFET devices. This investment will support our plans to internally source more than 40% of our substrate needs by 2024. Let me wrap up because of course for us it's very important, the two key points on the silicon carbide. First, on device production, we are expanding Catania and Singapore 150. We have installed 200-millimeter Industrialization line, and we start gradually conversion of diameter in 2023. We have two assembly and test lines in mass production, both Automotive qualified in Shenzhen and Bouskoura.
Second point, of course, is the vertical integration. We start the in-house production, not any longer, let me say R&D, of 150 mm and 200 mm substrates at our Sweden plants, feeding our device production fabs. We are executing according to our plan, our objective to get to the 40% substrate in-sourcing by 2024. Starting in 2023, this pilot production of this new integrated manufacturing infrastructure, where we go also to produce power MOSFET devices in 200 mm. Moving now to gallium nitride. We have installed an internal 200 mm pilot line at our Tours plant in France, and we have established there our GaN Epitaxy Competence Center, with the contribution of the experience acquired with the integration of Exagan. In Tours, we are planning to expand our clean rooms and start production already in 2023.
For other frequency GaN, we have installed a 150-millimeter production line in Catania, where we expect to complete qualification by this year. In the future, we will have the option to convert the production to 200-millimeter to cope with technology evolution and the business demand that we expect in big growth from now to the end of the decade. While we continue to build on the acquired internal competence and experience, we produce our design at TSMC, addressing both discrete and integrated GaN in System-in-Package solution. We have also opened a new line, so we are engaged in technology development activities to integrate GaN power transistor stage with logic functions to provide single-chip solutions.
Now on outsourcing, I confirm our model assume about 25% of external manufacturing, about 20% in front-end with foundries, and 35% in assembly and test with the OSATs. The collaboration with silicon foundries and OSATs are key ingredients of our strategy on two aspects. First, of course, to support our growth and provide our customer with multiple sourcing options for both industry standard technologies and certain ST proprietary technologies that we transfer from our fabs to the foundries. Second, of course, to give access to advanced FinFET nodes at 7 nm and below, as Marco was introducing in his presentation, as well to the most advanced packaging solutions. In conclusion, we confirm that our manufacturing strategy is a fundamental enabler of the company ambition to reach and exceed $20 billion revenues and to increase our profitability.
The execution of our strategic programs by expanding the 300-millimeter footprint and growing wide bandgap technologies with SiC and GaN migration to 200-millimeter and the vertical integration of SiC will increase our value creation, thanks to improved manufacturing efficiencies. We count on the support of the foundries and the OSATs both for capacity growth and for control access to leading-edge technologies such as FinFET, as I mentioned before, complementing our internal proprietary technology portfolio. Lorenzo will describe soon in his presentation, in 2022, we are set to invest between $3.4 billion and $3.6 billion to respond to the current unprecedented market demand and to support the manufacturing roadmap that I've just introduced to you.
Well, while I thank you for your attention, I now invite you to follow this short video that will complement what I just shared with you on the ST manufacturing. Somebody must do something now. Thank you. Thank you again. I hope you enjoyed these images. They make me proud even after almost 40 years in manufacturing to be part of this team, really great. I think the last few messages you have seen, last few statements of the video should be a good introduction to Rajita. Coming on the stage now to develop more on ST sustainability commitment. Thank you.
Good morning. I'm very pleased today to be able to talk to you about sustainability at ST. You are aware that at ST we focus our sustainability efforts through three areas. First, we create technology that enables our customers to boost sustainability and seize opportunities through independent, secure, and responsible supply chain, differentiated innovative products, and leading safer, greener, and smart technologies. Second, we do it in a sustainable way by prioritizing our people through areas of safety, labor, and ethics, diversity, for example, and our planet in terms of carbon neutrality, waste, zero waste, water recycling. Finally, we generate short-term and long-term value for our stakeholders. We increase the long-term intrinsic value of the company while minimizing risks. We create a win-win ecosystem that drives systematic change.
This approach is fully embedded in the company's strategy and value proposition of sustainable growth for shareholders, differentiated responsible products with independent supply chain for our customers, and committed to sustainability towards all our stakeholders. As you can see, sustainability for ST has a long history. In 1993, we published our first long-term commitment to the environment. In 1996, we published our first sustainability report, and this year we published our 25th edition. In 2005, we joined the RBA in the year of its creation. In 2020, we announced our commitment to carbon neutrality by 2027. In 2022, we have introduced a sustainable committee at our supervisory board. This long-standing commitment and experience gives us a competitive advantage.
With this continuous approach, in the last 26 years, we have improved our PFC direct emission efficiency by more than 80%, our water efficiency by more than 75%, our energy efficiency by more than 55%, and our recycling rate by more than 300%. More importantly, our sustainable practices are now embedded across our value chain. We manage sustainable impact across the full value chain. With our customers to start, we require them to implement RBA standards, encourage ISO and OSHA certifications, and we participate in the Responsible Minerals Initiative. At an R&D level, through the sustainable technology program we have, we design products systematically taking into consideration the environmental impact of the device through its whole life cycle. Through our people management processes, we ensure the health and safety of our employees through advanced management systems and certification.
We implement our code of conduct and RBA standards at all our production facilities. We deploy programs to reduce our direct and indirect greenhouse gas emissions from all our operations, including PFCs. We are continually reducing our water footprint through reuse and recycling, and all our wastewater is treated before it is discharged into the environment. This allows us to project in the future and to commit ourselves to long-term goals. We release long-term commitments since 1993. Our sustainability charter, published in 2021, is the sixth edition of such commitments. It includes 14 long-term sustainable term goals, as well as 10 yearly standards. Let me highlight a few of them for you today. Responsible products. At least 33% of our revenues will come from our responsible products by 2027. We're largely ahead.
In 2021 already, 20% of our revenues were coming from these products, mostly environmental. Our goal of safety of 0.15%, including illness and contractors, was reached already in 2021. On diversity and inclusion, ST is built on diversity with more than 115 nationalities represented. Our goal is to recruit more than 30% of women in our exempt positions, and to get women representing at least 20% of our management levels by 2025. Carbon neutrality, we will not only be carbon neutral by 2027, but we'll also be sourcing 100% of our energy from renewable sources. Let me highlight some other areas of environmental goals.
In 2021, we reached our 2025 goal of -20% energy efficiency and are good and well on track for our -20% water efficiency. Sorry, I didn't click. Oops. Sorry about that. Are well on our water efficiency goal versus 2017. Finally, our employee engagement, as you heard, is at 83%, which is 13 points above the industry's highest norm. In 11 out of 13 of our countries, we're already 10 points above the local norms. These goals are aligned with our stakeholders' expectations and engagement, but also have the full commitment of all our employees and management. This is a key differentiator at ST.
Sustainability is very much a part of our culture and management practices, as evidenced by the fact that for over a very long time, ESG criteria has been a part of the management executive short-term variable. In 2021, we extended the sustainability index to over 19,000 employees who are eligible for our short-term compensation. ESG criteria today also represents 33% of our long-term incentive program for all eligible management levels. These indexes are made up of material sustainability topics for us, health and safety, diversity and inclusion, people engagement, CO2 neutrality, and external ESG ratings and indices. As said in my introduction, we aim to create technologies for a sustainable world. ST has a unique program of managing, developing, and reporting, for example, our greenhouse gas through the product life cycle. This program is transparent and publicly described in our sustainability technology brochure on our website.
