##### Table of Contents





As filed with the Securities and Exchange Commission on March
    10, 2010
     SECURITIES AND EXCHANGE
    COMMISSIONWashington, D.C.
    20549
 Form 20-F
  o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR
    (g)
    OF THE SECURITIES EXCHANGE ACT OF 1934ORþ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          too

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this
    shell company report   Commission file number: 1-13546
  STMicroelectronics
    N.V.
 (Exact name of registrant as
    specified in its charter)
  Not Applicable

The Netherlands(Translation of
    registrants

(Jurisdiction of
    incorporationname into
    English)

or
    organization)  39, Chemin du Champ des
    Filles
    1228 Plan-Les-Ouates
    Geneva
    Switzerland
 (Address of principal executive
    offices)
  Carlo Bozotti
    39, Chemin du Champ des Filles
    1228 Plan-Les-Ouates
    Geneva
    Switzerland
    Tel: +41 22 929 29 29
    Fax: +41 22 929 29 88
 (Name, Telephone,
    E-mail
    and/or Facsimile number and Address of Company Contact
    Person)
  Securities registered or to be registered pursuant to
    Section 12(b) of the Act:
  Title of Each Class:

Name of Each Exchange on Which Registered:Common shares, nominal value 1.04 per share

New York Stock Exchange   Securities registered or to be
    registered pursuant to Section 12(g) of the Act: None
    Securities for which there is a reporting obligation pursuant to
    Section 15(d) of the Act: None
    878,333,566 common shares at
    December 31, 2009
   Yes þ     No
    o
    Yes o    No
    þ
   Yes þ     No
    o
  Regulation S-T
 Yes þ     No
    o
  Rule 12b-2
 Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller reporting
    company o (Do not check if a smaller
    reporting company)
    U.S. GAAP þ

International Financial Reporting Standards as issued o

Other oby the International Accounting Standards Board     Item 17 o    Item 18 o
  Rule 12b-2
  Yes o    No
    þ




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##### 





TABLE OF
    CONTENTS
   
 PRESENTATION OF FINANCIAL AND OTHER
    INFORMATION


2PART I


4Item 1.


Identity of Directors, Senior Management and
    Advisers


4Item 2.


Offer Statistics and Expected Timetable


4Item 3.


Key Information


4Item 4.


Information on the Company


20Item 5.


Operating and Financial Review and Prospects


42Item 6.


Directors, Senior Management and Employees


81Item 7.


Major Shareholders and Related Party
    Transactions


100Item 8.


Financial Information


106Item 9.


Listing


109Item 10.


Additional Information


115Item 11.


Quantitative and Qualitative Disclosures About
    Market Risk


130Item 12.


Description of Securities Other Than Equity
    Securities


133PART II


134Item 13.


Defaults, Dividend Arrearages and
    Delinquencies


134Item 14.


Material Modifications to the Rights of Security
    Holders and Use of Proceeds


134Item 15.


Controls and Procedures


134Item 16A.


Audit Committee Financial Expert


135Item 16B.


Code of Ethics


135Item 16C.


Principal Accountant Fees and Services


135Item 16D.


Exemptions from the Listing Standards for Audit
    Committees


137Item 16F.


Change in Registrants Certifying
    Accountant


137Item 16G.


Corporate Governance


137PART III


140Item 17.


Financial Statements


140Item 18.


Financial Statements


140Item 19.


Exhibits


140EX-1.1EX-8.1EX-12.1EX-12.2EX-13.1EX-15.1EX-15.2   1




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PRESENTATION
    OF FINANCIAL AND OTHER INFORMATION  Form 20-F Form 20-F),
    non-U.S. GAAP
  Form 20-F
    CAUTIONARY
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
  Form 20-F
  
    significant changes in demand in the key application markets and
    from key customers served by our products make it extremely
    difficult to accurately forecast and plan our future business
    activities. In particular, following a period of significant
    order cancellations, we recently experienced a strong surge in
    customer demand, which has led to capacity constraints in
    certain applications;
    significant differences in the gross margins we achieve compared
    to expectations, based on changes in revenue levels, product mix
    and pricing, capacity utilization and unused capacity charges,
    excess or obsolete inventory, manufacturing yields, changes in
    unit costs, impairments of long-lived assets (including
    manufacturing, assembly/test and intangible assets), and the
    timing, execution and associated costs for the announced
    transfer of manufacturing from facilities designated for
    closure, including phase-out and
    start-up
    costs;
    our ability to utilize and operate our manufacturing facilities
    at sufficient levels to cover fixed operating costs in periods
    of reduced customer demand, as well as our ability to ramp up
    production efficiently and rapidly to respond to increased
    customer demand, and the financial impact of obsolete or excess
    inventories if actual demand differs from our expectations;
    the impact of intellectual property (IP) claims by
    our competitors or other third parties, and our ability to
    obtain required licenses on reasonable terms and conditions;
    the outcome of ongoing litigation as well as any new litigation
    to which we may become a defendant;
    volatility in the financial markets and overall economic
    uncertainty increases the risk that the actual amounts
    potentially realized upon a future sale of our debt and equity
    investments could differ significantly from the fair values
    currently assigned to them; 2




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
    our ability to successfully integrate the acquisitions we
    pursue, in particular the successful integration and operation
    of the ST-Ericsson joint venture;
    ST-Ericsson is a new wireless joint venture, representing a
    significant investment and risk for our business. The joint
    venture is currently engaged in restructuring initiatives and
    further declines in the wireless market, as well as the
    inability of ST-Ericsson to complete its ongoing restructuring
    plans or to successfully compete, could result in additional
    significant impairment and restructuring charges;
    we currently also hold a significant non-marketable equity
    investment in Numonyx and are a guarantor of $225 million
    of its debts. On February 10, 2010, we announced that,
    together with our partners Intel Corporation and Francisco
    Partners, we have entered into a definitive agreement with
    Micron Technology Inc. (Micron), pursuant to which
    Micron will acquire Numonyx in an all-stock transaction. Upon
    the closing of the transaction, which is subject to regulatory
    review and other customary closing conditions, and based on
    Microns closing stock price on February 9, 2010 of
    $9.08 per share, we will receive  in exchange for our
    48.6% stake in Numonyx and the cancellation of the
    30-year note
    due to us by Numonyx  approximately 66.6 million
    shares of Micron common stock (taking into account a payable of
    $77.8 million due by us to Francisco Partners). There is no
    guaranty as to when, or if, the transaction will close, or
    whether the transaction will close pursuant to the terms
    currently planned. Furthermore, our shares in Micron are subject
    to certain resale restrictions and, consequently, there is no
    guaranty as to when we will be able to sell them and at what
    price;
    our ability to compete in our industry since a high percentage
    of our costs are fixed and are incurred in currencies other than
    U.S. dollars, especially in light of the volatility in the
    foreign exchange markets and, more particularly, in the
    U.S. dollar exchange rate as compared to the other major
    currencies we use for our operations;
    the effects of hedging, which we practice in order to minimize
    the impact of variations between the U.S. dollar and the
    currencies of the other major countries in which we have our
    operating infrastructure, especially the Euro, in the currently
    very volatile currency environment;
    our ability to execute our restructuring initiatives in
    accordance with our plans if unforeseen events require
    adjustments or delays in implementation or require new plans;
    our ability in an intensively competitive environment to secure
    customer acceptance and to achieve our pricing expectations for
    high-volume supplies of new products in whose development we
    have been, or are currently, investing;
    the ability to maintain solid, viable relationships with our
    suppliers and customers in the event they are unable to maintain
    a competitive market presence due, in particular, to the effects
    of the current economic environment;
    changes in the political, social or economic environment,
    including as a result of military conflict, social unrest
    and/or
    terrorist activities, economic turmoil, as well as natural
    events such as severe weather, health risks, epidemics or
    earthquakes in the countries in which we, our key customers or
    our suppliers, operate; and
    changes in our overall tax position as a result of changes in
    tax laws or the outcome of tax audits, and our ability to
    accurately estimate tax credits, benefits, deductions and
    provisions and to realize deferred tax assets.  Form 20-F Form 20-F
  and/or
 3




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PART I  Item 1.
    Identity
    of Directors, Senior Management and Advisers    Item 2.
    Offer
    Statistics and Expected Timetable    Item 3.
    Key
    Information  Selected
    Financial Data
  Form 20-F,
  Form 20-F.
  Year Ended December 31,2009


2008


2007


2006


2005(In millions except per share and ratio data)Consolidated Statements of Income Data:Net sales

$
8,465


$
9,792


$
9,966


$
9,838


$
8,876Other revenues


45



50



35



16



6Net revenues


8,510



9,842



10,001



9,854



8,882Cost of sales


(5,884
)


(6,282
)


(6,465
)


(6,331
)


(5,845
)Gross profit


2,626



3,560



3,536



3,523



3,037Operating expenses:Selling, general and administrative


(1,159
)


(1,187
)


(1,099
)


(1,067
)


(1,026
)Research and development(1)


(2,365
)


(2,152
)


(1,802
)


(1,667
)


(1,630
)Other income and expenses, net(2)


166



62



48



(35
)


(9
)Impairment, restructuring charges and other related closure costs


(291
)


(481
)


(1,228
)


(77
)


(128
)Total operating expenses


(3,649
)


(3,758
)


(4,081
)


(2,846
)


(2,793
)Operating income (loss)


(1,023
)


(198
)


(545
)


677



244Other-than-temporary
    impairment charge and realized losses on financial assets


(140
)


(138
)


(46
)






Interest income, net


9



51



83



93



34Earnings (loss) on equity investments


(337
)


(553
)


14



(6
)


(3
)Gain (loss) on financial assets


(8
)


15











Gain on convertible debt buyback


3















Income (loss) before income taxes and noncontrolling interest


(1,496
)


(823
)


(494
)


764



275Income tax benefit (expense)


95



43



23



20



(8
)Income (loss) before noncontrolling interest


(1,401
)


(780
)


(471
)


784



267Net loss (income) attributable to noncontrolling interest


270



(6
)


(6
)


(2
)


(1
)Net income (loss) attributable to parent company

$
(1,131
)

$
(786
)

$
(477
)

$
782


$
266 4




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Year Ended December 31,2009


2008


2007


2006


2005(In millions except per share and ratio data)Earnings (loss) per share (basic) attributable to parent company
    shareholders

$
(1.29
)

$
(0.88
)

$
(0.53
)

$
0.87


$
0.30Earnings (loss) per share (diluted) attributable to parent
    company shareholders

$
(1.29
)

$
(0.88
)

$
(0.53
)

$
0.83


$
0.29Number of shares used in calculating earnings per share (basic)


876.9



892.0



898.7



896.1



892.8Number of shares used in calculating earnings per share (diluted)


876.9



892.0



898.7



958.5



935.6Consolidated Balance Sheet Data (end of period):Cash and cash equivalents

$
1,588


$
1,009


$
1,855


$
1,659


$
2,027Marketable securities


1,032



651



1,014



764



Short-term deposits














250



Restricted cash


250



250



250



218



Non-current marketable securities


42



242



369







Total assets


13,655



13,913



14,272



14,198



12,439Short-term debt (including current portion of long-term debt)


176



143



103



136



1,533Long-term debt (excluding current portion)


2,316



2,554



2,117



1,994



269Total parent company shareholders equity(3)


7,147



8,156



9,573



9,747



8,480Common stock and capital surplus


3,637



3,480



3,253



3,177



3,120Other Data:Dividends per share(4)

$
0.12


$
0.36


$
0.30


$
0.12


$
0.12Capital expenditures(5)


451



983



1,140



1,533



1,441Net cash provided by operating activities


816



1,722



2,188



2,491



1,798Depreciation and amortization


1,367



1,366



1,413



1,766



1,944Debt-to-equity
    ratio(6)


0.35



0.33



0.23



0.22



0.21Net financial position: resources (debt)(6)

$
420


$
(545
)

$
1,268


$
761


$
225Net financial position to total shareholders equity
    ratio(6)


0.06



(0.07
)


0.13



0.08



0.03     (1)
    
    Our reported research and development expenses (R&D) are
    mainly in the areas of product design and technology
    development. They do not include marketing design center costs,
    which are accounted for as selling expenses, or process
    engineering, pre-production and process-transfer costs, which
    are accounted for as cost of sales. As of 2009 and 2008, our
    R&D expenses are net of certain tax credits.(2)
    
    Other income and expenses, net includes, among other
    things: funds received through government agencies for research
    and development programs; costs incurred for new
    start-up and
    phase-out activities not involving saleable production; foreign
    currency gains and losses; gains on sales of tangible assets and
    non-current assets; and the costs of certain activities relating
    to IP.(3)
    
    In 2008, we repurchased 29,520,220 of our shares, for a total
    cost of $313 million. We reflected this purchase at cost as
    a reduction of shareholders equity. The repurchased shares
    have been designated for allocation under our share-based
    compensation programs as nonvested shares, including the plans
    as approved by the 2005, 2006, 2007, 2008 and 2009 annual
    general shareholders meetings, and those which may be
    attributed in the future. As of December 31, 2009,
    10,934,481 shares had been transferred to employees upon
    the vesting of such stock awards. As of December 31, 2009,
    we owned 31,985,739 treasury shares.(4)
    
    Dividend per share represents the yearly dividend as approved by
    our annual general meeting of shareholders, which relates to the
    prior years accounts.(5)
    
    Capital expenditures are net of certain funds received through
    government agencies, the effect of which is to reduce our cash
    used in investing activities and to decrease depreciation.(6)
    
    Net financial position: resources (debt) represents the balance
    between our total financial resources and our total financial
    debt. Our total financial resources include cash and cash
    equivalents, current and non-current marketable securities,
    short-term deposits and restricted cash, and our total financial
    debt include bank 5




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overdrafts, current portion of long-term debt and long-term
    debt, as represented in our consolidated balance sheet. Our net
    financial position to total shareholders equity ratio is a
    non-U.S.
    GAAP financial measure. The most directly comparable U.S. GAAP
    financial measure is considered to be
    Debt-to-Equity
    Ratio. However, the
    Debt-to-Equity
    Ratio measures gross debt relative to equity, and does not
    reflect our current cash position. We believe that our net
    financial position to total shareholders equity ratio is
    useful to investors as a measure of our financial position and
    leverage. The ratio is computed on the basis of our net
    financial position divided by total parent company
    shareholders equity. For more information on our net
    financial position, see Item 5. Operating and
    Financial Review and Prospects  Liquidity and Capital
    Resources  Capital Resources  Net
    financial position. Our computation of net debt (cash) to
    total shareholders equity ratio may not be consistent with
    that of other companies, which could make comparability
    difficult.  Risk
    Factors
  Risks
    Related to the Semiconductor Industry which Impact Us
  The
    semiconductor industry is cyclical and downturns in the
    semiconductor industry can negatively affect our results of
    operations and financial condition.
  and/or
      
    significant declines in sales;
    significant reductions in selling prices;
    the resulting significant impact on our gross margins,
    profitability and net cash flow;
    increased volatility
    and/or
    declines in our share price;
    increased volatility or adverse movements in foreign currency
    exchange rates;
    delays in, or curtailment of, purchasing decisions by our
    customers or potential customers either as a result of overall
    economic uncertainty or as a result of their inability to access
    the liquidity necessary to engage in purchasing initiatives or
    new product development;
    closure or underloading of wafer fabrication plants
    (fabs);
    decreased valuations of our equity investments;
    increased credit risk associated with our customers or potential
    customers, particularly those that may operate in industries
    most affected by the economic downturn; and
    impairment of goodwill or other assets.  We may
    not be able to match our production capacity to
    demand.
   6