While we believe that sustainability brings a significant competitive advantage to our product handprint, and therefore our customers and investors, we are also very committed to lead by example across our full footprint. Greater than 69% of our new products are recognized as responsible, and 20%, as I mentioned, of our 2021 revenues were responsible. Last year, more than 90% of our responsible products were classified as green ones, that is, positive impact on climate change. We reported on the new EU taxonomy for the first time, both in our integrated IFRS report and our sustainability report. ST has taken advantage of the ten-plus years in our product life cycle experience approach to be able to report that under the IFRS standards, 36% of our sales come from products aiming at substantial greenhouse gas emission reduction across their life cycle.
46% of our CapEx has been related to technologies aiming to increase the capacity for these products or developing technologies to develop new eligible products. In line with our sales, 36% of our OpEx is related to development or support of these eligible products. We will report on alignment in early 2023, but we disclose every year the percentage of our sales coming from responsible products, and as mentioned, in 2021 it was 20%. While this is not the same methodology as the law, but both approaches are very stringent in terms of criteria and auditability. We are convinced that the semiconductor industry is one of the main enablers to a sustainable society. ST's strategy and portfolio addresses green mobility, energy management, responsible building markets, as well as required solutions for transition towards a low-carbon economy.
The European regulation is focusing very much on how companies are contributing to the European Green Deal, but ST's contribution is far above this, and we do this in a sustainable way, by prioritizing our people and safety first. For more than 30 years, we have developed an advanced health and safety management approach, including risk assessment and management systems embedded in all our operations, manager safety visits minimum twice a month, a minimum 4-hour training per employee per year, prevention, assistance of psychosocial risks, and development of well-being. Our recordable cases illustrate this maturity. A 0.12 recordable cases for employees and 0.15% including illness and contractors. Another aspect of prioritizing our people is diversity and inclusion.
We believe that diversity and inclusion enables innovation, increases customer experience and engagement, enhances attraction and engagement of talent, supports everyone's development, as well as the company's sustainable growth. Our strategy here is made up of three pillars. Diversity staffing, more than 30% of our yearly hiring are female, and in an environment where only 15% of the diplomas we source are women. An equitable workplace. We reached in 2021 full pay based on both base salary and total cash, and an inclusive culture. From our employee survey, over 80% of our employees believe that in ST, you can truly be who you are and be accepted. Along with people and safety, we also prioritize our planet. We lead the semiconductor industry by being the first committed to be carbon neutral by 2027.
This includes Scopes 1 and 2, and Scope 3 partially, where we control transport emissions from goods transportation, business travel, employee commuting, and this has been endorsed by SBTi. In 2027, our commitment also includes 100% renewable energy sourcing, as well as sustainable electricity savings. We are on track for all these goals, and we also participate in Apple's clean energy initiatives. We are very pleased that our performance in all the areas that I just talked about are mentioned and well-recognized by investors and ESG experts. ST is a part of multiple indices and rating agencies that you can see on the page.
Our entire sustainability approach is embedded and totally consistent with our business strategy and value proposition that you have just heard about, and it will serve as a competitive advantage to meet our ambition of $20 billion plus in revenue. Thank you very much. Let me introduce and hand over to Lorenzo.
Good morning. We are still on time to say good morning. Good morning and welcome to the final presentation of today. In the next half an hour, 20 minutes, I will try to stay short. We will together review the ST financial performance achieved in our recent past and the one we will achieve at our $20 billion plus revenue ambition. Let's see. Good. First, I will cover the ST actual results. Second, I will move on to the year 2022, this year. Third, our expectation moving forward towards our $20 billion plus revenue ambition. Let's start reviewing some of our recent achievements. In the last few years, ST was significantly expanding revenues, moving from a company below $10 billion in 2018 to a company close to $13 billion last year.
A growth representing a 10% compound annual growth rate. Many product lines contributed to our revenue expansion. Imaging and MEMS sensors, microcontrollers, increasing revenues both in general purpose and secure. Analog, growing both in the Industrial and Personal Electronics. Automotive, with our products addressing electrification like silicon carbide and digitalization like ADAS and microcontrollers, was a further important contributor to the growth. A pervasive and balanced growth in the markets and applications we focus on. This balanced revenue growth is also reflected in the evolution of our sales to OEM customers and distribution channel, what we define mass market. In 2021, distribution was representing 34% of our sales, a similar percentage as in 2018. A balanced revenue growth across groups, applications, and customers. The company revenue growth was accompanied by a significant improvement in our economic and financial performance.
Comparing last year, 2021, with 2018, operating margin gained 450 basis points to 19%. Last year, we posted $2 billion of net income. An increase of more than $700 million in three years, and we generate more than $1.1 billion of free cash flow after investing to support growth $1.8 billion in CapEx. Since 2017, the company gross margin has changed scale and level of volatility if we exclude the peculiar year 2020, dominated by the pandemic. In these last five years, our average gross margin close to 40% gain 570 basis points compared to the previous five years period of 630 basis points, if you exclude 2020.
Of course, this was not the end of the journey, as shown in the last few quarters. Strong drivers of this performance have been our manufacturing steadily improving in terms of efficiency and continuous product mix improvement, partially offset during the period 2017-2021 by pricing dynamics. We were continuing and accelerating our investment in expenses and CapEx. Our expense to sales ratio moved from -25.2% in 2018 to -22.8% in 2021, with an operating margin gain of 240 basis points after investing $6.2 billion or 14.7% of our revenue in R&D, and a significant amount of million dollars in projects to enable the digital transformation of the company, improving efficiency and effectiveness in a variety of business processes.
We invested $5.5 billion, 13% of our revenue, to expand our manufacturing capacity, improve our product mix, and set the basis of our future through a set of strategic projects ranging from the 300 millimeter to the new material capacity expansion. We complemented our IP portfolio with selected and focused bolt-on acquisition. A strong effort to secure our result and to set the basis for our future. We exited the period with a reinforced capital structure, $3.52 billion cash in our balance sheet, net financial position approaching $1 billion, and a confirmed and improved solid credit rating. In 2021, we exceeded the $12 billion revenue goal as set in our 2019 Capital Markets Day, delivering on all the metrics.
Shareholders have been rewarded of their trust in the company with a return beating the market. Okay, let's now leave the past and move to the near and medium term future. Let's start to talk now about the current year, 2022. We know we live in a quite dynamic environment. Since the end of 2020, we experience a very strong rebound in the semiconductor demand that is still nowadays continuing. Today, our 2022 order backlog is well above our current and planned manufacturing capacity, and so far we have not experienced any sign of rescheduling or cancellation. The level of revenues we plan to achieve this year is driven by our execution and delivery on the current order portfolio.