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Competition
    in the semiconductor industry is intense, and we may not be able
    to compete successfully if our product design technologies,
    process technologies and products do not meet market
    requirements or if we are unable to acquire the necessary
    IP.
    
    price;
    technical performance;
    product features;
    product system compatibility;
    product design and technology;
    timely introduction of new products;
    product availability;
    manufacturing yields; and
    sales and technical support.    and/or
       7




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The
    competitive environment of the semiconductor industry may lead
    to erosion of our market share, impacting our capacity to
    compete.
    and/or and/or
  The
    semiconductor industry may also be impacted by changes in the
    political, social or economic environment, including as a result
    of military conflict, social unrest and/or terrorist activities,
    as well as natural events such as severe weather, health risks,
    epidemics or earthquakes in the countries in which we, our key
    customers and our suppliers, operate.
    
    negative economic developments in foreign economies and
    instability of foreign governments, including the threat of war,
    terrorist attacks or civil unrest;
    epidemics such as disease outbreaks, pandemics and other health
    related issues;
    changes in laws and policies affecting trade and investment,
    including through the imposition of new constraints on
    investment and trade; and
    varying practices of the regulatory, tax, judicial and
    administrative bodies.  Risks
    Related to Our Operations
  Market
    dynamics are driving us to a strategic repositioning, which has
    led us to enter into significant joint ventures.
     8




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
    diversion of managements attention;
    insufficient IP rights or potential inaccuracies in the
    ownership of key IP;
    assumption of potential liabilities, disclosed or undisclosed,
    associated with the business acquired, which liabilities may
    exceed the amount of indemnification available from the seller;
    potential inaccuracies in the financials of the business
    acquired;
    that the businesses acquired will not maintain the quality of
    products and services that we have historically provided;
    whether we are able to attract and retain qualified management
    for the acquired business;
    whether we are able to retain customers of the acquired
    entity; and
    management, reporting and forecasting related to a
    50-50 joint
    venture that is fully consolidated in our results.    
    diversion of managements attention;
    loss of activities and technologies that may have complemented
    our remaining businesses or operations;
    loss of important services provided by key employees that are
    assigned to divested activities; and
    social issues or restructuring costs linked to divestitures and
    closures. 9




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In
    difficult market conditions, our high fixed costs adversely
    impact our results.
    The
    competitive environment of the semiconductor industry has led to
    industry consolidation and we may face even more intense
    competition from newly merged competitors or we may seek to
    acquire a competitor in order to improve our market
    share.
    Our
    financial results can be adversely affected by fluctuations in
    exchange rates, principally in the value of the U.S.
    dollar.
       10




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Because
    we have our own manufacturing facilities, our capital needs are
    high compared to those competitors who do not produce their own
    products.
    We may
    also need additional funding in the coming years to finance our
    investments, to pursue other business combinations or to
    purchase other companies or technologies developed by third
    parties or to refinance our maturing indebtedness.
  and/or
  Our
    R&D efforts are increasingly expensive and dependent on
    alliances, and our business, results of operations and prospects
    could be materially adversely affected by the failure or
    termination of such alliances, or failure to find new partners
    in such alliance and/or in developing new process technologies
    in line with market requirements.
  System-on-Chip
    and/or
 11




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Our
    operating results may vary significantly from quarter to quarter
    and annually and may differ significantly from our expectations
    or guidance.
      
    performance of our key customers in the markets they serve;
    order cancellations or reschedulings by customers;
    excess inventory held by customers leading to reduced bookings
    or product returns by key customers;
    manufacturing capacity and utilization rates;
    restructuring and impairment charges;
    losses on equity investments;
    fluctuations in currency exchange rates, particularly between
    the U.S. dollar and other currencies in jurisdictions where
    we have activities;
    IP developments;
    changes in distribution and sales arrangements;
    failure to win new design projects;
    manufacturing performance and yields;
    product liability or warranty claims;
    litigation;
    acquisitions or divestitures;
    problems in obtaining adequate raw materials or production
    equipment on a timely basis;
    property loss or damage or interruptions to our business,
    including as a result of fire, natural disasters or other
    disturbances at our facilities or those of our customers and
    suppliers that may exceed the amounts recoverable under our
    insurance policies;
    changes in the market value or yield of the financial
    instruments in which we invest our liquidity; and
    a substantial part of our business is run through joint ventures
    whose management acts independently pursuant to the joint
    ventures rule of governance.   12




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Our
    business is dependent in large part on continued growth in the
    industries and segments into which our products are sold and on
    our ability to attract and retain new customers. A market
    decline in any of these industries or our inability to attract
    new customers could have a material adverse effect on our
    results of operations.
    
    spending levels of the market segment participants;
    reduced demand resulting from a drop in consumer confidence
    and/or a
    deterioration of general economic conditions;
    development of new consumer products or applications requiring
    high semiconductor content;
    evolving industry standards; and
    the rate of adoption of new or alternative technologies.        Disruptions
    in our relationships with any one of our key customers, and/or
    material changes in their financial condition, could adversely
    affect our results of operations.
   13




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Our
    operating results can also vary significantly due to impairment
    of goodwill and other intangible assets incurred in the course
    of acquisitions, as well as to impairment of tangible assets due
    to changes in the business environment.
      Because
    we depend on a limited number of suppliers for raw materials and
    certain equipment, we may experience supply disruptions if
    suppliers interrupt supply, increase prices or experience
    material adverse changes in their financial
    condition.
  just-in-time
 14




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If our
    outside contractors fail to perform, this could adversely affect
    our ability to exploit growth opportunities.
    Our
    manufacturing processes are highly complex, costly and
    potentially vulnerable to impurities, disruptions or inefficient
    implementation of production changes that can significantly
    increase our costs and delay product shipments to our
    customers.
  sub-micron
    We
    depend on patents to protect our rights to our technology and
    may face claims of infringing the IP rights of
    others.
     15




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and/or
    We may
    be faced with product liability or warranty
    claims.
    Some
    of our production processes and materials are environmentally
    sensitive, which could expose us to liability and increase our
    costs due to environmental regulations and laws or because of
    damage to the environment.
      Loss
    of key employees could hurt our competitive
    position.
    We
    operate in many jurisdictions with highly complex and varied tax
    regimes. Changes in tax rules or the outcome of tax assessments
    and audits could cause a material adverse effect on our
    results.
   16




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and/or
  We are
    required to prepare Consolidated Financial Statements using both
    IFRS in addition to our Consolidated Financial Statements
    prepared pursuant to U.S. GAAP and dual reporting may impair the
    clarity of our financial reporting.
        If our
    internal control over financial reporting fails to meet the
    requirements of Section 404 of the
    Sarbanes-Oxley
    Act, it may have a materially adverse effect on our stock
    price.
  Form 20-F.
 17




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The
    lack of public funding available to us, changes in existing
    public funding programs or demands for repayment may increase
    our costs and impact our results of operations.
  and/or and/or
      project-by-project
  The
    interests of our controlling shareholders, which are in turn
    controlled respectively by the French and Italian governments,
    may conflict with investors interests.
     18




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Our
    shareholder structure and our preference shares may deter a
    change of control.
      Our
    direct or indirect shareholders may sell our existing common
    shares or issue financial instruments exchangeable into our
    common shares at any time. In addition, substantial sales by us
    of new common shares or convertible bonds could cause our common
    share price to drop significantly.
          Because
    we are a Dutch company subject to the corporate law of the
    Netherlands, U.S. investors might have more difficulty
    protecting their interests in a court of law or otherwise than
    if we were a U.S. company.
   19




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##### Table of Contents



Removal
    of our common shares from the CAC 40 on Euronext, the FTSE MIB
    on the Borsa Italiana or the PHLX Semiconductor Sector Index
    (SOX) could cause the market price of our common
    shares to drop significantly.
    Item 4.
    Information
    on the Company  History
    and Development of the Company
   20




---



##### Table of Contents



Business
    Overview
        System-in-Package
      Results
    of Operations
    Strategy
   21




---



##### Table of Contents




    the changing long-term structural growth of the overall market
    for semiconductor products, which has moved from double-digit
    average growth rate to single-digit average growth rate over the
    last several years;
    the strong development of new emerging applications in areas
    such as wireless communications, solid-state storage, digital
    TV, video products and games as well as for energy saving and
    medical applications;
    the importance of the Asia Pacific region, particularly China,
    Taiwan and other emerging countries, which represent the fastest
    growing regional markets;
    the importance of convergence between wireless, consumer and
    computer applications, which drives customer demand to seek new
    system-level, turnkey solutions from semiconductor suppliers;
    the evolution of the customer base from original equipment
    manufacturers (OEM) to a mix of OEM, electronic
    manufacturing service providers (EMS) and original
    design manufacturers (ODM);
    the expansion of available manufacturing capacity through
    third-party providers;
    the evolution of advanced process development R&D
    partnerships; and
    the recent consolidation process, which may lead to further
    strategic repositioning and reorganization amongst industry
    players.    Broad, balanced market exposure.
  Product innovation.
  Customer-based initiatives.
  Global integrated manufacturing
    infrastructure.
 22




---



##### Table of Contents



Reduced asset intensity. capex-to-sales
  Research and development (R&D)
    leadership. 32/28-nm
  Integrated presence in key regional
    markets.
  Product quality excellence.
  Sustainable Excellence and Compliance.
  Creating Shareholder Value.
  Products
    and Technology
      
    Automotive, Consumer, Computer and Communication Infrastructure
    (ACCI);
    Industrial and Multi segment Sector (IMS); and
    Wireless.  and/or
 23




---



##### Table of Contents



ACCI
        Automotive
    Products Group
    Car Body Division.
  Car Radio and Multi-media Division.
  Digital Broadcast Radio
    Division.
  Powertrain and Safety Division.
    Computer
    and Communications Infrastructure
  BCD Power Division.
  Communication Infrastructure
    Division.
  Computer System Division tm ease-of-use
 24




---



##### Table of Contents



Data Storage Division
  Microfluidics Division.
  Home
    Entertainment and Displays Group
    Audio Division.
  Home Video Division.
  Interactive System Solutions
    Division. best-in-class
  TV & Monitor Division.
  Imaging
    Division
  low-and-high
  IMS
      APM
  Advanced Analog and Mixed Signal
    Division. point-of-sales
  ASD and IPAD Division.
 25




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##### Table of Contents



Industrial and Power Conversion
    Division.
  Linear and Interface Division.
  MEMS and Sensors, Transceivers and Healthcare
    Division.
    Power Bipolar, IGBT and RF
    Division
  Power MOSFET Division
  MMS
  Memory Division.
  (ii) Microcontroller Division.
  Smartcard IC Division. pay-TV
  Incard Division.
  Wireless
     26




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##### Table of Contents



Strategic
    Alliances with Customers and Industry Partnerships
      Customers
    and Applications
      TelecommunicationsCustomers:

Alcatel-Lucent
    Cisco
    Ericsson Finisar

Huawei
    LG Electronics
    Motorola

Nokia
    Research in Motion
    Samsung

Sharp
    Sony EricssonApplications:

Camera modules/mobile imaging
    Entry platforms (mobile handsets)
    Central office switching systems
    Thin modems
    Infrastructure



Application processor &
    integrated modem
    Telephone terminals
    Connectivity
    Connected devicesComputer PeripheralsCustomers:

Agilent
    Apple
    Dell

Delta
    Hewlett-Packard
    Hitachi

Microsoft
    Samsung

Seagate
    Western Digital
    Eastman KodakApplications:

Data storage
    Microfluidics /
    print-head cartridges



Power management
    PrintersAutomotiveCustomers:

Bosch
    Continental
    Delphi
    Denso

Harman
    Hella
    Kostal

Lear
    Marelli
    Pioneer

Valeo
    Sirius Satellite Radio 27




---



##### Table of Contents



Applications:

Airbags
    Anti-lock braking systems
    Body and chassis electronics
    Engine management systems



GPS multimedia
    Radio/satellite radio
    Telematics
    Vehicle stability controlConsumerCustomers:

ADB
    AOC
    Echostar

Garmin
    Pace
    LG Electronics
    Nintendo

Sagem Connunications
    Samsung
    Cisco/SA

TechnicolorApplications:

Audio processing
    Digital TVs
    Display Port
    Internet TV



High Definition DVD
    Imaging
    Set-top boxes
    Multimedia playerIndustrial/Other
    ApplicationsCustomers:

Medtronic
    Autostrade
    Delta
    Emerson

Gemalto
    General Electric

Safran
    Nagra
    Nintendo

Philips
    Siemens
    Taiwan-Liteon
    VodafoneApplications:

Battery chargers
    Smartcard ICs
    Intelligent power switches
    Industrial automation/
    control systems
    Lighting systems



MEMS
    Motor controllers
    Power supplies
    Switch mode power supplies     Sales,
    Marketing and Distribution
    EMEA
  Americas
  Asia Pacific
 28




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Greater China
  Japan
      and/or right-of-return
      Research
    and Development
       29




---



##### Table of Contents




    Repatriate to Crolles the core CMOS technologies jointly
    developed under the ISDA alliance.
    Accelerate the development and the number of differentiated
    technologies for SoC so as to be able to supply amongst the
    worlds leading prototypes ICs, thereby develop a strategy of
    advanced differentiated products to compete with Asia foundries.
    Develop libraries and perform transversal R&D on the
    methods and tools necessary to develop complex ICs using these
    technologies.
    Perform advanced technology research linked to the conception of
    CMOS nano electric functionalities advance devices on 300mm
    wafers.
    Pervade local, national and European territories, taking
    advantage of nano-electronic diffusion technologies to further
    promote innovation in various application sectors.    state-of-the-art
  time-to-market
 30




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3-D
  Property,
    Plants and Equipment
    31




---



##### Table of Contents



Location

Products

TechnologiesFront-end facilitiesCrolles1, France

Application-specific products, image sensors

Fab: 200-mm CMOS and BiCMOS, Analog/RF, imagingCrolles2, France

Application-specific products and leading edge logic products

Fab: 300-mm research and development on deep sub-micron
    (45-nm and
    below) CMOS and differentiated SoC technology development,
    imaging, TSV linePhoenix, Arizona
    (entering the final stages of closure)

Application-specific products and microcontrollers

Fab: 200-mm BCD, BiCMOS, microcontrollers, CMOSAgrate, Italy

Nonvolatile memories, microcontrollers and application- specific
    products MEMS

Fab 1: 200-mm BCD, MEMS, Microfluidics Fab 2: 200-mm, embedded
    Flash, research and development on nonvolatile memories and BCD
    technologies and Flash (operating in consortium with Numonyx)Rousset, France

Microcontrollers, nonvolatile memories and Smartcard ICs,
    application-specific products and image sensors

Fab 1: 200-mm CMOS, Smartcard, embedded Flash, Analog/RFCatania, Italy

Power transistors, Smart Power ICs and application-specific
    products

Fab 1: 150-mm
Power metal-on silicon oxide semiconductor process technology
(MOS),VIPowertm,

MO-3, MO-5
and Pilot Line RF 
Fab 2: 200-mm, Microcontrollers, BCD, power MOSTours, France

Protection thyristors, diodes and ASD power transistors, IPAD

Fab: 125-mm, 150-mm and 200-mm pilot line discreteAng Mo Kio, Singapore

Analog, microcontrollers, power transistors, commodity products,
    nonvolatile memories, and application-specific products

Fab 1: 125-mm, power MOS, bipolar, power Fab 2: 150-mm bipolar,
    power MOS and BCD, EEPROM, Smartcard, Micros, CMOS logic Fab 3:
    150 mm Microfluidics, MEMS, BCD, BiCMOS, CMOSBack-end facilitiesMuar, Malaysia

Application-specific and standard products, microcontrollers

A building (block P) inside the plant has been contributed to STEKirkop, Malta

Application-specific products, MEMS, Embedded Flash for
    AutomotiveToa Payoh, Singapore

Optical packages research and development, under reconversion
    into an EWS centerBouskoura, Morocco

Nonvolatile memories, discrete and standard products,
    micromodules, RF and subsystemsShenzhen, China(1)

Nonvolatile memories, discrete and standard productsLonggang, China

Discrete and standard productsCalamba, Philippines(2)

Application Specific Products and standard products     (1)
    
    Jointly operated with SHIC, a subsidiary of Shenzhen Electronics
    Group.(2)
    
    Operated by ST but contributed to the ST-Ericsson joint venture.  200-mm 200-mm 150-mm
 32




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##### Table of Contents



300-mm
        sub-micron
  and/or
  state-of-the-art sub-micron
  Intellectual
    Property (IP)
   33




---



##### Table of Contents



and/or
      Backlog
  and/or and/or
    just-in-time build-ups.
   34




---



##### Table of Contents



Competition
        Organizational
    Structure and History
        Percentage OwnershipLegal Seat

Name

(Direct or Indirect)Australia  Sydney

STMicroelectronics PTY Ltd


100Belgium  Zaventem

ST-Ericsson Belgium N.V.