Revenue price environment remains positive, and we are experiencing an evolution in some business models, like Automotive, where longer-term contract commitment for volume and price from our customer and customer of our customer is becoming more and more the norm, securing medium-term a material portion of our order portfolio. As already stated during the Q1 earnings release conference call, we confirm our visibility for revenue growth in 2022 between $14.8 billion-$15.3 billion. This range is encompassing at this stage all possible threats and opportunities. In 2022, ADG will lead the growth. The strong semiconductor demand in Automotive for electrification and digitalization of mobility will be the underlying growth driver.
Our Automotive microcontroller and the products for ADAS are growing at a strong pace, and our revenues in silicon carbide, as already communicated, will be above $700 million on an accelerated path to $1 billion revenues. MDG will be the second contributor to this year's growth. The revenue increase for this group could have been much larger. The biggest limitation for our microcontrollers remain capacity, with moderate growth, especially in foundry. Our radio frequency products will materially contribute to the revenue increase with an important engaged customer program. AMS will also contribute to the company growth, but in a more limited way, single digit growth. All the AMS product lines will contribute to the revenue growth, imaging, MEMS, and Analog, but with this latter two impacted by important capacity limitation.
This capacity limitation in AMS cannot be reversed in short time, and notwithstanding our strong effort in investing in these areas, we will not be this year in the position to serve as we would like all our customers' demand. The company revenue increase at the midpoint of our plan, expected to be around 18%, will be coupled with a material improvement in our economic performance that is already visible in our Q1 actual result and Q2 guidance. Our gross margin in the year will be around 46%, improving 430 basis points compared to last year. The favorable price environment and improved product mix are the strongest driver of this expectation.
Looking a little bit more in detail of this element of price and mix, we can see that this improvement is not purely related to the current market situation, which as a matter of fact could embed some volatility. A significant portion of this contribution comes from product mix evolution and medium long-term contracts with our customers, setting not only volume commitments, but also pricing commitments. Similarly, we engage on medium long-term contracts with our suppliers, even if at a lower extent. Additionally, this inflationary impact will be partially mitigated by some gain in our manufacturing efficiency. We confirm our capital expenditure for the year in a range between $3.4 billion-$3.6 billion, with a strong effort on capacity addition and mix change.
I would also like to underline how our CapEx expenditure is now dominated by investment in 300 millimeter, the Crolles 300 expansion and the Agrate 300 readiness, as mentioned by Orio, for start production in the second part of the year. The investment in 300 millimeter represent almost half of the overall CapEx spending for this year. I'm sorry, you're right. Good suggestion from my CEO. If I change the slide, it would be better for you to follow. Thank you, Jean-Marc. It's the emotion, you know? Let's look now at what is the expectation. 2022 will be another strong year for ST. In a market supposed to grow around 16% sequentially, ST, amid capacity constraint, at midpoint of our plan will grow revenue 18%.
Operating margin will be between 24%-26%, and after investing about $3.5 billion in CapEx, free cash flow will be well above $700 million, fully covering our proposed dividend distribution and the share buyback. As already mentioned during the morning, this will definitely not be the end of the journey. Let's now move to our next ambition, to become a $20 billion-plus revenue company between 2025 and 2027. Today, my colleagues, the Three Musketeers, widely illustrate our product offer and the positioning of the various product groups on the market we address.
The growth in this market is driven by secular trends, electrification and digitalization in Automotive, the digitalization of devices and systems, including the integration with the cloud in Industrial, and the transition to greener energy that will call for more and more power products to improve efficiency and savings, accelerating revenues for our broad power product portfolio, including new materials. ST, with its large range of technologies and IPs, will be in a unique position to benefit from these trends. In a served market which is expected to grow high single digit in the next few years, ST has the ambition to outperform the market, reaching between 3-5 years, depending on the evolution of the market, the $20 billion+ revenue mark. This revenue ambition will be sustained by an important transformation of our manufacturing footprint that will significantly expand on 300-mm.
This expansion will achieve two goals. On one side, it will allow the company to fulfill the market demand. There is someone now that is not arrived. He comes late. They don't trust anymore maybe on changes the slide. Now I pay attention, I can tell you now. I'm not yet there. I come back. That on the two goals of this expansion. On one side, it will allow the company to fulfill the market demand, securing our customer a reliable source of their semiconductor needs. On the other side, make this source more and more efficient and economically competitive. We will move our production progressively from 6-inch and 8-inch to 12-inch. All our product groups will benefit from this move, supporting revenues and expanding profitability.
Now is the right moment. The expansion and the deep shift in our production will be the key enabler to sustain the volume, to improve the mix, and to gain in efficiency. The chart illustrate the revenue evolution by internal production wafer size, by new wide bandgap material, as well as the contribution of the foundry. The percentage of revenue generated internally by legacy 6-inch and 8-inch will move down from 55% of last year $12.8 billion to 38% at the $20 billion-plus revenues. A change mix in technology and an increased value of the product offer will contribute to improve the profitability of this portion of sales, together with some gain in productivity and efficiency in our legacy fabs.
At $20 billion+ revenue, the portion generated by internal 300-millimeter fabs will represent 32% of our total sales, compared to the 20% generated last year, and this will be a key contributor to the gross margin expansion. After an intermediate period in which the balancing between the Agrate 300 fab ramp-up extra cost and the gain in productivity of Crolles 300, thanks to its increased scale, will result substantially neutral to our current level of profitability at full build-out. The combination of the two 300-millimeter will be strongly accretive to our margin. The new materials that represent around 10% of our $20 billion+ revenue ambition will be an additional element in improving our profitability, mainly thanks to the scale effect, the transition to 8-inch, and the contribution of the portion of silicon carbide substrate internally produced.
Foundry will continue to contribute to revenues for about 20%. At $20 billion+ revenue, our operating profit will stably remain above 30%. Actually, it's our operating margin that will remain above 30%. Compared to the 19% that we achieved in 2021, three major contributors to this expansion. First, the expense to sales leverage. Revenue growth will outpace our expenses growth, where the effort in R&D will be somehow partially counterbalanced by improved efficiency in our business processes, thanks to their digitalization and the move to a scalable solution like the use of cloud for CAD. Second, the increase of the weight of the 300-millimeter production. Third, the contribution of the product mix and price.
I have already illustrated the 300 mm benefit when Crolles 300 and Agrate 300 facility will be at full build-out. The product cost will be reduced by above 20% compared to the cost of a similar product manufactured in 200 mm with same area and process complexity. Additionally, the move to 300 mm technologies will contribute to enrich the mix with more complex and value-added products compared to those manufactured in 6-inch and 8-inch. Product mix will be an additional important contributor to the operating margin expansion. Of course, after two years of positive price environment, we will experience some price erosion in the coming years. However, some of the price dynamics we currently see will not suddenly disappear.
Some resetting of our prices that we have negotiated beginning of this year with OEM customers are multiyear contracts that, even if they include some price erosion moving forward, make us start from a significant higher price basis compared to the level of 2021. The expectation is that the combination of product mix and price will be a further positive contributor compared to year 2021 to the evolution of the company profitability. To achieve such a transformation in the manufacturing footprint, ST will accelerate its capital investment.
We have already started to step up our capital expenditure, addressing the 300-millimeter capacity expansion, the increase of our capacity in new material, and the modernization and evolution of our assembly and testing infrastructure, as well as to enrich our product mix and to secure our goal toward carbon neutrality. This year, ST will invest around 23% of planned revenues in a remarkable effort to respond to market demand and to reshape our infrastructure. Moving forward, this percentage level will progressively reduce, remaining on a relatively high level in short-term and moving down toward mid-teens on medium-term when approaching our $20 billion+ revenue level. We will continue to leverage what we believe to be a strong strategic advantage, operate as an integrated device manufacturer.
ST is a company well-positioned on a growth trajectory towards the $20 billion+ revenue ambition, achieving gross margin in the 50% range and operating margin solidly above 30%. With an EBITDA above 40%, the company will be in the position to generate a free cash flow in excess of $5 billion, securing a strong and solid capital structure. ST will continue to remunerate its stockholders, increasing constantly the fundamental value of the company, and with a dividend policy consistent with the planned increased cash generation. A relentless effort in investing in R&D, in maintaining and improving an efficient and top-class manufacturing infrastructure, and focusing on specialized bolt-on acquisition to expand IP's portfolio, will be the key enablers to improve financial performance and to secure solid and flexible capital structure. Ultimately, to generate increased fundamental value for all our stockholders and stakeholders.
Thank you for your attention.
It is now time for the Q&A session. Thank you very much for your attention during those different interventions. I will now ask our president to come on stage, all of them, so you have the whole ST management team. I think it's important for you to see that. We will have approximately one hour of Q&A session still with Jeff. Who would like to shoot first? Lucie, if you could come to Mr. François-Xavier Bouvignies from UBS. It's not running.
Is it working? Yeah. Okay. Thank you. It's François. Hello. No. Yeah.
Okay. It's Francois-Xavier from UBS. I just have maybe a question for Jean-Marc first. You have done a few Capital Markets Days in the past, and maybe today you are at the time where profitability, free cash generation is near all-time high. You gave a number of targets back for 2025, 2027. Do you intend to change the way you manage the company through cycle going forwards? In a way, you gave some free cash flow targets and gross margins, and if you look at in the past, you had some, you know, of course, cycles, and you're protecting more maybe revenues at the expense of profitability or cash flow. Is it changing the way, you know, you want to manage the company going forward? Like for example, exiting products if you don't see the profitability that you want or the free cash flow generation.
Yeah, just to know exactly if you want to change the way you manage the company going forward, given where we are in terms of profitability and free cash flow generation?
No, there is really important difference, okay, if we compare the early stage of the period chaired by Lorenzo. I don't want to repeat, okay, the same story always, but again, after the major disengagement from ST-Ericsson and let's say the core digital of consumer application, our main, let's say, handicap with the loading of our manufacturing infrastructure in both wafer fab and assembly, okay? Because we always spoken about wafer fab, but also assembly, okay, was intensively used, okay, from the digital core of the consumer application.
It is clear that for a while we have been driven by the strong determination to load as fast as we can our manufacturing infrastructure because we know it was a key detractor of our gross margin. However, we have been very determined and visionary, and I have to thanks also my predecessor, okay, Carlo Bozotti, to keep going our R&D effort on technology, on IP, and on product in order to prepare the future. Thanks to some major engaged customer programs in all the verticals we address, we achieve in the end of 2018-2019 a pretty well loading of our manufacturing infrastructure.
Now, we are entering since last two years and for the next few years to drive the company with a short-term, medium-term, long-term sales and operating plan. Make or buy, we will continue to invest in proprietary technology, differentiated technology. We will never come back to the advanced CMOS technology because here we rely on partnership. Yes, now, we are, I have to say, more selective and more balanced, and clearly each product group, they know that taking into account the business model and the operating model they are managing, they have clear target and must do in terms of gross margin, R&D expense to sales ratio, G&A to contribute to the ambition of the company.
Yes, we modulate, okay. Now we are more selective than in the past, for sure.
Lucie, Mr. Alexander Peterc on the first.
Thanks for the question. Can you hear me all right, yeah? Nope. Here we are. Now we're good. Thank you. Just a question on your gross margin evolution, particularly pertaining to the gains that you base on the 300mm migration. I understand how that is a tailwind for you in terms of margins, but I'd just like to understand, is your competition not catching up or doing the same thing, thereby eroding the price power that you have at these geo arbitrages? Do you see that being unique to ST in any way? And how, you know, how you see this evolving?
Yes. About the 300 millimeter, we have to say that in the gross margin that we are enjoying today, we have only partially embedding this positive impact of the 300 millimeter. There is still a significant portion of our production that is, let's say, on, if you want, a legacy fab, on the 6-inch, on the 8-inch. Actually, we have not yet enjoyed the positive impact to have a basis, larger basis of our production on the 12-inch. On top of that, as has been shown by my colleagues during their presentation, this will allow us also to improve in term of product mix our offer with more value.
I think the combination of these two elements are something that, let's say, for our company is, an element that will, significantly improve to the expansion of the gross margin. I think that the point to have, significantly investing in 12-inch, for us, let's say at this stage, will definitely contribute to move up our gross margin in respect to where we stand today.
Lucie, upstairs, Jerome Ramel here.
Yeah. Jerome Ramel, Exane BNP Paribas. On the target of $20 billion revenues, how much is due to cycle, and what is your assumption on the cycle? How much is due to your specific engaged programs that you have?
Well, as I said, okay, I think there is two things. There is the core business where clearly here we do believe we will grow at the market pace because I also answer to the first question. We know that on core business, on established market the only way to win market share is to decrease the price. Here there is no reason ST okay decrease any price. We want to capture market share at the detriment of the gross margin. We do believe that we will grow at the market pace.
Yes, definitively, okay, all the customer engagement program and the growth, let's say opportunities, okay, will be the main contributor of the fact that we expect to grow faster than the market. The addressable market should grow high single digit. Us, okay, we will be above, okay? Maybe not at 1.5, huh, because I guess if you have computed the $20 billion between 2025-2027, okay, you have the compound average growth rate. It's between 7%-8%, okay, to 10%-11%. Yes, we have embedded a range, okay, in case there is a year, as we have seen in 2019, of, let's say, a soft adjustment.
The major part of our, let's say, growth overperforming the market will be linked to the engagement customer programs.
Claudia, we will do on the other side. Where is Claudia? To Matt.
Hopefully this is on. Yeah, thanks. It's Matt Ramsay from Cowen. Thanks very much, guys. I just wanted to ask on contributions of growth by division as you look out to your targets, both in terms of revenue and margin contribution. I think, as the gentleman presented their business, I mean, ADG and MDG clearly, I think could potentially grow in double digits for the next few years. Anyway, if you guys could talk a little bit about growth by division and how much it accrues to the $20 billion target, particularly on margins as well. Thanks.
Thank you. Thank you for your question. I pass Lorenzo to answer.