50Belgium  Zaventem

Proton World International N.V.


100Brazil  Sao Paolo

STMicroelectronics Ltda


100Brazil  Sao Paulo

Incard do Brazil Ltda


50Canada  Ottawa

STMicroelectronics (Canada), Inc.


100Canada  Thorn hill

Genesis Microchip (Canada) Co.


100China  Beijing

STMicroelectronics (Beijing) R&D Co. Ltd


100China  Beijing

Beijing T3G Technology Co. Ltd


50China  Shanghai

STMicroelectronics (Shanghai) Co. Ltd


100China  Shanghai

STMicroelectronics (Shanghai) R&D Co. Ltd


100 35




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##### Table of Contents



Percentage OwnershipLegal Seat

Name

(Direct or Indirect)China  Shanghai

STMicroelectronics (China) Investment Co. Ltd


100China  Shanghai

Shanghai NF Trading Ltd


50China  Shanghai

Shanghai NF Semiconductors Technology Ltd


50China  Shenzhen

Shenzhen STS Microelectronics Co. Ltd


60China  Shenzhen

STMicroelectronics (Shenzhen) Co. Ltd


100China  Shenzhen

STMicroelectronics (Shenzhen) Manufacturing Co. Ltd


100China  Shenzhen

STMicroelectronics (Shenzhen) R&D Co. Ltd


100Czech Republic  Prague

STMicroelectronics Design and Application s.r.o.


100Czech Republic  Prague

STN Wireless Sro


50Finland  Helsinki

ST-Ericsson R&D OY


50Finland  Lohja

ST-Ericsson OY


50France  Crolles

STMicroelectronics (Crolles 2) SAS


100France  Grenoble

STMicroelectronics (Grenoble 2) SAS


100France  Grenoble

ST-Ericsson (Grenoble) SAS


50France  Montrouge

STMicroelectronics S.A.


100France  Paris

ST-Ericsson (France) SAS


50France  Rousset

STMicroelectronics (Rousset) SAS


100France  Tours

STMicroelectronics (Tours) SAS


100Germany  Grasbrunn

STMicroelectronics GmbH


100Germany  Grasbrunn

STMicroelectronics Design and Application GmbH


100Germany  Grasbrunn

ST-NXP Wireless GmbH i.L.


50Holland  Amsterdam

STMicroelectronics Finance B.V.


100Holland  AmsterdamLuchtaven

ST-Ericsson Wireless N.V.


50Holland  Eindhoven

ST-Ericsson B.V.


50Holland  Eindhoven

ST-Ericsson Holding B.V.


50Hong Kong  Hong Kong

STMicroelectronics LTD


100India  Bangalore

NF Wireless India Pvt Ltd


50India  New Delhi

STMicroelectronics Marketing Pvt Ltd


100India  Noida

STMicroelectronics Pvt Ltd


100India  Noida

ST-Ericsson India Pvt Ltd


50Ireland  Dublin

NXP Falcon Ireland Ltd


50Israel  Netanya

STMicroelectronics Ltd


100Italy  Agrate Brianza

ST Incard S.r.l.


100Italy  Agrate Brianza

ST-Ericsson Srl


50Italy  Agrate Brianza

STMicroelectronics S.r.l.


100Italy  Aosta

DORA S.p.a.


100Italy  Catania

CO.RI.M.ME.


100Italy  Naples

STMicroelectronics Services S.r.l.


100Japan  Tokyo

STMicroelectronics KK


100Japan  Tokyo

ST-Ericsson KK


50Korea  Seoul

ST-Ericsson (Korea) Ltd


50Malaysia - Kuala Lumpur

STMicroelectronics Marketing SDN BHD


100Malaysia  Muar

STMicroelectronics SDN BHD


100Malaysia  Muar

ST-Ericsson SDN.BHD


50Malta  Kirkop

STMicroelectronics (Malta) Ltd


100Mexico  Guadalajara

STMicroelectronics Marketing, S. de R.L. de C.V.


100Mexico  Guadalajara

STMicroelectronics Design and Applications, S. de R.L. de C.V.


100Morocco  Casablanca

STMicroelectronics S.A.S. (Maroc)


100Morocco  Rabat

Electronic Holding S.A.


100Morocco  Rabat

ST-Ericsson (Maroc) SAS


50Norway  Grimstad

ST-Ericsson A.S.


50Philippines  Calamba

STMicroelectronics, Inc..


100Philippines  Calamba

ST-Ericsson (Philippines) Inc.


50Philippines  Calamba

Mountain Drive Property, Inc.


20Singapore  Ang Mo Kio

STMicroelectronics ASIA PACIFIC Pte Ltd


100Singapore  Ang Mo Kio

STMicroelectronics Pte Ltd


100Singapore  Ang Mo Kio

ST-Ericsson Asia Pacific Pte Ltd


50Spain  Madrid

STMicroelectronics Iberia S.A.


100Sweden  Kista

STMicroelectronics A.B.


100Sweden  Kista

STMicroelectronics Wireless A.B.


50Sweden  Stockholm

ST-Ericsson A.B.


50Switzerland  Geneva

STMicroelectronics S.A.


100 36




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Percentage OwnershipLegal Seat

Name

(Direct or Indirect)Switzerland  Geneva

INCARD S.A.


100Switzerland  Geneva

INCARD Sales and Marketing S.A.


100Switzerland  Geneva

ST-Ericsson S.A.


50Switzerland  Zurich

ST-Ericsson Holding AG


50Taiwan  Taipei

ST-Ericsson (Taiwan) Ltd


50Thailand  Bangkok

STMicroelectronics (Thailand) Ltd


100Turkey  Istanbul

STMicroelectronics Elektronik Arastirma ve Gelistirme Anonim
    Sirketi


50United Kingdom  Bristol

Inmos Limited


100United Kingdom  Bristol

ST-Ericsson (UK) Ltd


50United Kingdom  Marlow

STMicroelectronics Limited


100United Kingdom  Marlow

STMicroelectronics (Research & Development) Limited


100United Kingdom  Reading

Synad Technologies Limited


100United Kingdom  Southampton

NF UK, Ltd


50United States  Carrollton

STMicroelectronics Inc.


100United States  Carrollton

ST-Ericsson Inc.


50United States  Carrollton

Genesis Microchip Inc.,


100United States  Carrollton

Genesis Microchip (Del) Inc.


100United States  Carrollton

Genesis Microchip LLC


100United States  Carrollton

Genesis Microchip Limited Partnership


100United States  Carrollton

Sage Inc.


100United States  Carrollton

Faroudja Inc.


100United States  Carrollton

Faroudja Laboratories Inc.


100United States  Wilmington

STMicroelectronics (North America) Holding, Inc.


100United States  Wilsonville

The Portland Group, Inc.


100     Percentage OwnershipLegal Seat

Name

(Direct or Indirect)The Netherlands  Rotterdam

Numonyx Holdings B.V.


48.6Switzerland  Zurich

ST-Ericsson AT Holding AG


49Singapore  The Curie

Veredus Laboratories Pte Ltd


41.2South Korea  Yongin-si

ATLab Inc.


8.1Italy  Caivano

INGAM Srl


20     Public
    Funding
         37




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and/or
    2008-2012. system-on-chip
       38




---



##### Table of Contents



and/or
  Suppliers
      just-in-time
    Environmental
    Matters
     39




---



##### Table of Contents



2008-2012. 2 2008-2012.
  2
    Industry
    Background
  The
    Semiconductor Market
     40




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##### Table of Contents



Semiconductor
    Classifications
                       41




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##### Table of Contents



Item 5.
    Operating
    and Financial Review and Prospects  Overview
  The following discussion should be read in conjunction with
    our Consolidated Financial Statements and Notes thereto included
    elsewhere in this
    Form 20-F.
    The following discussion contains statements of future
    expectations and other forward-looking statements within the
    meaning of Section 27A of the Securities Act of 1933, or
    Section 21E of the Securities Exchange Act of 1934, each as
    amended, particularly in the sections  Critical
    Accounting Policies Using Significant Estimates,
     Business Outlook and
     Liquidity and Capital Resources 
    Financial Outlook. Our actual results may differ
    significantly from those projected in the forward-looking
    statements. For a discussion of factors that might cause future
    actual results to differ materially from our recent results or
    those projected in the forward-looking statements in addition to
    the factors set forth below, see Cautionary Note Regarding
    Forward-Looking Statements and Item 3, Key
    Information  Risk Factors. We assume no
    obligation to update the forward-looking statements or such risk
    factors.
  Critical
    Accounting Policies Using Significant Estimates
    
    sales returns and allowances;
    determination of best estimate of selling price for deliverables
    in multiple element sale arrangements;
    inventory reserves and normal manufacturing capacity thresholds
    to determine costs capitalized in inventory;
    accruals for litigation and claims;
    valuation at fair value of acquired assets including intangibles
    and assumed liabilities in a business combination, goodwill,
    investments and tangible assets as well as the impairment of
    their related carrying values;
    the assessment in each reporting period of events, which could
    trigger interim impairment testing;
    estimated value of the consideration to be received and used as
    fair value for asset groups classified as assets to be disposed
    of by sale and the assessment of probability to realize the sale;
    measurement of the fair value of debt and equity securities
    classified as
    available-for-sale,
    including debt securities, for which no observable market price
    is obtainable;
    the assessment of credit losses and
    other-than-temporary
    impairment charges on financial assets;
    the valuation of noncontrolling interests, particularly in case
    of contribution in kind as part of a business combination;
    restructuring charges;
    assumptions used in calculating pension obligations;
    assumptions used to measure and recognize a liability for the
    fair value of the obligation we assume at the inception of a
    guarantee;
    deferred income tax assets including required valuation
    allowances and liabilities as well as provisions for
    specifically identified income tax exposures and income tax
    uncertainties. 42




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Revenue recognition.
           43




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Goodwill and purchased intangible assets.
  Impairment of goodwill.
    Intangible assets subject to
    amortization.
 44




---



##### Table of Contents



Property, plant and equipment. 300-mm
      Inventory.
    Business combination.
 45




---



##### Table of Contents



Restructuring charges.
  Share-based compensation.
  Earnings (loss) on Equity Investments. other-than-temporary
  Financial assets. held-for-trading available-for-sale. held-for-trading available-for-sale. Available-for-sale held-for-trading
 46




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##### Table of Contents



Income taxes.
    Patent and other IP litigation or claims. and/or
    and/or
  Pension and Post Retirement Benefits.
 47




---



##### Table of Contents



Other claims.
    Fiscal
    Year 2009
    2009
    Business Overview
    year-over-year
    year-over-year,
  year-over-year year-over-year
    year-over-year
 48




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##### Table of Contents




    sharp drop in demand as a result of the global economic downturn;
    negative pricing trend;
    manufacturing inefficiencies experienced in our fabs due to the
    disruption in their operations throughout the year;
    unused capacity charges arising from the underutilization of our
    fabs;
    loss recorded in relation to our equity investments, although
    mitigated compared to the prior year;
    additional impairment and other restructuring charges related to
    our ongoing and newly adopted plans, although lower compared to
    the prior year; 49




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##### Table of Contents




    the additional R&D expenses inherited from the integrated
    wireless businesses, while the synergy plans are being
    implemented; and
    losses on financial assets, pending the payment by Credit Suisse
    of the amount due pursuant to the FINRA arbitration award that
    is favorable to us.    
    favorable currency impact;
    improved product portfolio mix, after deconsolidating Flash and
    integrating the wireless businesses;
    additional funding for our R&D projects;
    the cost savings resulting to date from the restructuring
    programs that are in progress; and
    non-controlling interest related to the 50% ownership of
    ST-Ericssons losses, which counterbalanced the negative
    operating results in the wireless segment.        Business
    Outlook
  year-over-year
     50




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##### Table of Contents



These are forward-looking statements that are subject to
    known and unknown risks and uncertainties that could cause
    actual results to differ materially; in particular, refer to
    those known risks and uncertainties described in
    Cautionary Note Regarding Forward-Looking Statements
    and Item 3. Key Information  Risk
    Factors herein.
  Other
    Developments
      2008-2012.
    and/or
  
    The distribution of a cash dividend of $0.12 per common share,
    to be paid in four equal installments, in May 2009, August 2009,
    November 2009 and February 2010. Payment of an installment will
    be made to shareholders of record in the month of each quarterly
    payment;
    The reappointment for a three-year term, expiring at the 2012
    Annual General Meeting, for the following members of the
    Supervisory Board: Mr. Doug Dunn and Dr. Didier
    Lamouche; and
    The maximum number of restricted Share Awards under
    our existing
    5-year
    Employee Unvested Share Award Plan
    (2008-2012)
    of 30,500,000, which includes any Unvested Stock Awards granted
    to our President and CEO as part of his compensation, with the
    maximum number of restricted shares in 2009 to be
    6,100,000.       51




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Vice-President,
  30-year 30-year
  Results
    of Operations
  Segment
    Information
       52




---



##### Table of Contents




    Automotive, Consumer, Computer and Communication Infrastructure
    (ACCI), comprised of four product lines:          
    Industrial and Multi segment Sector (IMS), comprised
    of:      
    Wireless (Wireless), comprised of:  
    Cellular Systems (CS);
    Connectivity & Peripherals (C&P);
    Mobile Platforms (MP);
    Wireless Multi Media (WMM);    
    Other Wireless, in which we report manufacturing margin,
    R&D revenues and other items related to the wireless
    business but outside the ST-Ericsson JVS.            
    Other Wireless, in which we report manufacturing margin,
    R&D revenues and other items related to the wireless
    business but outside the ST-Ericsson JVS.       53




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##### Table of Contents



start-up
  Year Ended December 31,2009


2008


2007(In millions)Net revenues by product segments:Automotive Consumer Computer and Communication Infrastructure
    (ACCI)

$
3,198


$
4,129


$
3,944Industrial and Multi-segment Sector (IMS)


2,641



3,329



3,138Wireless (Wireless)


2,585



2,030



1,495Others(1)


86



55



60Flash Memories Group (FMG)






299



1,364Total consolidated net revenues

$
8,510


$
9,842


$
10,001     (1)
    
    Includes revenues from the sales of subsystems and other
    products not allocated to product segments.    Year Ended December 31,2009


2008


2007(In millions)Net revenues by product lines:Automotive Products Group (APG)