Yes, about the contribution. First of all, of course, all the product groups will contribute to the growth. When I will, let's say, see the contribution, surely ADG and MDG we do plan to grow more than the average of the company. While AMS, that will continue to contribute significantly to the growth of the company, will be a little bit less than the average of the company. In terms of contribution to the operating margin, here, let's say in my presentation, I didn't went through this, but I can tell you that at the end, we do expect that leading the operating margin will be MDG. That will be well above the average of the company.
We will have AMS that will be substantially at the average of the company, while we will have, let's say, ADG slightly below the average of the company. At the end, let's say, this will be the split among the various groups. I repeat, all of them has significant opportunity to growth, even if definitely on ADG and MDG, we see the strongest growth, let's say, to our ambition of $20 billion plus revenue.
We stay on the same side, if you could, pass Sandeep, please.
Sandeep Deshpande, JP Morgan. If I may go back to the gross margin question. When we look at the gross margin today, around 46% in 2022, and then when we look at your guided gross margin of 50%+ in 2025-2027, is there not an impact on the gross margin today from pricing, which is, you know, much, much stronger than it has ever been in the industry, which is seen across the board at your competition? Thus, if that was to normalize, it would mean that your guidance on gross margin for between 2025 and 2026 is even more substantially higher than a change is much more. I mean, the point you're making about 300 millimeter in the mix.
You're talking about a very substantially better mix by 2025-2027, which will cause this gross margin to be able to overcome any small correction in pricing that we will see between here and there. Could we understand, I mean, you've talked through your presentations about, you know, content increases, but where the mix is shifting and that this is a higher margin product and that is going to change the mix of the product. Thank you.
Thank you. Important question. Okay. Lorenzo, I think, we discuss it.
No, yes. The point that you make, Sandeep, is right, in the sense that there are these two important contributors, let's say. On one side, as we said, to have a more efficient infrastructure in terms of manufacturing. This, I think, is an important element. The other element is the content of the value of what we propose to the market. Because, let's say, while in the past, the dynamic of pricing and, let's say, mix was, let's say, I would not say offsetting, but not really giving a significant boost to our margin.
Our view today is that with the portfolio that we have, with the situation that Jean-Marc Chery was describing, and now there is no reason why we need to give up value, let's say, for looking for market share and so on. Let's say, we think that this contributes to increasing value of our offer, giving to our customer, let's say, solutions, giving to our customer also, let's say, we were talking today about artificial intelligence, we were talking today about embedding more software in our offer proposition. All these elements we see as an increased value of what the company is able to propose to the market. We have a wide range in term of portfolio. We have a wide range in term of technology. We believe we have a strong value to offer to the market.
This is the reason why we believe that this component will be a key element in evolving of our, let's say, gross margin. That combined with the fact that the investment on which we are focusing today in order to have a more efficient and more effective infrastructure combined together give us the possibility really to have this ambition to get the company on a gross margin in the range of 50%. This is the two elements that we believe will be the big drivers to get there in respect to where we stand today.
No, and I have to add, if you remember very well, our Capital Markets Day in 2020. Not the $12 billion in 2023, yeah? Not my point. The point of Marco Monti. He explained clearly to you the way he intend to move the profitability of the group, also changing the operating model. Moving from a COT business, ASIC business to more ASSP business, solution business, and also to balance the way we cooperate with Tier One and car makers and EMS and distributor. All this dynamic is paying back now.
For sure, in a pricing environment which is favorable, but we have the payback also of the strategic initiative that Marco Monti has taken in 2020, and that are really paying back now for the group.
Lucie, we will take another question that Didier in the 1, 2, 3 keeping the hand up. Before we take maybe a question from somebody in webcast, we have Didier Scemama asking a question.
Thank you. Didier Scemama from Bank of America. Thanks for your insights. I just wanted to go back to the gross margins, you know, above 50%. It's kind of hallelujah for me, for ST. It's where you should have been quite a while ago, so it's finally getting there, so congratulations. Related to that, I just wanted to come back to the point Lorenzo made earlier, which is that a number of the contracts you have signed are on sort of long-term supply agreements at fixed prices. So can you just give us a sense of how much of your, you know, backlog or visibility into the coming years is covered by those long-term supply agreement, and therefore gives us confidence that this 50% plus gross margin is indeed within reach?
Related to that, just wanted to also double-check the brief that you've given Lorenzo on the gross margin between 21% and 25%+. It feels like the pricing and mix benefits that you've got there budgeted is very much what you've achieved already in 2022. Effectively, there is no mix or pricing benefit expected after 2022 to get to that 50%. Is that correct?
No. First of all, I answered the first question. Let's say, today, we have seen a significant shift in terms of pricing, let's say, power, if you want, you know? This has been somehow leveraged. In today's, let's say, many of our customers are really addressing the ability to have the parts. Of course, there is a possibility here in order to secure commitment on volume from our side also, let's say, in terms of pricing, to have a positive impact on that. Here, I would say that there is a portion. It depends, of course, on the kind of market that we are addressing.
There are some markets in which the portion of contracts that are securing somehow our pricing in medium term, if I take for instance the case of Marco, is quite significant, quite material, quite high in terms of percentage. Of course, when we look at the portion that we sell through our distribution channel, here, if you want, let's say, this long term is more questionable. At the end, it represent, if you want, a portion that is in the range of 30%+ of our revenues. I would say, without entering in a precise percentage, that this component of a medium-long term contract is material.
Is such that make us, let's say, feel comfortable to say that even if the price environment will not be such favorable like today, a big portion of this will not immediately disappear, will not be back in such a situation. When we look, let's say, the... Considering that, of course, the bridge are more indicative than to go in the detail, but answering to your question, of course, in moving from 2022 forward, what we have embedded, let's say, is that, in any case, there will be some price erosion. We cannot think, let's say, that price will be flat or continuing increase.
At a certain point, our assumption was that we will be back on a normal situation in which there will be some erosion. That's why at the end, when we look at the component of price and mix, maybe it could appear a little bit lower than when you compare, let's say, with 2022 bridge. This is because due to the fact that on the portion that is accretive to our gross margin, that is the product mix where we were discussing before, this is a portion that is becoming red. Means that is the portion of the pricing that at the end we may expect even or even in those that we have contractually signed, because there is some erosion, starting from a higher standpoint, but some erosion, let's say, a negative impact.
Overall, anyway, our view, our plan is that this component will remain, let's say, positive for our gross margin, for the reason that we were explaining before.
Tait, do you have any question from the audience on webcast?
Yes, we do. Thank you, Céline. Two questions, if I may. A quick one, in your full year 2025, 2027 gross margin target assumptions, do you assume that your manufacturing facilities will be fully loaded?
Yes.
That would be sure.
Yes. Now, what does it mean? Today, we consider infrastructure of manufacturing fully loaded is when, compared to the maximum capacity you reach for production 92%-93% loading. Because then you keep some flexibility for engineering, R&D, and so on and so forth. This is what we are planning. We are planning to saturate our asset because I think it's the basic of the semiconductor. For some industry like Automotive, the basic of profitability is purchasing because they buy a lot of pieces and components. For semiconductor, the basic of the profitability is, of course, the design efficiency, so the die size and the performance of the device, but the manufacturing. Yes, we plan at 90% and above manufacturing loading.
Thank you. As a follow-up, can you talk more about LiDAR opportunities and any traction you are seeing?
LiDAR? Okay. Yes, here you have to distinguish between two kind of LiDAR. Let's say the mini LiDARs that will go in Personal Electronics, let's say, and the LiDAR for Automotives. There are different technologies that then can do that, and we are engaged in this development. Clear at this stage is difficult to see how fast and how big this market will be. These are surely markets that will come, and we have the right technologies to be able to support. We already have engagements where we can develop, let's say, system know-how, because it's not only components, it's also the capability to build systems, and we are working on that.
Okay, Claudia, if you could go to Andrew. Another question in the live audience. We'll get back to webcast after.
Thank you. Andrew Gardiner from Citi. Just to follow up on the gross margin again, I'm afraid. Just the point you were making in terms of a sort of material portion of the orders or backlog already coming from this new pricing dynamic. Is that just in terms of the end markets or divisions, is it almost entirely Automotive, or are you actually seeing that in some sort of broader Industrial or, you know, for microcontrollers into consumer electronics as well?
It's coming from OEM customers. For sure, let's say a relevant portion is in Automotive, but not only, let's say, covering OEMs. Where we don't have a long-term contract with prices, for sure, when we address the mass market. Here it's more, of course, related to pricing negotiations that are maybe on a yearly basis, something like that. But when we look at, let's say, with our OEMs, also in Industrial, some OEMs in Industrial, some OEMs for the portion of the business of Remi.
Yes, we have also this part that now is covered with some contracts that are longer term in which we set pricing. Of course, in front of the pricing, we set also some commitment in capacity. It's not only, let's say, we need also to get the price, we need to serve the customer. This is, I think, quite evident.
The reason why it is touching Automotive and Industrial, it is what I have summarized in my opening address and my colleagues deeply complemented, is related to the transformation. When Automotive and Industrial OEMs engage themselves in massive transformation, so electrification and digitalization, they change. They restructure their manufacturing line, they change their product line, like battery tool, battery base, tool battery base.
They cannot take the risk to say, "Well, okay, semiconductor is a commodity, capacity will be infinite." Because if they miss a component, they go to bankruptcy. This is a situation today. Some customer are going to bankruptcy because they are missing one microcontroller. Now, okay, they have understood that to lead their transformation successfully, they need to secure capacity with us in long term, not only short term. Automotive and Industrial are massively on this behavior.
If I could just have another one on free cash flow. It's improved markedly over recent years. $1 billion or so last year, $700 million this year. Based on your targets, you're talking about north of $5 billion per year of free cash flow when you reach $20 billion in sales. You historically haven't done a lot of M&A. Your balance sheet's pretty clean as well. I mean, how should we be thinking of where that free cash flow is going to go in terms of returns, as you reach those targets?
Well, it's as we said, our strategy is let's say organic growth definitively because we are totally all together convinced that we can reach this ambition with our current market positioning and product and technology. Again, we do not forbid ourselves to make bolt-on acquisition strategy in the field of let's say sensor in the field of broadband processing solution. We do believe we are well-equipped on power and Analog. Most likely, yes, a part of the cash we can generate can enable our capability to make this bolt-on acquisition definitively. For financial activities, okay, I'll let Lorenzo comment.
As I was saying during my presentation, I don't know if I was on the right slide. Of course, our expectation is, first of all, you know that it's important for a company like ST to have some flexibility in the balance sheet. This has been very evident, for instance, 2020, in which we were protecting, let's say, our infrastructure, protecting our employees with this. Of course, let's say, as I was saying, we do expect to have a dividend policy that will be consistent, and we remunerate somehow our shareholder. We all know that we have, let's say, two elements. The first one, and this is the most important one, is to create value, let's say fundamental value of the company. This is the main one.
Historically, we have always, let's say, give dividend, and then there will be, let's say, this will be the other path.
Lucie, if you put it to Janardan.
Hi. Janardan from Jefferies. Two quick questions, if I might. One is on your silicon carbide. You've brought forward your revenue target to $1 billion in 2023. But when we look at your momentum there, and your largest customer clearly is shipping a massively increasing number of cars, and many of the new design wins that you and others are getting are really in the 2024, 2025, 2026 time frame for material shipments. So my first question is, should you not be now talking about $2 billion of silicon carbide revenue, and sort of put yourself well above the rest of the competition?
Is it at the rate of growth of around 40, 50% a year, is 2025 a realistic time frame for ST to look at a $2 billion revenue in silicon carbide? Second question is to Marco Cassis. I was just wondering, you made a comment on the growth of your division, that you will achieve double-digit growth in Industrial Automotive, but continued leadership in Personal Electronics. I was just wondering how we should be thinking about the growth of your division in Personal Electronics. Is it sort of single digit growth or can you give us any kind of qualitative or quantitative, because so many numbers of growth have been thrown around here today. Just wondering what your growth prospects will be on Personal Electronics within the AMS division.
Thanks.
Well, thank you. On silicon carbide, I am delighted to let Marco to answer. On Personal Electronics, okay, Marco, you will take it.
No, can you hear me? Now on silicon carbide, first, thank you for giving me some pressure because my boss is not giving so much pressure on revenue for silicon carbide, so thank you for that. You know, I think it's frankly, you know, we spent a lot of time at the beginning of our history with silicon carbide to tell you and also, you know, to some of our competitors, that silicon carbide is the right technology for the electrification in the Automotive domain and Industrial. Now it seems that everyone is in favor and is in love with silicon carbide, so we are very pleased for this. Sometimes it's nice to be the right one.
I think in some way you are right in the sense that the silicon carbide in Automotive in terms of volumes has not yet started. All the cars the Europeans will put in the market with silicon carbide are not yet in production today. This will come in the next, let's say, 5-10 years. For sure, the ambition to grow silicon carbide is there. You see, we are preparing ourselves in capacity for MOSFET in substrates to fulfill the need. We don't want to give unrealistic, you know, targets also because we have to say material is still a bottleneck today. For sure, we are a strong believer of silicon carbide. We think silicon carbide will evolve much more than what we think today.
I think we will go more on top of the Automotive, also in Industrial, even on consumer. I think the next one will be GaN, because part of GaN, when will be solid in production, will take also part of silicon carbide. But again, we don't want to be, let's say, unrealistic in giving numbers. You know, we'll not go in numbers over the $1 billion that we are telling you today. But I am with you, the expectation for silicon carbide is probably much bigger than what we think today. Frankly, we are prepared to fulfill these volumes.
Okay. If you remember, maybe in my presentation on the second or third chart, I was showing that from basically a 60%/40% by distribution between Personal Electronics and, let's say, non-Personal Electronic, we will move by 2025, 2027 in a more balanced 50/50. I clearly stated that this was going to happen, by the way, with having all the components, all the markets growing. Your question is correct. Automotive and Industrial are growing faster, but why? First of all, because the base from where we start, it's lower. Second, all these digitalization, electrification, have there a very serious impact, and is impacting sensor, because as I was explaining, sensors are becoming more and more fundamental, and the value of the sensors is increasing.