$
1,051


$
1,460


$
1,419Computer and Communication Infrastructure (CCI)


932



1,077



1,123Home Entertainment & Displays (HED)


787



1,086



963Imaging (IMG)


417



499



439Others


11



7



Automotive Consumer Computer and Communication Infrastructure
    (ACCI)


3,198



4,129



3,944Analog, Power and Micro-Electro-Mechanical Systems
    (APM)


1,887



2,393



2,313Microcontrollers, non-Flash, non-volatile Memory and Smartcard
    products (MMS)


752



936



825Others


2







Industrial and Multisegment Sector (IMS)


2,641



3,329



3,138Cellular Systems (CS)(1)


748



321



Connectivity & Peripherals (C&P)


416



416



207Mobile Platforms (MP)


300







Wireless Multi Media (WMM)


1,110



1,293



1,288Others


11







Wireless (Wireless)


2,585



2,030



1,495Others


86



55



60Flash Memories Group (FMG)






299



1,364Total consolidated net revenues

$
8,510


$
9,842


$
10,001     (1)
    
    CS includes the largest part of the revenues contributed by NXP
    Wireless and, as such, there are no comparable numbers available
    for 2007. C&P also partly benefited from the NXP wireless
    contribution.  54




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Year Ended December 31,2009


2008


2007(In millions)Operating income (loss) by product segments:Automotive Consumer Computer and Communication Infrastructure
    (ACCI)

$
(91
)

$
136


$
198Industrial and Multisegment Sector (IMS)


113



482



469Wireless (Wireless)(1)


(356
)


(65
)


105Others(2)


(689
)


(767
)


(1,266
)Operating income (loss) excluding FMG


(1,023
)


(214
)


(494
)Flash Memories Group (FMG)






16



(51
)Total consolidated operating loss

$
(1,023
)

$
(198
)

$
(545
)     (1)
    
    The majority of Wireless activities are run through
    ST-Ericsson JVS, a JV between us and Ericsson. The minority
    interest of Ericsson in ST-Ericssons operating losses
    (which are 100% included in the wireless segment) is credited in
    the line Non controlling interest of our Income
    Statement, which reported income of $265 million for the
    year ended December 31, 2009.(2)
    
    Operating loss of Others includes items such as
    unused capacity charges, impairment, restructuring charges and
    other related closure costs,
    start-up and
    phase-out costs, and other unallocated expenses such as:
    strategic or special R&D programs, acquired IP R&D and
    other non-recurrent purchase accounting items, certain corporate
    level operating expenses, certain patent claims and litigation,
    and other costs that are not allocated to the product segments,
    as well as operating earnings or losses of the Subsystems and
    Other Products Group.  Year Ended December 31,2009


2008


2007(As percentage of net revenues)Operating income (loss) by product segments:Automotive Consumer Computer and Communication Infrastructure
    (ACCI)


(2.8
)%


3.3
%


5.0
%Industrial and Multi-segment Sector (IMS)(1)


4.3



14.5



14.9Wireless (Wireless)(1)


(13.8
)


(3.2
)


7.0Others(2)










Flash Memories Group (FMG)(1)


0



5.4



(3.7
)Total consolidated operating loss(3)


(12.0
)%


(2.0
)%


(5.4
)%     (1)
    
    As a percentage of net revenues per product group.(2)
    
    Includes operating income (loss) from sales of subsystems and
    other income (costs) not allocated to product segments.(3)
    
    As a percentage of total net revenues.  55




---



##### Table of Contents



Year Ended December 31,2009


2008


2007(In millions)Reconciliation to consolidated operating loss:Total operating income (loss) of product segments

$
(334
)

$
553


$
772Total operating income FMG






16



(51
)Unused capacity charges


(322
)


(57
)


Impairment, restructuring charges and other related closure costs


(291
)


(481
)


(1,228
)Start-up /
    phase- out costs


(39
)


(17
)


(24
)Strategic and other research and development programs


(13
)


(24
)


(20
)Equipment write-off


(11
)






R&D funding


(9
)






Consulting fees related to business combinations


(8
)






Acquired In-Process R&D and other non recurring purchase
    accounting items






(185
)


Manufacturing services


16







Other non-allocated provisions(1)


(12
)


(3
)


6Total operating loss Others


(689
)


(767
)


(1,266
)Total consolidated operating loss

$
(1,023
)

$
(198
)

$
(545
)     (1)
    
    Includes unallocated income and expenses such as certain
    corporate level operating expenses and other costs that are not
    allocated to the product segments.  Net
    revenues by location of order shipment and by market
    segment
    Year Ended December 31,2009


2008


2007(In millions)Net Revenues by Location of Order Shipment:(1)(2)EMEA

$
2,413


$
3,024


$
3,342Americas


1,015



1,334



1,342Asia Pacific


2,567



2,480



2,092Greater China


2,132



2,492



2,750Japan


383



512



475Total

$
8,510


$
9,842


$
10,001     (1)
    
    Net revenues by location of order shipment are classified by
    location of customer invoiced. For example, products ordered by
    U.S.-based
    companies to be invoiced to Asia Pacific affiliates are
    classified as Asia Pacific revenues. Furthermore, the comparison
    among the different periods may be affected by shifts in order
    shipment from one location to another, as requested by our
    customers.(2)
    
    As of January 1, 2009, Emerging Markets has been
    reallocated to the EMEA, Americas and Asia Pacific organizations. 56




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##### Table of Contents



Year Ended December 31,2009


2008


2007(As percentage of net revenues)Net Revenues by Location of Order Shipment:(1)(2)EMEA


28.4
%


30.7
%


33.4
%Americas


11.9



13.6



13.4Asia Pacific


30.2



25.2



20.9Greater China


25.0



25.3



27.5Japan


4.5



5.2



4.8Total


100.0
%


100.0
%


100.0
%Net Revenues by Market Segment Application(3):Automotive


12.2
%


13.8
%


14.4
%Consumer


11.5



13.6



14.0Computer


12.9



12.0



12.4Telecom


39.9



33.3



33.5Industrial and Other


7.7



9.0



7.5Distribution


15.8



18.3



18.2Total


100.0
%


100.0
%


100.0
%     (1)
    
    Net revenues by location of order shipment are classified by
    location of customer invoiced. For example, products ordered by
    U.S.-based
    companies to be invoiced to Asia Pacific affiliates are
    classified as Asia Pacific revenues. Furthermore, the comparison
    among the different periods may be affected by shifts in order
    shipment from one location to another, as requested by our
    customers.(2)
    
    As of January 1, 2009, Emerging Markets has been
    reallocated to the EMEA, Americas and Asia Pacific organizations.(3)
    
    The above table estimates, within a variance of 5% to 10% in the
    absolute dollar amount, the relative weighting of each of our
    target segments. 57




---



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Year Ended December 31,2009


2008


2007(As percentage of net revenues)Net sales


99.5
%


99.5
%


99.7
%Other revenues


0.5



0.5



0.3Net revenues


100



100



100Cost of sales


(69.1
)


(63.8
)


(64.6
)Gross profit


30.9



36.2



35.4Selling, general and administrative


(13.6
)


(12.1
)


(11.0
)Research and development


(27.8
)


(21.9
)


(18.0
)Other income and expenses, net


1.9



0.6



0.5Impairment, restructuring charges and other related closure costs


(3.4
)


(4.9
)


(12.3
)Operating loss


(12.0
)


(2.0
)


(5.4
)Other-than-temporary
    impairment charge and realized losses on financial assets


(1.6
)


(1.4
)


(0.4
)Interest income, net


0.1



0.5



0.8Gain (loss) on financial assets


(0.1
)


(0.1
)


Gain on convertible debt buyback


0.0







Earnings (loss) on equity investments


(4.0
)


(5.6
)


0.1Loss before income taxes and noncontrolling interests


(17.6
)


(8.4
)


(4.9
)Income tax benefit


1.1



0.4



0.2Loss before noncontrolling interests


(16.5
)


(7.9
)


(4.7
)Net loss (income) attributable to noncontrolling interest


3.2



(0.1
)


(0.1
)Net loss attributable to parent company


(13.3
)%


(8.0
)%


(4.8
)%   2009 vs.
    2008
    Net
    Revenues
  Year Ended December 31,2009


2008


% Variation(Audited, in millions)Net sales

$
8,465


$
9,792



(13.5
)%Other revenues


45



50



(10.2
)Net revenues

$
8,510


$
9,842



(13.5
)%        58




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##### Table of Contents



Gross
    profit
  Year Ended December 31,2009


2008


% Variation(Audited, in millions)Cost of sales

$
(5,884
)

$
(6,282
)


6.3
%Gross profit

$
2,626


$
3,560



(26.2
)%Gross margin (as a percentage of net revenues)


30.9
%


36.2
%


       Selling,
    general and administrative expenses
  Year Ended December 31,2009

2008

% Variation(Audited, in millions)Selling, general and administrative expenses

$
(1,159
)

$
(1,187
)


2.3
%As a percentage of net revenues


(13.6
)%


(12.1
)%


     Research
    and development expenses
  Year Ended December 31,2009

2008

% Variation(Audited, in millions)Research and development expenses

$
(2,365
)

$
(2,152
)


(9.9
)%As a percentage of net revenues


(27.8
)%


(21.9
)%


   year-over-year
 59




---



##### Table of Contents



Other
    income and expenses, net
  Year Ended December 31,2009


2008(Audited,in millions)Research and development funding

$
202


$
83Start-up/phase-out
    costs


(39
)


(17
)Exchange gain (loss) net


11



20Patent costs, net of gain from settlement


(5
)


(24
)Gain on sale of other non-current assets


3



4Other, net


(6
)


(4
)Other income and expenses, net

$
166


$
62As a percentage of net revenues


2.0
%


0.6
%   start-up catch-up
  Impairment,
    restructuring charges and other related closure
    costs
  Year Ended December 31,2009

2008(Audited, in millions)Impairment, restructuring charges and other related closure costs

$
(291
)

$
(481
)     
    $126 million related to the closure of our Ain Sebaa
    (Morocco), Carrollton (Texas) and Phoenix (Arizona) sites,
    including $101 million of one-time termination benefits, as
    well as other relevant charges and $25 million as
    impairment charges on the fair value of Carrollton and Phoenix
    assets;
    $100 million related to the new plans announced in April
    and December 2009 by ST-Ericsson, to be completed in 2010,
    primarily consisting of on-going termination benefits pursuant
    to the closure of certain locations in Europe and the United
    States;
    $59 million related to other ongoing and newly committed
    restructuring plans, consisting primarily of voluntary
    termination benefits and early retirement arrangements in some
    of our European locations; and
    $6 million as impairment on certain goodwill.   60




---



##### Table of Contents



Operating
    loss
  Year Ended December 31,2009

2008(Audited, in millions)Operating loss

$
(1,023
)

$
(198
)As a percentage of net revenues


(12.0
)%


(2.0
)%     year-over-year
  Other-than-temporary
    impairment charges and realized losses on financial
    assets
  Year Ended December 31,2009

2008(Audited, in millions)Other-than-temporary
    impairment charges and realized losses on financial assets

$
(140
)

$
(138
)   other-than-temporary
  Interest
    income, net
  Year Ended December 31,2009

2008(Audited, in millions)Interest income, net

$
9


$
51     Loss
    on equity investments
  Year Ended December 31,2009

2008(Audited, in millions)Loss on equity investments

$
(337
)

$
(553
)    61




---



##### Table of Contents



pick-up
    Gain
    (loss) on financial assets
  Year Ended December 31,2009

2008(Audited, in millions)Gain (loss) on financial assets

$
(8
)

$
15   held-for-trading
    Gain
    on convertible debt buyback
  Year Ended December 31,2009

2008(Audited, in millions)Gain on convertible debt buyback

$
3


$
     Income
    tax benefit
  Year Ended December 31,2009

2008(Audited, in millions)Income tax benefit

$
95


$
43     Net
    loss (income) attributable to noncontrolling
    interest
  Year Ended December 31,2009

2008(Audited, in millions)Net loss (income) attributable to noncontrolling interest

$
270


$
(6
)As a percentage of net revenues


3.2
%


(0.1
)%    62




---



##### Table of Contents



Net
    loss attributable to parent company
  Year Ended December 31,2009

2008(Audited, in millions)Net loss attributable to parent company

$
(1,131
)

$
(786
)As a percentage of net revenues


(13.3
)%


(8.0
)%     other-than-temporary
  2008 vs.
    2007
    Net
    Revenues
  Year Ended December 31,2008


2007


% Variation(Audited, in millions)Net sales

$
9,792


$
9,966



(1.8
)%Other revenues


50



35



Net revenues

$
9,842


$
10,001



(1.6
)%       year-over-year
     63




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##### Table of Contents



Gross
    profit
  Year Ended December 31,2008


2007


% Variation(Audited, in millions)Cost of sales

$
(6,282
)

$
(6,465
)


2.8
%Gross profit

$
3,560


$
3,536



0.7
%Gross margin (as a percentage of net revenues)


36.2
%


35.4
%   step-up step-up year-over-year
  Selling,
    general and administrative expenses
  Year Ended December 31,2008

2007

% Variation(Audited, in millions)Selling, general and administrative expenses

$
(1,187
)

$
(1,099
)


(8.0
)%As a percentage of net revenues


(12.1
)%


(11.0
)%


     Research
    and development expenses
  Year Ended December 31,2008

2007

% Variation(Audited, in millions)Research and development expenses

$
(2,152
)

$
(1,802
)


(19.5
)%As a percentage of net revenues


(21.9
)%


(18.0
)%


      64




---



##### Table of Contents



Other
    income and expenses, net
  Year Ended December 31,2008


2007(Audited, in millions)Research and development funding

$
83


$
97Start-up/phase-out
    costs


(17
)


(24
)Exchange gain (loss) net


20



1Patent litigation costs


(14
)


(18
)Patent pre-litigation costs


(10
)


(10
)Gain on sale of non-current assets


4



Other, net


(4
)


2Other income and expenses, net

$
62


$
48As a percentage of net revenues


0.6
%


0.5
%   start-up
  Impairment,
    restructuring charges and other related closure
    costs
  Year Ended December 31,2008

2007(Audited, in millions)Impairment, restructuring charges and other related closure costs

$
(481
)

$
(1,228
)     
    $216 million originated by the FMG assets disposal which
    required the recognition of $190 million as an additional
    loss and $26 million as restructuring and other related
    disposal costs; this additional loss was the result of revised
    terms of the transaction from those expected at
    December 31, 2007;
    $164 million incurred as part of our ongoing 2007
    restructuring initiatives which include the closure of our fabs
    in Phoenix and Carrollton (USA) and of our back-end facilities
    in Ain Sebaa (Morocco);
    $13 million as impairment charges on goodwill and certain
    financial investments; and
    $88 million for other previously and newly announced
    restructuring plans, consisting primarily of voluntary
    termination benefits and early retirement arrangements in some
    of our European locations.    Operating
    loss
  Year Ended December 31,2008

2007(Audited, in millions)Operating loss

$
(198
)

$
(545
)As a percentage of net revenues


(2.0
)%


(5.4
)%  65




---



##### Table of Contents



Other-than-temporary
    impairment charges on financial assets
  Year Ended December 31,2008

2007(Audited, in millions)Other-than-temporary
    impairment charges on financial assets

$
(138
)

$
(46
)   available-for-sale
  Interest
    income, net
  Year Ended December 31,2008

2007(Audited, in millions)Interest income, net

$
51


$
83     Earnings
    (loss) on equity investments
  Year Ended December 31,2008

2007(Audited, in millions)Earnings (loss) on equity investments

$
(553
)