Same thing for what is related with optical sensing and also Analog there. We will grow in Personal Electronics. In the example that I did, for example, I put the wireless charging, which is something that will grow extremely fast in terms both of volumes and in terms of contents. Because the evolution of device is such that the augmentation of intelligence that you put inside is bringing the values up on top of the volumes up. But again, in Personal Electronics, we will grow less in terms of percentage because we start from already a very high value.
Just to complement my two colleagues, and not putting the pressure on Marco. Just put the pressure on myself. You have clear indication, okay. Lorenzo has shown a chart where the $20 billion plus, the contribution of wide bandgap in the time frame of 2025-2027 is 10%. The main part is the silicon carbide, because the GaN will start to contribute, but the high growth of the GaN will be beyond this time period. This is the first point, okay. I guess our chart is very explicit on that. Orio show a chart to say between 2022 and 2025, we will multiply by 2.5 our capacity on silicon carbide. I said that we plan to saturate this capacity.
The baseline is $700 million this year, multiplied by 2.5, so you make the computation. I don't want to hide ourselves. I put the pressure on myself.
Sorry.
Yes, $2 billion is clearly the target, the mission we have.
If I have to contribute with your income, let me know. I mean, if I have to pay something.
Claudia, to Sebastien.
Hello. Thank you for your presentation. Two very basic question. One is regarding neon gas situation, which seems to impact the players, the foundries, and also the IDM. What is your plan, and how is impacting your plan on manufacturing especially, do you have stocks, and how to secure this key element for your fabs and the lithography process? This is my first question, and second one is regarding your strategy on power is clear. You are doing SiC, you are doing GaN, and also IGBT and so on. But I see on your customers, Semikron, and also, which is doing module. It seems that you have also some strategy on module, power module.
Do you plan to be a key players fighting with, Infineon, all these guys? It's not so clear, let's say, so far for me in your strategy, but it seems that behind you are pushing for that.
Well, Marco will answer the power solution strategy and Lorenzo Grandi and Orio Bellezza will complement my answer on neon. Well, yes, on neon, let's say a few very few days or weeks, okay, after the war declaration between Russia and Ukraine, yes, we started to see some concern rising. Well, honestly, we react very fast with our main partner supplier. We are totally secure up for the time being up to Q1 2023, H1 2023. We form alternative sources and way to supply us because this gas is very important for the laser of, let's say, immersion scanner.
Definitely. Now we are working with him to secure our sales and operating plan, okay, up to 2023, and we are doing it on rolling two years. Is it okay?
Yes, I confirm, of course. I just to expand a little bit and not only to neon. For sure, you know that there are other gases and other molecules that are, let's say. I can confirm that for all of them, we have found, let's say, the way in order to secure our plan for 2022, surely. Also, let's say, starting 2023. I'm referring to helium, for instance, other molecules in which there are for sure tension on the market. Yes, for the neon, as Jean-Marc was saying, for other, let's say, components that are important, let's say, because you know that the supply chain of semiconductor is really wide.
Also, for that, we have taken measures and agreements in order to secure our plan to 2022.
Marco?
In the backend for power, unfortunately, there is no one solution. I think the right word is flexibility. If you want to fulfill the need of your customers, you need to go from one extreme, that is dice business, because car makers want to use their own modules, so you need to ship dice, and they will do the backend part. To the other extreme, that is very high specialized double cooled modules, on which there are companies like the one you mentioned, Semikron, that has for sure a strong capability. In the middle you have everything. You have a customer that wants to have a molded package because they want to reach the maximum flexibility.
You know, one, as one of the customers that we have, that I had in my table, or you need to have a customer with almost standard modules or you need to have JEDEC modules, or you need, again, specialized module, not so specialized like the Semikron one, which we are capable to produce in Shenzhen and in Bouskoura. You need to have the full, let's say, basket of solutions, because just with one way to go, you will not catch all the opportunities that you have. You know, every customer in this segment is different to the other, but you know, we are following all different paths.
Okay. We have a few follow-ups in the room. Later I will ask if we have some questions on the webcast. If you could go, Lucie, to Jerome again.
Maybe a question on microcontrollers. You said that your assumption for microcontroller is that you're gonna grow in line with the market in units. Isn't it a little bit conservative for a company who came from 2% market share in 2007 to 22% last year? Just to follow up on the connectivity, two quick ones on connectivity. Is the IP, or does the IP belong to STMicroelectronics for all the protocol stack? And what is your market share target?
Remi.
Yeah. Thank you. The goal for the general purpose micro, the non-wireless, non-NPU side is, like you said, to grow at market CAGR. I think more importantly, like I said, to try to grow more in dollar value than actually in unit value. This really mean that we are able to go and monetize the security assets we have, monetize what we're doing on AI, and also actually shift the intensity of our capacity supply to the higher end of the portfolio. We have an amazing MCU portfolio that Claude has built over the years. Those are costing, you know, $2, $3, $4 per unit.
I really want to see what we can do to go and capture more value on those lines. On connectivity today, on wireless connectivity, we have two ways to do it, okay? Either we go straight into embedding the functionality within the microcontroller, so you end up having single chip, two dual cortex approaches, one dedicated for the wireless protocol, and the radio is actually integrated within the microcontroller. The other approach is what we call internally. I'm not sure it's a great set of marketing words, but network processor, where the wireless function is separate from the microcontroller, eventually to be integrated, but at T zero, separated, okay?
Right now, what's driving the market is clearly BLE, and we are spending a lot of time to go and attack this market forcefully. I do believe, obviously, Wi-Fi is an important asset, but I do believe cellular connectivity will grow in importance. We are building actually a portfolio inside, actually, both Marco and I, and we're also actually partnering externally to go and attack the cellular wireless market. Today, the market share we have is mid-single-digit, to tell you the truth. If we reach 10%, I'll be very happy. If we reach 15%, I'll be delighted out of this market. I think these were the two questions. Yeah.
If you can go to Didier Scemama, and then we will go to webcast.
Yeah. Didier Scemama, Bank of America. Just have a few questions about the theme of reshoring. First of all
When you talk about the new business models that you're seeing emerging with Automotive and maybe even Industrial OEMs, do you see the relationship with these customers effectively strengthened by the fact that you've got fabs based in Europe? 'Cause we start to see in the U.S., for instance, major Automotive OEMs committing to local suppliers of semiconductors because they've got fabs in the U.S. That's my first question. Second of all, when it comes to the EU Chips Act and the first installment, and we've seen with Intel on both the front end and the back end, what are your thoughts around that? Would you consider using Intel as a foundry away from perhaps TSMC, just because this fab is gonna be based in Germany?
Just your thought, Jean-Marc, at a high level when it comes to relocalization and the reshoring theme, what does that mean for ST? Would you be able to qualify for the subsidies that the European Union is going to give away? Are you not interested? I think your position is, you know, has been sort of official, but just wanted to hear your thoughts now that this project with Intel has been announced. Thank you.