$
14     Income
    tax benefit
  Year Ended December 31,2008

2007(Audited, in millions)Income tax benefit

$
43


$
23      66




---



##### Table of Contents



Net
    loss
  Year Ended December 31,2008

2007(Audited, in millions)Net loss

$
(786
)

$
(477
)As a percentage of net revenues


(8.0
)%


(4.8
)%     Quarterly
    Results of Operations
  period-to-period
    year-over-year
   67




---



##### Table of Contents



Net
    revenues
  Three Months Ended


% VariationDec 31, 2009


Sept 26, 2009


Dec 31, 2008


Sequential


Year-Over-Year(Unaudited, in millions)Net sales

$
2,570


$
2,269


$
2,264



13.3
%


13.5
%Other revenues


13



6



12







Net revenues

$
2,583


$
2,275


$
2,276



13.6
%


13.5
%   Year-over-year
    comparison
        Sequential
    comparison
          Gross
    profit
  Three Months Ended


% VariationDecember 31, 2009


September 26, 2009


December 31, 2008


Sequential


Year-Over-Year(Unaudited, in millions)Cost of sales

$
(1,626
)

$
(1,562
)

$
(1,454
)


(4.1
)%


(11.9
)%Gross profit


957



713



822



34.2
%


16.3
%Gross margin (as a percentage of net revenues)


37.0
%


31.3
%


36.1
%   year-over-year
 68




---



##### Table of Contents



Selling,
    general and administrative expenses
  Three Months Ended

% VariationDecember 31, 2009

September 26, 2009

December 31, 2008

Sequential

Year-Over-Year(Unaudited, in millions)Selling, general and administrative expenses

$
(303
)

$
(290
)

$
(304
)


(4.8
)%


0.4
%As percentage of net revenue


(11.7
)%


(12.7
)%


(13.4
)%






   year-over-year
    Research
    and development expenses
  Three Months Ended

% VariationDecember 31, 2009

September 26, 2009

December 31, 2008

Sequential

Year-Over-Year(Unaudited, in millions)Research and development expenses

$
(603
)

$
(595
)

$
(572
)


(1.2
)%


(5.3
)%As percentage of net revenues


(23.3
)%


(26.2
)%


(25.1
)%   year-over-year
     69




---



##### Table of Contents



Other
    income and expenses, net
  Three Months EndedDecember 31, 2009


September 26, 2009


December 31, 2008(Unaudited, in millions)Research and development funding

$
44


$
26


$
19Start-up/phase-out
    costs


(2
)


(3
)


(7
)Exchange gain (loss) net


2



(4
)


Patent costs, net of gain from settlement


(5
)


11



(5
)Gain on sale of other non-current assets


2



1



Other, net


(2
)


(2
)


(1
)Other income and expenses, net


39



29



6As a percentage of net revenues


1.5
%


1.3
%


0.3
%   start-up
  Impairment,
    restructuring charges and other related closure
    costs
  Three Months EndedDecember 31, 2009

September 26, 2009

December 31, 2008(Unaudited, in millions)Impairment, restructuring charges and other related closure costs

$
(96
)

$
(53
)

$
(91
)     
    $16 million was recorded in preparation of the closure of
    our Ain Sebaa, Morocco, Carrollton, Texas and Phoenix (Arizona)
    sites, and was composed of one-time termination benefits, as
    well as other relevant charges;
    $17 million related to the plan announced in April 2009 by
    ST-Ericsson, to be completed by the mid- 2010, primarily
    consisting of on-going termination benefits pursuant to the
    closure of certain locations in Europe and the United States and
    $45 million related to a new plan announced in December
    2009 by ST-Ericsson, to be completed by 2010, primarily
    consisting of on-going termination benefits pursuant to
    workforce reduction; and
    $18 million related to other ongoing and newly committed
    restructuring plans, consisting primarily of voluntary
    termination benefits and early retirement arrangements in some
    of our European locations.     70




---



##### Table of Contents



Operating
    loss
  Three Months EndedDecember 31, 2009

September 26, 2009

December 31, 2008(Unaudited, in millions)Operating loss

$
(6
)

$
(196
)

$
(139
)In percentage of net revenues


(0.2
)%


(8.6
)%


(6.1
)%     other-than-temporary
    Other-than-temporary
    impairment charges and realized losses on financial
    assets
  Three Months EndedDecember 31, 2009

September 26, 2009

December 31, 2008(Unaudited, in millions)Other-than-temporary
    impairment charges and realized losses on financial assets

$
(68
)

$
0


$
(55
)     Interest
    income, net
  Three Months EndedDecember 31, 2009

September 26, 2009

December 31, 2008(Unaudited, in millions)Interest income, net

$
3


$
4


$
3     Loss
    on equity investments
  Three Months EndedDecember 31, 2009

September 26, 2009

December 31, 2008(Unaudited, in millions)Earnings (loss) on equity investments

$
(13
)

$
(42
)

$
(204
)   pick-up
 71




---



##### Table of Contents



Gain
    on convertible debt buyback
  Three Months EndedDecember 31, 2009

September 26, 2009

December 31, 2008(Unaudited, in millions)Gain on convertible debt buyback

$
3


$



$
     Income
    tax benefit (expense)
  Three Months EndedDecember 31, 2009

September 26, 2009

December 31, 2008(Unaudited, in millions)Income tax benefit (expense)

$
(48
)

$
(15
)

$
9   true-up
    Net
    loss attributable to noncontrolling interest
  Three Months EndedDecember 31, 2009

September 26, 2009

December 31, 2008(Unaudited, in millions)Net loss attributable to noncontrolling interest

$
59


$
48


$
5       Net
    loss attributable to parent company
  Three Months EndedDecember 31, 2009

September 26, 2009

December 31, 2008(Unaudited, in millions)Net loss attributable to parent company

$
(70
)

$
(201
)

$
(366
)As percentage of net revenues


(2.7
)%


(8.8
)%


(16.1
)%       other-than-temporary other-than-temporary
 72




---



##### Table of Contents



Impact of
    Changes in Exchange Rates
    non-U.S. dollar
           73




---



##### Table of Contents



Impact of
    Changes in Interest Rates
    held-for-trading
     74




---



##### Table of Contents



Liquidity
    and Capital Resources
      available-for-sale other-than-temporary. available-for-sale
  Hynix-Numonyx
 75




---



##### Table of Contents



available-for-sale Other-than-temporary Other-than-temporary
    and/or
  Liquidity
        Year Ended December 31,2009


2008


2007(In millions)Net cash from (used in) operating activities

$
816


$
1,722


$
2,188Net cash from (used in) investing activities


290



(2,417
)


(1,737
)Net cash from (used in) in financing activities


(513
)


(67
)


(296
)Effect of change in exchange rates


(14
)


(84
)


41Net cash increase (decrease)

$
579


$
(846
)

$
196  76




---



##### Table of Contents



Net cash from (used in) operating
    activities.
    Net cash from (used in) investing
    activities.
  Net cash from (used in) financing
    activities.
  Net operating cash flow.
  Year Ended December 31,2009


2008


2007(In millions)Net cash from (used in) operating activities

$
816


$
1,722


$
2,188Net cash from (used in) investing activities


290



(2,417
)


(1,737
)Payment for purchase and proceeds from sale of marketable
    securities (current and non-current), short-term deposits and
    restricted cash, net


258



(351
)


389Net operating cash flow

$
1,364


$
(1,046
)

$
840     Capital
    Resources
  Net
    financial position
   77




---



##### Table of Contents



Year Ended December 31,2009


2008


2007(In millions)Cash and cash equivalents, net of bank overdrafts

$
1,588


$
989


$
1,855Marketable securities, current


1,032



651



1,014Restricted cash


250



250



250Marketable securities, non-current


42



242



369Total financial resources


2,912



2,132



3,488Current portion of long-term debt


(176
)


(123
)


(103
)Long-term debt


(2,316
)


(2,554
)


(2,117
)Total financial debt


(2,492
)


(2,677
)


(2,220
)Net financial position

$
420


$
(545
)

$
1,268           Payments Due by PeriodTotal

2010

2011

2012

2013

2014

2015

Thereafter(In millions)Long-term debt (including current portion)

$
2,492


$
176


$
1,063


$
119


$
836


$
114


$
92


$
92    78




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##### Table of Contents



Moodys Investors Service

Standard & PoorsZero Coupon Senior Convertible Bonds due 2013

WR(1)

NRZero Coupon Senior Convertible Bonds due 2016

Baa1

BBB+Floating Rate Senior Bonds due 2013

Baa1

BBB+     (1)
    
    Rating withdrawn since the redemption in August 2006 of
    $1.4 billion of our 2013 Convertible Bonds.        Contractual
    Obligations, Commercial Commitments and Contingencies
    Total


2010


2011


2012


2013


2014


ThereafterOperating leases(2)

$
481


$
131


$
98


$
68


$
43


$
26


$
115Purchase obligations(2)


741



604



62



37



20



18



of which:Equipment and other asset purchase


267



267



















Foundry purchase


182



182



















Software, technology licenses and design


292



155



62



37



20



18



Other obligations(2)


532



263



135



125



6



2



1Long-term debt obligations (including current portion)(3)(4)(5)
    of which:


2,492



176



1,063



119



836



114



184Capital
    leases(3)


19



8



4



2



2



2



1Pension obligations(3)


317



41



21



28



28



37



162Other non-current liabilities(3)


342



19



20



87



8



7



201Total

$
4,905


$
1,234


$
1,399


$
464


$
941


$
204


$
663     (1)
    
    Contingent liabilities which cannot be quantified are excluded
    from the table above.(2)
    
    Items not reflected on the Consolidated Balance Sheet at
    December 31, 2009.(3)
    
    Items reflected on the Consolidated Balance Sheet at
    December 31, 2009.(4)
    
    See Note 14 to our Consolidated Financial Statements at
    December 31, 2009 for additional information related to
    long-term debt and redeemable convertible securities.(5)
    
    Year of payment is based on maturity before taking into account
    any potential acceleration that could result from a triggering
    of the change of control provisions of the 2016 Convertible
    Bonds and the 2013 Senior Bonds.     79




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##### Table of Contents



Off-Balance
    Sheet Arrangements
    Financial
    Outlook
  300-mm 200-mm 200-mm
   80




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##### Table of Contents



Impact of
    Recently Issued U.S. Accounting Standards
    Equity
    investments
    Backlog
    and Customers
    Item 6.
    Directors,
    Senior Management and Employees  Directors
    and Senior Management
    Supervisory
    Board
      Name

Position

Year Appointed(1)


Term Expires


AgeAntonino Turicchi

Chairman


2008
(2)


2011



44Gérald Arbola

Vice-Chairman


2004



2011



61Raymond Bingham

Member


2007



2010



64Douglas Dunn

Member


2001



2012



65Didier Lamouche

Member


2006



2012



50Didier Lombard

Member


2004



2011



68Alessandro Ovi

Member


2007
(3)


2010



66Bruno Steve

Member


1989



2011



68Tom de Waard

Member


1998



2011



63     (1)
    
    As a member of the Supervisory Board.(2)
    
    Mr. Turicchi was also a Supervisory Board member from
    2005-2007.(3)
    
    Mr. Ovi was also a Supervisory Board member from
    1994-2005.     81




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##### Table of Contents



http://www.st.com/stonline/company/governance/index.htm.
    Biographies
         82




---



##### Table of Contents



83




---



##### Table of Contents



Supervisory
    Board Committees
  Membership and Attendance.
    NominatingandCorporateAudit


Compensation


Strategic


GovernanceNumber of Meetings Attended in 2009

Full Board


Committee


Committee


Committee


CommitteeAntonino Turicchi


13







3



1



1Gérald Arbola


13







3



1



1Raymond Bingham


13



11







1



Douglas Dunn


13



11







1



Didier Lamouche


9



11











Didier Lombard


11







3



1



1Alessandro Ovi


13











1



Bruno Steve


13



9



2







Tom de Waard


12



11



3







1   Audit Committee.
     84




---



##### Table of Contents



Form 20-F.
      Compensation Committee.
        Strategic Committee.
  Nominating and Corporate Governance
    Committee.
 85




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##### Table of Contents



Secretariat and Controllers.
      Managing
    Board
       86




---



##### Table of Contents



5-year
  Executive
    Officers
     87




---



##### Table of Contents




    Corporate Operation Reviews (COR), which meets once per
    month to review monthly results and short term forecasts and
    involve the following executive officers/groups: CEO; COO; CFO;
    Infrastructures and Services; Product Quality Excellence;
    Manufacturing (Front-End and Back-End); TR&D; Regions; and
    Product Groups.
    Corporate Strategic Committeemeetings,which
    occur twice per quarter with the objective of defining the
    strategic directions of the Company. They are attended by the
    CEO, COO and the following executive officers: Orio Bellezza;
    Jean-Marc Chery; Andrea Cuomo; Carlo Ferro; Tjerk Hooghiemstra;
    Philippe Lambinet; Loic Liétar; and Carmelo Papa. 88




---



##### Table of Contents



Years inSemi-Years with


ConductorName

Position

Company


Industry


AgeCarlo Bozotti, Chairman

President and Chief Executive Officer


33



33



57Alain Dutheil, Vice Chairman

Chief Operating Officer


26



40



64Georges Auguste

Executive Vice President, Quality, Education and Sustainable
    Development


23



35



60Orio Bellezza

Executive Vice President and General Manager, Front-End
    Manufacturing


26



26



50Gian Luca Bertino

Corporate Vice President, Computer and Communications
    Infrastructure


12



23



50Ugo Carena(1)

Corporate Vice President, Automotive Products Group


12



32



66Marco Luciano Cassis

Corporate Vice President, Japan Region


22



22



46Patrice Chastagner

Corporate Vice President, Human Resources


25



25



62Jean-Marc Chery

Executive Vice President and Chief Technology Officer


25



25



49Andrea Cuomo

Executive Vice President and General Manager, Sales &
    Marketing, Europe, Middle


26



26



55East and AfricaClaude Dardanne

Corporate Vice President, General Manager, Microcontrollers,
    Memories & Smartcards


27



30



57Carlo Ferro

Executive Vice President, Chief Financial Officer


10



10



49Alisia Grenville

Corporate Vice President, Chief Compliance Officer


2



2



42Paul Grimme

Corporate Vice President and General Manager, Automotive Product
    Group


1



29



50François Guibert

Corporate Vice President, President, Greater China & South
    Asia Region


29



32



56Reza Kazerounian(2)

Corporate Vice President, North America Region


25



25



52Otto Kosgalwies

Executive Vice President, Infrastructure and Services


26



26



54Robert Krysiak

Corporate Vice President and General Manager, Greater China
    Region


27



27



55Philippe Lambinet

Executive Vice President, General Manager, Home Entertainment
    & Displays Group


16



16



52Loïc Lietar

Corporate Vice President, Corporate Business Development


24



24



47Pierre Ollivier

Corporate Vice President and General Counsel


20



20



54Carlo Ottaviani

Corporate Vice President, Communication


45



45



66Carmelo Papa

Executive Vice President and General Manager, Industiral
    Multi-segment Sector


27



27



60Jeffrey See

Executive Vice President, Central Packaging and Test
    Manufacturing


40



40



64Thierry Tingaud(3)

Corporate Vice President, Emerging Markets Region


25



25



50     (1)
    
    Retired in 2009.(2)
    
    As of April 2009, Mr. Kazerounian is no longer with the
    Company.(3)
    