Well, first of all, the importance of the manufacturing with our customer during the past two, three years is to have internal manufacturing. Why? Because we control it and we manage it. When you are facing a situation where basically you have a backlog of $30 billion out of which you schedule on a rolling 12 months 95% of your capacity and you simply support 70% of the total demand, you have every day escalation, concern, and so on and so forth. The fact we control our manufacturing gives you more flexibility to manage on a day-to-day basis situation.
Clearly, the fact we have so many customer testimonial is simply the result of the close relationship and the stronger relationship we have established because of this period, not because we are a good friend, but because every day we found solution to avoid shutdown of plant, bankruptcy, this kind of stuff. First of all, it's not a question to be European or American and so on. It's internal manufacturing versus external one, because internal, we control it. When we commit capacity, we have the capability to check and secure our own supply chain. We are relying on ourself, is point number one. The point number two, you're right.
Now, I already spoken in the past about that. We are seeing what we call the decoupling of the economy. Now, unfortunately, I have to say, we are seeing some behavior of customers who want to have sourcing localized in their region of production. Here, it is clear that the strategy of ST and that the reason why, okay, we said that we will continue to develop our strong relationship with some foundries and all that, it's because of the situation. Because we do believe that if we have the right cooperation with foundry, as an example, and if we can implement in other part of the world similar cooperation than the one we have with STMicroelectronics in Italy, it's really a win-win situation.
ST can invest in any part of the world operated by our partner and sharing a cost plus base of access to capacity. Our strategy will be to grow worldwide everywhere we must do. You give a correct example. Yes, there is important OEMs which really want to have the source of production in their region. The way we will address it is according to the model I disclose to you. Well, about European Chips Act. Well, I confirm we welcome it. We will participate to it definitively. Well, we have already, let's say, programs which are covered by the well-known IPCEI and so-called now IPCEI ME/CT.
Well, we will see what will happen in the near future. It is clear that during the past few weeks, the share of mind and the focus of Europe was certainly on something else than the European Chips Act, I have to say.
We will first take if you have a question from people on the webcast.
Okay. There are fears on the market, not about 2025, but about 2023. Knowing that ASPs are high and fabs fully saturated, could you share your views on the revenue and gross margin growth trajectory for 2023?
Well, I think we have given a clear and great indication for 2022. We know that,
Our process of communication is to provide CapEx and most likely revenue in January 2023 for the full year 2023, and we will confirm the indication in April 2023. Now, we don't give indication for the, let's say, 2023. I think what is important is we do believe that the market we serve will grow high single digit definitively. We are investing this year and basically the H2 investment we will have will contribute to 2023. We will have H2 at a run rate of above $80 billion, because if you make the computation, so we prepare ourselves to grow in 2023 definitively. We will not give more indication than this one.
Claudia for Matt.
Thank you. It's Matt Ramsay from Cowen again. I had a question for Marco Cassis on it was very clear that the consumer electronics portion of your business will grow, but the Industrial and auto business will grow more quickly. I was interested in some of the examples you gave where there were design wins in your colleagues' two businesses where it pulled along a lot of Analog and digital content from your business. I guess my question is, are your colleagues' sales teams incentivized to pull through your business? Do you have a sales force that needs to push it yourself?
Like, how does that process work in sort of, I know where your old seat was, and I know where your new seat was, so I'm kind of pulling at that a bit. Thank you.
Maybe you remember my past life. Maybe you remember that in my past life, I was taking care about sales. I know how the sales are working. Now, the message that we were trying to pass there is that really, and this is happening, and maybe Jerome can comment on that, we are really reinforcing competence center around the world, and we go with solutions to the market. We leverage...
Sorry. You have to speak, yeah.
What I was saying is, on top of what we are doing from a product group point of view, allow me to touch the point. Jerome, we are also reinforced very strongly in the field through competence centers where we build solution very close to the customers. There, we do have the major ingredients to offer fast solution to our customers. Of course, a lot of things are going around the STM32 because it's where you have the brain. On top of that, you will attack the Analog portion, the sensor portion when it is needed, and this is the way to go.
These kind of relations are also helping with, let's say, high-end Industrial, for example, customers, also to get the intimacy to work on much more advanced ASSP where you can put a lot of value and we can extract dollars because we have the capability to digitalize, we have the capability to put the security, we have the capability to go to the customer with very, very strong or ASSP or overall solutions leveraging on all the portfolio of ST. The presence of the competence centers close to our customers is also an extremely strong added value.
Okay. Thank you, Marco. I think just to complement as a new part of this team is we are delighted in sales and marketing to have such a complementary portfolio to address to the customer. This is a real strength for the whole team. Instead of promoting product by product, we can as Marco was saying, thanks also to the ecosystem around the STM32, we can address directly the system itself within the application. We have competence center. We have also joint lab to the point of use. Basically, we are addressing some customers with joint lab working together, which are also making the design stronger, more robust for the future and really some very strong anchors at the customer development side.
This is our way to go.
We have time for, I'm sorry, only one more question from the audience, maybe Sebastien, the real one. For the others, we'll have many other opportunities, but time is running.
Yeah.
For the podcast, it will be close.
Thank you, Céline. Sebastien from Kepler Cheuvreux. One question on Agrate R3. When do you expect the first margin benefit from this fab? At full capacity, could you quantify the potential benefit of this 300 millimeter fab versus traditional 200 millimeter power fab? Thank you.
Well, in terms of the benefit I was trying to give some indication during my speech. Let's say, you know, we said that at the end, apart from the positive impact that the 300 millimeter is bringing to the mix, there is also the fact that when you look at our chip products that are, let's say, with the same complexity, with the same area, you can gain easily 20% of the cost. This is already something that is positive. If you want, at the end, I think also the ability, let's say, to make a product more complex and more added value is important. The plan for our Agrate 300 millimeter facility is to go as fast as we can.
Next year, let's say, the fab will start to produce and to contribute, let's say, to our revenues. As I was saying, 2023, of course, let's say, we are in a ramp-up phase. At the end, when you start a fab like that, initially you cannot dream to have immediately the economic benefit. Fortunately, on the other side, we have the benefit that is coming from the already well-established 300 mm in Crolles that will continue to gain in efficiency, and this will somehow more than offsetting, let's say, the impact of our Agrate R3.
From 2024, by the end of 2024, we will start to have a scale that is, let's say, start to not only contribute to volume, but really, let's say, to bring benefit to our gross margin. Of course, at that point, you can confirm, let's say, Orio, from that point, let's say it will be an asset for us, a strong asset for volume, for, let's say from an economic standpoint, definitely. Think at the end of 2024, we will start to see really the strong benefit also in our profitability.
Here it is, it is a clear model because we have the experience of Crolles moving from two wafers per week to four to six to eight, which basically is a roadmap of Agrate. We know exactly the model. It's not something rising in the middle of Oregon or Germany. It's a clear model, copy-paste of what we have done in Crolles.
This is concluding our Q&A session. If you want to
Not the last question.
There are many more questions, but time is running, and the people in the room, they can follow the discussion in the next one hour or so, because for the one that are staying there's a networking lunch, and the top management will be available for your question and for discussion for you.
On behalf of ST team, thank you very much for your attendance, for the question and, let's say the team work together. Thank you.