    Mr. Tingaud left ST in February 2009. 89




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##### Table of Contents



Biographies
    of our Current Executive Officers
               90




---



##### Table of Contents



91




---



##### Table of Contents



2007-2009,
     92




---



##### Table of Contents



16/32/64
            start-up
 93




---



##### Table of Contents



(125-mm)
    Compensation
    Supervisory Board Member

Directors FeesAntonino Turicchi


146,875Gérald Arbola


146,875Raymond Bingham


98,375Douglas Dunn


96,875Didier Lamouche


86,250Didier Lombard


88,125Alessandro Ovi


75,875Bruno Steve


97,375Tom de Waard(1)


157,250Total


993,875     (1)
    
    Compensation, including attendance fees of $2,000 per meeting of
    our Supervisory Board or committee thereof, was paid to Clifford
    Chance LLP.    inter alia
  Sole Member of Our Managing Board and





Non-cashPresident and CEO

Salary(2)

Bonus(1)

Benefits(3)

TotalCarlo Bozotti

$
933,474


$
649,755


$
884,662


$
2,467,891     (1)
    
    The bonus paid to the sole member of our Managing Board and
    President and CEO during the 2009 financial year was approved by
    the Compensation Committee, and approved by the Supervisory
    Board in respect of the 2008 financial year, based on
    fulfillment of a number of pre-defined objectives for 2008.(2)
    
    Our Supervisory Board, upon the recommendation of our
    Compensation Committee, approved an annual salary for 2009 for
    our Managing Board and President and CEO of $700,000, with an
    exchange rate for the salary paid in Euro fixed at 1.00 to
    $1.20 and an exchange rate for the salary paid in Swiss Francs
    of approximately CHF 1.00 to $0.90. 94




---



##### Table of Contents



(3)
    
    Including stock awards, employer social contributions, company
    car allowance and miscellaneous allowances.                     95




---



##### Table of Contents



Share
    Ownership
    Stock
    Awards and Options
  and/or and/or
    
    amended grants pursuant to the 2005 stock-based compensation
    plan for Supervisory Board members and professionals at our 2007
    annual shareholders meeting;
    adopted our 2007 nonvested Stock Award Plan for Executives and
    Key Employees (the Employee USA Plan) with the goal
    of enhancing our ability to retain key employees and motivate
    them to work to create shareholder value and, in addition,
    approved vesting conditions linked to our future performance and
    continued service with us;
    approved, for a five year period, our 2008 nonvested Stock Award
    Plan for Executives and Key Employees, under which directors,
    managers and selected employees may be granted stock awards upon
    the fulfillment of restricted criteria, such as those linked to
    our performance and continued service with us; and
    approved conditions relating to our 2009 nonvested stock award
    allocation under the 2008 Stock Award Plan, including
    restriction criteria linked to our performance.    inter alia,
  Employee
    and Managing Board Stock-Based Compensation Plans
  2001 Stock Option Plan.
   96




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##### Table of Contents



2001 Plan
    (Employees)
    April 25, 2001
    (outstanding grants)
  Tranche 1

Tranche 2

Tranche 3

Tranche 4

Tranche 5

Tranche 6

Tranche 7Date of the grant

27-Apr-01

4-Sep-01

1-Nov-01

2-Jan-02

25-Jan-02

25-Apr-02

26-Jun-02Total Number of Shares which may be purchased

9,521,100

16,000

61,900

29,400

3,656,103

9,708,390

318,600Vesting Date

27-Apr-03

4-Sep-03

1-Nov-03

2-Jan-04

25-Jan-03

25-Apr-04

26-Jun-04Expiration Date

27-Apr-11

4-Sep-11

1-Nov-11

2-Jan-12

25-Jan-12

25-Apr-12

26-Jun-12Exercise Price

$39.00

$29.70

$29.61

$33.70

$31.09

$31.11

$22.30Terms of Exercise

32% on

32% on

32% on

32% on

50% on

32% on

32% on27-Apr-03

4-Sep-03

1-Nov-03

2-Jan-04

25-Jan-03

25-Apr-04

26-Jun-0432% on

32% on

32% on

32% on

50% on

32% on

32% on27-Apr-04

4-Sep-04

1-Nov-04

2-Jan-05

25-Jan-04

25-Apr-05

26-Jun-0536% on
    27-Apr-05

36% on
    4-Sep-05

36% on
    1-Nov-05

36% on
    2-Jan-06



36% on
    25-Apr-06

36% on
    26-Jun-06Number of Shares to be acquired with Outstanding Options as of
    December 31, 2009

7,309,350

0

43,500

19,400

2,709,996

7,661,061

123,706Held by Managing Board/Executive Officers

323,500

0

0

0

126,300

335,030

0   2001 Plan
    (Employees) (continued)
    April 25, 2001
    (outstanding grants)
  Tranche 8

Tranche 9

Tranche 10

Tranche 11

Tranche 12

Tranche 13

Tranche 14

Tranche 15

Tranche 16

Tranche 17Date of the grant

1-Aug-02

17-Dec-02

14-Mar-03

3-Jun-03

24-Oct-03

2-Jan-04

26-Apr-04

1-Sep-04

31-Jan-05

17-Mar-05Total Number of Shares which may be purchased

24,500

14,400

11,533,960

306,850

135,500

86,400

12,103,490

175,390

29,200

13,000Vesting Date

1-Aug-04

17-Dec-04

14-Mar-05

3-Jun-05

24-Oct-05

2-Jan-06

26-Apr-06

1-Sep-06

31-Jan-07

17-Mar-07Expiration Date

1-Aug-12

17-Dec-12

14-Mar-13

3-Jun-13

24-Oct-13

2-Jan-14

26-Apr-14

1-Sep-14

31-Jan-15

17-Mar-15Exercise Price

$20.02

$21.59

$19.18

$22.83

$25.90

$27.21

$22.71

$17.08

$16.73

$17.31Terms of Exercise

32% on

32% on

32% on

32% on

32% on

32% on

32% on

32% on

32% on

32% on1-Aug-04

17-Dec-04

14-Mar-05

3-Jun-05

24-Oct-05

2-Jan-06

26-Apr-06

1-Sep-06

31-Jan-07

17-Mar-0732% on

32% on

32% on

32% on

32% on

32% on

32% on

32% on

32% on

32% on1-Aug-05

17-Dec-05

14-Mar-06

3-Jun-06

24-Oct-06

2-Jan-07

26-Apr-07

1-Sep-07

31-Jan-08

17-Mar-0836% on

36% on

36% on

36% on

36% on

36% on

36% on

36% on

36% on

36% on1-Aug-06

17-Dec-06

14-Mar-07

3-Jun-07

24-Oct-07

2-Jan-08

14-Mar-08

1-Sep-08

31-Jan-09

17-Mar-09Number of Shares to be acquired with Outstanding Options as of
    December 31, 2009

13,100

14,400

9,298,738

167,950

112,150

11,700

9,886,815

110,666

17,300

6,000Held by Managing Board/ Executive Officers

0

0

402,200

0

31,000

0

486,400

0

0

0   2006
    nonvested Stock Award Plan
    2007
    nonvested Stock Award Plan
   97




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##### Table of Contents



2008
    nonvested Stock Award Plan  2008
    Allocation
    2009
    nonvested Stock Award Plan  2009
    Allocation
          Supervisory
    Board Stock Option Plans
  1999 Stock Option Plan for members and professionals of our
    Supervisory Board.
  2002 Stock Option Plan for members and professionals of our
    Supervisory Board. 2002-2005),
  1999 and
    2002 Plans
    (for Supervisory Board Members and Professionals)
    (outstanding grants)
  Date of Annual

May 31, 1999

March 27, 2002Shareholders Meeting

Tranche 2

Tranche 3

Tranche 1

Tranche 2

Tranche 3Date of the grant

16-Jun-00

27-Apr-01

25-Apr-02

14-Mar-03

26-Apr-04Total Number of Shares which may be purchased

103,500

112,500

132,000

132,000

132,000Vesting Date

16-Jun-01

27-Apr-02

25-May-02

14-Apr-03

26-May-04Expiration Date

16-Jun-08

27-Apr-11

25-Apr-12

14-Mar-13

26-Apr-14Exercise Price

$62.01

$39.00

$31.11

$19.18

$22.71Terms of Exercise

All exercisable
    after 1 year

All exercisable
    after 1 year

All exercisable
    after 1 year

All exercisable
    after 1 year

All exercisable
    after 1 yearNumber of Shares to be acquired with Outstanding Options as of
    December 31, 2009

0

90,000

108,000

108,000

132,000    98




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##### Table of Contents



2005, 2006 and 2007 Stock-based Compensation for members and
    professionals of the Supervisory Board.
      2005

2006

2007Total number of Shares outstanding


0



0



45,000Expiration date


25-Oct-15



29-Apr-16



28-Apr-17   2008, 2009 and 2010 Stock-based Compensation for members and
    professionals of the Supervisory Board.
    Plan 2008

Plan 2009Total number of Shares outstanding


95,000



157,500Expiration date


14-May-18



20-May-19   Employees
    At December 31,2009


2008


2007France


10,960



10,790



10,560Italy


8,290



8,200



10,090Rest of Europe


3,200



2,320



1,730United States


2,000



3,250



3,120Mediterranean (Malta, Morocco, Tunisia)


4,630



5,840



6,990Asia


22,480



21,410



19,690Total


51,560



51,810



52,180   99




---



##### Table of Contents



At December 31,2009


2008


2007Research and Development


12,330



11,900



10,570Marketing and Sales


2,640



2,670



2,870Manufacturing


31,300



32,290



33,520Administration and General Services


2,560



2,470



2,570Divisional Functions


2,730



2,480



2,650Total


51,560



51,810



52,180     Item 7.
    Major
    Shareholders and Related Party Transactions  Major
    Shareholders
    Common Shares OwnedShareholders

Number


%ST Holding II


250,704,754



27.54Public


542,946,425



59.64Brandes Investment Partners(1)


66,620,387



7.32Capital World Investors(2)


18,050,000



1.98Treasury shares


31,985,739



3.52Total


910,307,305



100     (1)
    
    According to information filed February 12, 2010 on
    Schedule 13G, Brandes Investment Partners shares in
    our company are beneficially owned by the following group of
    entities: Brandes Investment Partners, L.P., Brandes Investment
    Partners, Inc., Brandes Worldwide Holdings, L.P., Charles H.
    Brandes, Glenn R. Carlson and Jeffrey A. Busby.(2)
    
    At December 31, 2008, Capital World Investors held 5.4% of
    our shares. As of December 31, 2009, it held less than 5%
    of our shares and has ceased to be a major shareholder of our
    company.       100




---



##### Table of Contents



Common Shares OwnedNumber

%December 31, 2009


250,704,754



27.5December 31, 2008


250,704,754



27.5December 31, 2007


250,704,754



27.5       
    (1)
    
    In addition to the 27.5% held by ST Holding and the 68.9% held
    by the Public, 3.5% are held by us as Treasury Shares.        Shareholders
    Agreements
  STH
    Shareholders Agreement
   101




---



##### Table of Contents



Restructuring
    of the Holding Companies
    Standstill
    Corporate
    Governance
         102




---



##### Table of Contents



and/or and/or
        and/or
       103




---



##### Table of Contents



Disposals
    of our Common Shares
      Re-adjusting
    and Re-balancing options
    50 50
  Change of
    Control Provision
    Non-competition
    Deadlock
   104




---



##### Table of Contents



Preference
    Shares
        Other
    Shareholders Agreements
  Italian
    Shareholders Pact
      French
    Shareholders Pact
    Statutory
    Considerations
  Commissaire
    du Gouvernement Contrôleur dEtat No. 94-214,
 105




---



##### Table of Contents



società per azioni
  Related
    Party Transactions
        Item 8.
    Financial
    Information  Financial
    Statements
  Form 20-F.
  Legal
    Proceedings
  and/or
       106




---



##### Table of Contents



Other
    matters:
          Risk
    Management and Insurance
     107




---



##### Table of Contents




    Property damage and business interruption;
    General liability and product liability;
    Directors and officers liability; and
    Transportation risks.      Reporting
    Obligations in IFRS
        Dividend
    Policy
          
    On May 20, 2009, our shareholders adopted the payment of a
    cash dividend with respect to the year ended December 31,
    2008 of $0.12. 108




---



##### Table of Contents




    On May 14, 2008, our shareholders adopted the payment of a
    quarterly cash dividend with respect to the year ended
    December 31, 2007 of $0.36.
    On April 26, 2007, our shareholders adopted the payment of
    a cash dividend with respect to the year ended December 31,
    2006 of $0.30.
    On April 27, 2006, our shareholders adopted the payment of
    a cash dividend with respect to the year ended December 31,
    2005 of $0.12 per share.
    On March 18, 2005, our shareholders adopted the payment of
    a cash dividend with respect to the year ended December 31,
    2004 of $0.12 per share.    Item 9.
    Listing  Trading
    History of the Companys Shares
             109




---



##### Table of Contents



Euronext
  Average Daily TradingVolumesNumber of





Price RangesCalendar Period

Shares


Capital


High


Low()


()


()Annual Information for the Past Five Years2005


5,367,485



72,641,065



15.81



10.832006


5,748,008



78,944,778



16.56



11.342007


5,430,551



71,352,748



15.61



9.702008


7,490,827



54,414,076



9.89



4.522009


4,613,574



23,933,547



7.02



2.97Quarterly Information for the Past Two Years2008First quarter


7,826,688



62,318,108



9.89



6.21Second quarter


8,048,986



60,926,675



8.70



6.55Third quarter


8,051,424



62,352,058



9.49



6.17Fourth quarter


6,049,032



34,975,690



7.66



4.522009First quarter


4,318,138



17,103,184



5.29



2.97Second quarter


5,127,833



25,919,626



5.96



3.67Third quarter


4,519,462



25,896,652



6.78



4.96Fourth quarter


4,504,956



26,817,174



7.02



5.18Monthly Information for the Past 6 Months2009September


5,540,498



35,694,154



6.78



5.80October


5,556,260



34,655,655



7.02



5.44November


4,642,508



26,148,817



6.16



5.18December


3,322,354



19,848,345



6.43



5.412010January


5,118,605



31,814,948



6.59



5.81February (as of February 22, 2010)


5,126,795



30,994,039



6.45



5.73      110




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##### Table of Contents



Borsa
    Italiana (Milan)
  Average Daily Trading


Price RangesNumber of





VolumesCalendar Period

Shares


Capital


High


Low()


()


()Annual Information for the past five years2005


15,530,038



210,190,100



15.82



10.822006


10,316,084



141,689,828



16.55



11.332007


7,485,654



98,885,773



15.60



9.802008


7,194,358



52,370,415



9.90



4.522009


6,606,116



34,222,931



7.03



2.97Quarterly Information for the past two years2008First quarter


8,127,048



64,733,773



9.90



6.21Second quarter


8,234,557



62,311,404



8.69



6.55Third quarter


8,080,374



62,486,775



9.50



6.17Fourth quarter


4,293,847



24,952,098



7.66



4.522009First quarter


4,708,890



18,660,286



5.29



2.97Second quarter


7,575,169



38,304,696



5.95



3.67Third quarter


6,923,926



39,684,060



6.79



4.96Fourth quarter


7,216,727



42,888,549



7.03



5.15Monthly Information for the past 6 months2009September


9,419,477



60,734,216



6.78



5.78October


9,420,406



58,764,062



7.03



5.45November


6,560,369



36,977,051



6.11



5.15December


5,481,856



32,563,593



6.43



5.422010January


9,438,785



58,671,489



6.58



5.81February (as of February 22, 2010)


7,826,391



47,278,742



6.45



5.71      111




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##### Table of Contents



New York
    Stock Exchange
  Average Daily TradingVolumesNumber of





Price RangesCalendar Period

Shares


Capital


High


Low(US$)


(US$)


(US$)Annual Information for the past five years2005


1,087,913



18,288,128



19.47



13.962006


1,069,476



18,428,607



19.90



14.552007


1,823,514



32,857,113



20.84



14.222008


2,615,829



28,015,734



14.35



5.902009


1,707,480



12,411,885



10.28



3.73Quarterly Information for the past two years2008First quarter


2,820,614



33,476,984



14.35



9.88Second quarter


2,644,567



31,193,912



13.56



10.33Third quarter


2,836,884



32,893,674



13.74



9.75Fourth quarter


2,171,834



16,582,971



10.46



5.92009First quarter


1,780,595



9,166,855



7.15



3.73Second quarter


1,632,902



11,183,826



8.30



4.97Third quarter


1,483,681



11,785,948



9.99



6.89Fourth quarter


1,980,001



17,386,576



10.28



7.86Monthly Information for the past 6 months2009September


1,601,857



15,009,397



9.99



8.24October


2,199,882



20,174,914



10.28



7.93November


1,866,736



15,730,980



9.05



7.86December


1,863,090



16,233,438



9.46



8.232010January


2,687,037



23,781,694



9.5



8.1February (as of February 22, 2010)


1,867,142



15,549,559



8.77



7.87         Market
    Information
  Euronext
  General
   112




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##### Table of Contents



tm
    Euronext
    Paris
  Premier Marché Second Marché Nouveau
    Marché
  Premier Marché
  
    Compartment A comprises the companies with market
    capitalizations above 1 billion;
    Compartment B comprises the companies with market
    capitalizations from 150 million and up to and
    including 1 billion; and
    Compartment C comprises the companies with market
    capitalizations below 150 million.    Continu Fixing and/or Continu, Continu
    continu Autorité des
    marchés financiers AMF
  continu
 113




---



##### Table of Contents



continu
  Service à
    Réglement Différé date de liquidation
          Securities
    Trading in Italy
     114




---



##### Table of Contents



vis-à-vis
        Item 10.
    Additional
    Information  Memorandum
    and Articles of Association
  Applicable
    non-U.S.
    Regulations
  Applicable
    Dutch Legislation
      (Wet op het financieel
    toezicht)
  (Autoriteit Financiële
    Markten)
 115




---



##### Table of Contents



Ondernemingskamer
    Applicable
    French Legislation
    Article 223-20 Article 223-16
  Articles 241-1 241-6 Articles 611-1 632-1
    Premier, Second Nouveau Marché
    articles 231-1 237-13
  Applicable
    Italian Legislation
   116




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##### Table of Contents



Articles
    of Association
  Purposes
    of the Company (Article 2)
    Company
    and Trade Registry
  (Kamer van Koophandel en Fabrieken voor Amsterdam)
  Supervisory
    Board and Managing Board
    
    power to vote on proposals, arrangements or contracts in which
    such member is directly interested;
    power, in the absence of an independent quorum, to vote on
    compensation to themselves or any members of the Supervisory
    Board; or
    borrowing powers exercisable by the directors and how such
    borrowing powers can be varied.      Compensation
    of our Managing Board (Article 12)
   117




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##### Table of Contents



Compensation
    of our Supervisory Board (Article 23)
  and/or
  Information
    from our Managing Board to our Supervisory Board
    (Article 18)
      
    our operational and financial objectives;
    our strategy designed to achieve the objectives;
    the parameters to be applied in relation to our strategy,
    inter alia,regarding financial ratios; and
    corporate social responsibility issues that are relevant to the
    enterprise.    Adoption
    of Annual Accounts and Discharge of Management and Supervision
    Liability (Article 25)
      Distribution
    of Profits (Articles 37, 38, 39 and 40)
     118




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##### Table of Contents



Shareholders
    Meetings, Attendance at Shareholders Meetings and Voting
    Rights
  Notice
    Convening the Shareholders Meeting (Articles 25, 26,
    27, 28 and 29)
          Attendance
    at Shareholders Meetings and Voting Rights
    (Articles 6, 30, 31, 32, 33 and 34)
     119




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##### Table of Contents



inter alia,
            Authority
    of our Shareholders Meeting (Articles 12, 16, 19, 25,
    28, 32 and 41)
    (dochtermaatschappij)
 120




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##### Table of Contents



(dochtermaatschappij)
    Quorum
    and Majority (Articles 4, 13 and 32)
      Disclosure
    of Holdings under Dutch Law
           121




---



##### Table of Contents



Share
    Capital
            Issuance
    of Shares, Preemptive Rights, Preference Shares and Capital
    Reduction (Articles 4 and 5)
     122




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##### Table of Contents



and/or and/or
              Liquidation
    Rights (Articles 42 and 43)
    Acquisition of Shares in Our Own Share Capital
    (Article 5)
  paid-up called-up
    Limitations
    on Right to Hold or Vote Shares
   123




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##### Table of Contents



Material
    Contracts
  ST-NXP
    ST-Ericsson
    Exchange
    Controls
    Taxation
  Dutch
    Taxation
  The following is a general summary and the tax consequences
    as described here may not apply to a holder of common shares.
    Any potential investor should consult his tax adviser for more
    information about the tax consequences of acquiring, owning and
    disposing of common shares in his particular circumstances.
  Form 20-F.
  Form 20-F.
          Wet
    inkomstenbelasting 2001
  Taxes
    on income and capital gains
   124




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##### Table of Contents



(bestuurder) (commissaris)
  Wet inkomstenbelasting 2001)
  Wet op de vennootschapsbelasting
    1969)
    winstbewijzen
        Form 20-F.
    ondernemer
    voorkennis
   125




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##### Table of Contents



Wet
    inkomstenbelasting 2001
  Attribution
    rule
    Dividend
    withholding tax
      
    distributions in cash or in kind, deemed and constructive
    distributions and repayments of capital not recognized as
    paid-in for Dutch dividend withholding tax purposes;
    liquidation proceeds and proceeds of repurchase or redemption of
    shares in excess of the average capital recognized as paid-in
    for Dutch dividend withholding tax purposes;
    the par value of shares issued by us to a holder of common
    shares or an increase of the par value of shares, as the case
    may be, to the extent that it does not appear that a
    contribution, recognized for Dutch dividend withholding tax
    purposes, has been made or will be made; and
    partial repayment of capital, recognized as paid-in for Dutch
    dividend withholding tax purposes, if and to the extent that
    there are net profits (zuivere winst), unless
    (a) the general meeting of our shareholders has resolved in
    advance to make such repayment and (b) the par value of the
    shares concerned has been reduced by an equal amount by way of
    an amendment to our articles of association.  uiteindelijk gerechtigde Belastingregeling voor het Koninkrijk kortlopende genotsrechten op
    aandelen
           126




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##### Table of Contents



Wet op de vennootschapsbelasting 1969
  Wet op de vennootschapsbelasting 1969
    beleggingsinstelling Wet op
    de vennootschapsbelasting 1969
        
    3% of the dividends paid by us in respect of which Dutch
    dividend withholding tax is withheld; and
    3% of the qualifying profit distributions grossed up by the
    foreign tax withheld on such distributions received from foreign
    subsidiaries and branches prior to the distribution of the
    dividend by us during the current calendar year and the two
    preceding calendar years (to the extent such distributions have
    not been taken into account previously when applying this test).      Gift
    and inheritance taxes
    
    the donor is, or the deceased was, resident or deemed to be
    resident in the Netherlands for purposes of Dutch gift tax or
    Dutch inheritance tax, as applicable; or
    the donor made a gift of common shares, then became a resident
    or deemed resident of the Netherlands, and died as a resident or
    deemed resident of the Netherlands within 180 days of the
    date of the gift.  Other
    taxes and duties
   127




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##### Table of Contents



and/or
  United
    States Federal Income Taxation
    
    that is, for U.S. federal income tax purposes, (a) a
    citizen or individual resident of the United States, (b) a
    U.S. domestic corporation or a domestic entity taxable as a
    corporation, (c) an estate the income of which is subject
    to U.S. federal income taxation regardless of its source,
    or (d) a trust if a court within the United States can
    exercise primary supervision over the administration of the
    trust and one or more U.S. persons are authorized to
    control all substantial decisions of the trust;
    that owns, directly, indirectly or by attribution, less than 10%
    of our voting power or outstanding share capital;
    that holds the common shares as capital assets;
    whose functional currency for U.S. federal income tax
    purposes is the U.S. dollar;
    that is a resident of the United States and not also a resident
    of the Netherlands for purposes of the U.S./NL Income Tax Treaty;
    that is entitled, under the limitation on benefits
    provisions contained in the U.S./NL Income Tax Treaty, to the
    benefits of the U.S./NL Income Tax Treaty; and
    that does not have a permanent establishment or fixed base in
    the Netherlands.  mark-to-market
    Form 20-F,
  Dividends
  U.S.-source
 128




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##### Table of Contents



dollar-for-dollar
  non-U.S. corporation non-U.S. corporation non-U.S. corporation non-U.S. corporation
  Sale,
    Exchange or Other Disposition of Common Shares
  U.S.-source
  Passive
    Foreign Investment Company Status
    U.S.
    Information Reporting and Backup Withholding
   129




---



##### Table of Contents



Form W-9. Non-U.S. holders non-U.S. status Form W-8BEN) U.S.-related
  Documents
    on Display
  Form 20-F Form 20-F Form 20-F.
    1-800-SEC-0330 http://www.sec.gov
      Item 11.
    Quantitative
    and Qualitative Disclosures About Market Risk     130




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##### Table of Contents



available-for-sale other-than-temporary and/or
  available-for-sale
        Fair Value atDecember 31,Total


2010


2011


2012


2013


2014


Thereafter


2009Assets:Cash and cash equivalents

$
1,588


























$
1,588Average interest rate


0.27
%Current marketable securities

$
1,032


























$
1,032Average interest rate


0.42
%Non current marketable securities

$
42


























$
42Average interest rate


3.26
%Restricted Cash

$
250


























$
250Average interest rate


6.06
%Long-term debt:

$
2,492



176



1,063



119



836



114



184


$
2,459Average interest rate


1.18
%   131




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##### Table of Contents



Amounts inMillions ofU.S. DollarsLong-term debt by currency as of December 31, 2009:U.S. dollar


1,666Euro


826Total in U.S. dollars


2,492   Amounts inMillions ofU.S. DollarsLong-term debt by currency as of December 31, 2008:U.S. dollar


1,840Euro


837Total in U.S. dollars

$
2,677     FORWARD
    CONTRACTS AND CURRENCY OPTIONS AT DECEMBER 31, 2009
  Notional Amount


Average Rate


Fair ValueBuy

EUR

Sell

USD


1,669



1.4



4Buy

USD

Sell

CAD


8



1.1



0Buy

JPY

Sell

EUR


19



131.7



0Buy

INR

Sell

USD


28



46.9



0Buy

USD

Sell

JPY


31



90.5



0Buy

JPY

Sell

USD


3



92.1



0Buy

SGD

Sell

USD


96



1.4



0Buy

MYR

Sell

USD


11



3.4



0Buy

GBP

Sell

USD


39



1.6



0Buy

USD

Sell

GBP


14



1.6



0Buy

SEK

Sell

USD


84



7.3



2Buy

USD

Sell

SEK


4



7.2



0Buy

CZK

Sell

USD


1



18.3



0Buy

CHF

Sell

USD


34



1.0



0Buy

USD

Sell

CHF


12



1.0



0Buy

CNY

Sell

USD


8



6.8



0Buy

TWD

Sell

USD


4



32.3



0Buy

PHP

Sell

USD


1



46.2



0Buy

NOK

Sell

USD


5



5.8



0Buy

USD

Sell

NOK


1



5.8



02,072







(2
)  132




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##### Table of Contents



FORWARD
    CONTRACTS AND CURRENCY OPTIONS AT DECEMBER 31, 2008
  Notional Amount


Average Rate


Fair ValueBuy

EUR

Sell

USD


1,031



1.4



23Buy

USD

Sell

EUR


2



1.4



0Buy

USD

Sell

CAD


8



1.3



0Buy

JPY

Sell

EUR


3



120.7



0Buy

INR

Sell

USD


24



49.5



0Buy

USD

Sell

JPY


37



90.5



0Buy

SGD

Sell

USD


96



1.5



3Buy

MYR

Sell

USD


12



3.5



0Buy

GBP

Sell

USD


23



1.5



1Buy

SEK

Sell

USD


3



8.2



0Buy

CZK

Sell

USD


1



18.8



0Buy

CHF

Sell

USD


5



1.1



0Buy

USD

Sell

CHF


6



1.0



0Buy

CNY

Sell

USD


16



6.8



01,268







25   Item 12.
    Description
    of Securities Other Than Equity Securities    12.D.3
    Fees and Charges that a holder of our New York Shares May
    Have to Pay
      
    $5.00 (or less) per 100 New York Shares (or portion of 100 New
    York Shares) for the issuance of New York Shares, including
    issuances resulting from a distribution of shares or rights or
    other property, and cancellation of New York Shares for the
    purpose of withdrawal, including if the New York Share agreement
    terminates.
    Taxes and other governmental charges BNY Mellon or the custodian
    have to pay on any New York Shares or share underlying a New
    York Share, such as stock transfer, stamp duty or withholding
    taxes, as necessary.
    Any charges incurred by the New York Agent or its agents for
    servicing the deposited securities, as necessary.  12D.4
    Fees and Other Payments Made by the New York Agent to
    Us
  out-of-pocket
 133




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##### Table of Contents



PART II  Item 13.
    Defaults,
    Dividend Arrearages and Delinquencies    Item 14.
    Material
    Modifications to the Rights of Security Holders and Use of
    Proceeds    Item 15.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Form 20-F. Form 20-F,
  Form 20-F. Form 6-K Form 20-F.
  50-50%
  Form 20-F,
  Managements
    Report on Internal Control over Financial Reporting
     134




---



##### Table of Contents



Form 20-F.
  Attestation
    Report of the Registered Public Accounting Firm
    Changes
    in Internal Control over Financial Reporting
  Form 20-F
  Item 16A.
    Audit
    Committee Financial Expert  Form 20-F.
  Item 16B.
    Code
    of Ethics  Policy on
    Business Conduct and Ethics
      http://www.st.com.
  Item 16C.
    Principal
    Accountant Fees and Services   135




---



##### Table of Contents



Percentage of





Percentage of2009(1)


Total Fees


2008


Total FeesAudit FeesStatutory audit, certification, audit of individual and
    Consolidated Financial Statements

$
7,494,914



98
%

$
5,384,962



99
%Audit-related fees

$
155,867



2
%

$
15,360



0.2
%Non-audit FeesTax compliance fees

$
3,883






$
40,880



0.8
%Other fees










Total

$
7,654,614



100
%

$
5,441,202



100
%     (1)
    
    These figures include the fees paid for the audit of ST-Ericsson.    agreed-upon
    Audit
    Committee Pre-approval Policies and Procedures
          Rule 2-01 Regulation S-X.
 136




---



##### Table of Contents



Item 16D.
    Exemptions
    from the Listing Standards for Audit Committees    Item 16E.
    Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers  Maximum NumberTotal Number of


of Securities thatTotal Number of





Securities Purchased


May yet beSecurities


Average Price Paid


as Part of Publicly


Purchased UnderPeriod

Purchased


per Security


Announced Programs


the Programs2009-01-01
    to 2009-01-31














2009-02-01
    to 2009-02-28














2009-03-01
    to 2009-03-31














2009-04-01
    to 2009-04-30














2009-05-01
    to 2009-05-31














2009-06-01
    to 2009-06-30














2009-07-01
    to 2009-07-31














2009-08-01
    to 2009-08-31














2009-09-01
    to 2009-09-30














2009-10-01
    to 2009-10-31














2009-11-01
    to 2009-11-30














2009-12-01
    to 2009-12-31














     Item 16F.
    Change
    in Registrants Certifying Accountant    Item 16G.
    Corporate
    Governance    
    Our corporate organization under Dutch law that entrusts our
    management to a Managing Board acting under the supervision and
    control of a Supervisory Board totally independent from the
    Managing Board. Members of our Managing Board and of our
    Supervisory Board are appointed and dismissed by our
    shareholders.
    Our early adoption of policies on important issues such as
    business ethics and conflicts of
    interest and strict policies to comply with applicable
    regulatory requirements concerning financial reporting, insider
    trading and public disclosures.
    Our compliance with Dutch securities laws, because we are a
    company incorporated under the laws of the Netherlands, as well
    as our compliance with American, French and Italian securities
    laws, because our shares are listed in these jurisdictions, in
    addition to our compliance with the corporate, social and
    financial laws applicable to our subsidiaries in the countries
    in which we do business.
    Our broad-based activities in the field of corporate social
    responsibility, encompassing environmental, social, health,
    safety, educational and other related issues.
    Our implementation of a non-compliance reporting channel
    (managed by a third party) for issues regarding accounting,
    internal controls or auditing. A special ombudsperson has been
    appointed by our Supervisory Board, following the proposal of
    its Audit Committee, to collect all complaints, whatever their
    source, regarding accounting, internal accounting controls or
    auditing matters, as well as the confidential, anonymous
    submission by our employees of concerns regarding questionable
    accounting or auditing matters.
    Our PSE, which require us to integrate and execute all of our
    business activities, focusing on our employees, customers,
    shareholders and global business partners;
    Our Ethics Committee, whose mandate is to provide advice to
    management and employees about our PSE and other ethical
    issues; and 137




---



##### Table of Contents




    Our Chief Compliance Officer, who reports directly to the
    Managing Board, acts as Executive Secretary to our Supervisory
    Board and chairs our Ethics Committee.    and/or
        Form 20-F, Form 20-F and/or Form 20-F.
 138




---



##### Table of Contents



139




---



##### Table of Contents



PART III  Item 17.
    Financial
    Statements    Item 18.
    Financial
    Statements  PageFinancial Statements:Report of Independent Registered Public Accounting Firm for
    Years Ended December 31, 2009, 2008 and 2007


F-2Consolidated Statements of Income for the Years Ended
    December 31, 2009, 2008 and 2007


F-4Consolidated Balance Sheets at December 31, 2009 and 2008


F-5Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2009, 2008 and 2007


F-6Consolidated Statements of Changes in Equity for the Years Ended
    December 31, 2009, 2008 and 2007


F-7Notes to Consolidated Financial Statements


F-8Numonyx Holdings B.V. Consolidated Financial Statements for the
    Year Ended December 31, 2009 and the Nine Month Period
    Ended December 31, 2008


F-79Financial Statement Schedule:For each of the three years in the period ended
    December 31, Schedule II Valuation and Qualifying
    Accounts


S-1   Item 19.
    Exhibits  1.1

Amended and Related Articles of Associations of
    STMicroelectronics N.V., dated May 20, 2009, as adopted by the
    annual general meeting of Shareholders on May 20, 2009.4.1

Sale and Contribution Agreement between STMicroelectronics N.V.
    and NXP B.V. dated April 10, 2008 (incorporated by reference to
    Form 20-F of STMicroelectronics N.V. filed on May 13, 2009).4.2

Framework Agreement by and between STMicroelectronics N.V. and
    Telefonaktiebolaget L.M. Ericsson dated August 19, 2008
    (incorporated by reference to Form 20-F of STMicroelectronics
    N.V. filed on May 13, 2009).8.1

Subsidiaries and Equity Investments of the Company.12.1

Certification of Carlo Bozotti, President and Chief Executive
    Officer of STMicroelectronics N.V., pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002.12.2

Certification of Carlo Ferro, Executive Vice President and Chief
    Financial Officer of STMicroelectronics N.V., pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.13.1

Certification of Carlo Bozotti, President and Chief Executive
    Officer of STMicroelectronics N.V., and Carlo Ferro, Executive
    Vice President and Chief Financial Officer of STMicroelectronics
    N.V., pursuant to 18 U.S.C. §1350, as adopted by
    Section 906 of the Sarbanes-Oxley Act of 2002.15.1

Consent of Independent Registered Public Accounting Firm.15.2

Consent of Independent Registered Public Accounting Firm for
    Numonyx Holdings B.V.  140




---



##### Table of Contents



CERTAIN
    TERMS
   ADSL
    
    Asymmetrical digital subscriber lineASD
    
    application-specific discrete technologyASIC
    
    application-specific integrated circuitASSP
    
    application-specific standard productBCD
    
    bipolar, CMOS and DMOS process technologyBiCMOS
    
    bipolar and CMOS process technologyCAD
    
    computer aided designCMOS
    
    complementary metal-on silicon oxide semiconductorCODEC
    
    audio coding and decoding functionsCPE
    
    customer premises equipmentDMOS
    
    diffused metal-on silicon oxide semiconductorDRAMs
    
    dynamic random access memoryDSL
    
    digital subscriber lineDSP
    
    digital signal processorEMAS
    
    Eco-Management and Audit Scheme, the voluntary European
    Community scheme for companies performing industrial activities
    for the evaluation and improvement of environmental performanceEEPROM
    
    electrically erasable programmable read-only memoryEPROM
    
    erasable programmable read-only memoryEWS
    
    electrical wafer sortingG-bit
    
    gigabitGPRS
    
    global packet radio serviceGPS
    
    global positioning systemGSM
    
    global system for mobile communicationsGSM/GPRS
    
    European standard for mobile phonesHCMOS
    
    high-speed complementary metal-on silicon oxide semiconductorIC
    
    integrated circuitIGBT
    
    insulated gate bipolar transistorsIPAD
    
    integrated passive and active devicesISO
    
    International Organization for StandardizationK-bit
    
    kilobitLAN
    
    local area networkM-bit
    
    megabitMEMS
    
    micro-electro-mechanical systemMOS
    
    metal-on silicon oxide semiconductor process technologyMOSFET
    
    metal-on silicon oxide semiconductor field effect transistorMPEG
    
    motion picture experts groupODM
    
    original design manufacturerOEM
    
    original equipment manufacturer 141




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##### Table of Contents



OTP
    
    one-time programmablePDA
    
    personal digital assistantPFC
    
    power factor correctorPROM
    
    programmable read-only memoryPSM
    
    programmable system memoriesRAM
    
    random access memoryRF
    
    radio frequencyRISC
    
    reduced instruction set computingROM
    
    read-only memorySAM
    
    serviceable available marketSCR
    
    silicon controlled rectifierSLIC
    
    subscriber line interface cardSMPS
    
    switch-mode power supplySoC
    
    system-on-chipSRAM
    
    static random access memorySNVM
    
    serial nonvolatile memoriesTAM
    
    total available marketUSB
    
    universal serial busVIPpowertm

    
    vertical integration powerVLSI
    
    very large scale integrationXDSL
    
    digital subscriber line 142




---



##### Table of Contents



SIGNATURES
  Form 20-F
  STMICROELECTRONICS N.V.Date: March 10, 2010

By:

/s/  Carlo
    BozottiCarlo Bozotti
    President and Chief Executive Officer  143




---



##### 



CONSOLIDATED
    FINANCIAL STATEMENTS
    Index to Consolidated Financial Statements
   
 PageFinancial Statements:Report of Independent Registered Public
    Accounting Firm for Years Ended December 31, 2009, 2008 and
    2007


F-2Consolidated Statements of Income for the Years
    Ended December 31, 2009, 2008 and 2007


F-4Consolidated Balance Sheets at December 31,
    2009 and 2008


F-5Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2009, 2008 and 2007


F-6Consolidated Statements of Changes in
    Shareholders Equity for the Years Ended December 31,
    2009, 2008 and 2007


F-7Notes to Consolidated Financial Statements


F-8Numonyx Holdings B.V. Consolidated Financial
    Statements for the Year Ended December 31, 2009 and the
    Nine Month Period Ended December 31, 2008


F-79Financial Statement Schedule:For each of the three years in the period ended
    December 31, Schedule II Valuation and Qualifying
    Accounts


S-1   F-1




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
   To the
    Supervisory Board and Shareholders of STMicroelectronics N.V.:
  Form 20-F Internal Control - Integrated
    Framework Form 20-F.
     F-2




---



##### Table of Contents



ST-Ericsson ST-Ericsson
    /s/ Travis Randolph

/s/ Felix RothTravis Randolph

Felix Roth    F-3




---



##### Table of Contents



STMicroelectronics
    N.V.
  CONSOLIDATED
    STATEMENTS OF INCOME
 In
    millions of U.S. dollars, except per share amounts
  Twelve Months EndedDecember 31,


December 31,


December 31,2009


2008


2007Net sales


8,465



9,792



9,966Other revenues


45



50



35Net revenues


8,510



9,842



10,001Cost of sales


(5,884
)


(6,282
)


(6,465
)Gross profit


2,626



3,560



3,536Selling, general and administrative


(1,159
)


(1,187
)


(1,099
)Research and development


(2,365
)


(2,152
)


(1,802
)Other income and expenses, net


166



62



48Impairment, restructuring charges and other related closure costs


(291
)


(481
)


(1,228
)Operating loss


(1,023
)


(198
)


(545
)Other-than-temporary impairment charge and realized losses on
    financial assets


(140
)


(138
)


(46
)Interest income, net


9



51



83Earnings (loss) on equity investments


(337
)


(553
)


14Gain (loss) on financial assets


(8
)


15



Gain on convertible debt buyback


3







Loss before income taxes and noncontrolling interest


(1,496
)


(823
)


(494
)Income tax benefit


95



43



23Loss before noncontrolling interest


(1,401
)


(780
)


(471
)Net loss (income) attributable to noncontrolling interest


270



(6
)


(6
)Net loss attributable to parent company


(1,131
)


(786
)


(477
)Loss per share (Basic) attributable to parent company
    shareholders


(1.29
)


(0.88
)


(0.53
)Loss per share (Diluted) attributable to parent company
    shareholders


(1.29
)


(0.88
)


(0.53
)   The accompanying notes are an integral part of these audited
    consolidated financial statements
  
 F-4




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##### Table of Contents



STMicroelectronics
    N.V.
  CONSOLIDATED BALANCE SHEETS
 In million of U.S. dollars
  As atDecember 31,


December 31,2009


2008AssetsCurrent assets:Cash and cash equivalents


1,588



1,009Marketable securities


1,032



651Trade accounts receivable, net


1,367



1,064Inventories, net


1,275



1,840Deferred tax assets


298



252Assets held for sale


31



Other receivables and assets


753



685Total current assets


6,344



5,501Goodwill


1,071



958Other intangible assets, net


819



863Property, plant and equipment, net


4,081



4,739Long-term deferred tax assets


333



373Equity investments


273



510Restricted cash


250



250Non-current marketable securities


42



242Other investments and other non-current assets


442



4777,311



8,412Total assets


13,655



13,913Liabilities and shareholders equityCurrent liabilities:Bank overdrafts






20Current portion of long-term debt


176



123Trade accounts payable


883



847Other payables and accrued liabilities


1,049



996Dividends payable to shareholders


26



79Deferred tax liabilities


20



28Accrued income tax


126



125Total current liabilities


2,280



2,218Long-term debt


2,316



2,554Reserve for pension and termination indemnities


317



332Long-term deferred tax liabilities


37



27Other non-current liabilities


342



3503,012



3,263Total liabilities


5,292



5,481Commitment and contingenciesEquityParent company shareholders equityCommon stock (preferred stock: 540,000,000 shares
    authorized, not issued; common stock: Euro 1.04 nominal value,
    1,200,000,000 shares authorized, 910,319,305 shares
    issued, 878,333,566 shares outstanding)


1,156



1,156Capital surplus


2,481



2,324Accumulated result


2,723



4,064Accumulated other comprehensive income


1,164



1,094Treasury stock


(377
)


(482
)Total parent company shareholders equity


7,147



8,156Noncontrolling interest


1,216



276Total equity


8,363



8,432Total liabilities and equity


13,655



13,913   The accompanying notes are an integral part of these audited
    consolidated financial statements
  
 F-5




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##### Table of Contents



STMicroelectronics
    N.V.
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 In million of U.S. dollars
  Twelve Months EndedDecember 31,


December 31,


December 31,2009


2008


2007Cash flows from operating activities:Net loss


(1,401
)


(780
)


(471
)Items to reconcile net loss and cash flows from operating
    activities:Depreciation and amortization


1,367



1,366



1,413Amortization of discount on convertible debt


13



18



18Other-than-temporary impairment charge and realized losses on
    financial assets


140



138



46Unrealized gain on financial assets






(15
)


Loss on sale of financial assets


8







Gain on convertible debt buyback


(3
)






Other non-cash items


(64
)


159



109Deferred income tax


(24
)


(69
)


(148
)(Earnings) loss on equity investments


337



553



(14
)Impairment, restructuring charges and other related closure
    costs, net of cash payments


(4
)


371



1,173Changes in assets and liabilities:Trade receivables, net


(300
)


565



2Inventories, net


553



(299
)


24Trade payables


(54
)


(34
)


19Other assets and liabilities, net


248



(251
)


17Net cash from operating activities


816



1,722



2,188Cash flows from investing activities:Payment for purchase of tangible assets


(451
)


(983
)


(1,140
)Payment for purchase of marketable securities


(1,730
)






(708
)Proceeds from sale of marketable securities


1,371



351



101Proceeds from sale of non current marketable securities


75







Proceeds from matured short-term deposits










250Restricted cash










(32
)Disposal of financial instrument


26







Investment in intangible and financial assets


(138
)


(91
)


(208
)Proceeds received in business combinations


1,155







Payment for business acquisitions, net of cash and cash
    equivalents acquired


(18
)


(1,694
)


Net cash from (used in) investing activities


290



(2,417
)


(1,737
)Cash flows from financing activities:Proceeds from long-term debt


1



663



102Buyback of convertible debt


(103
)






Repayment of long-term debt


(134
)


(187
)


(125
)Increase (decrease) in short-term facilities


(20
)


20



Capital increase










2Repurchase of common stock






(313
)


Dividends paid to shareholders


(158
)


(240
)


(269
)Dividends paid to noncontrolling interests


(5
)


(10
)


(6
)Purchase of equity from noncontrolling interests


(92
)






Other financing activities


(2
)






Net cash used in financing activities


(513
)


(67
)


(296
)Effect of changes in exchange rates


(14
)


(84
)


41Net cash increase (decrease)


579



(846
)


196Cash and cash equivalents at beginning of the period


1,009



1,855



1,659Cash and cash equivalents at end of the period


1,588



1,009



1,855Supplemental cash information:Interest paid


34



63



52Income tax paid (refund)


(141
)


154



133   The accompanying notes are an integral part of these audited
    consolidated financial statements
  
 F-6




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##### Table of Contents



STMicroelectronics
    N.V.
  CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 In millions of U.S. dollars, except per share amounts
  AccumulatedOtherCommon


Capital


Treasury


Accumulated


Comprehensive


Noncontrolling


TotalStock


Surplus


Stock


Result


Income (Loss)


Interests


EquityBalance as of December 31, 2006


1,156



2,021



(332
)


6,086



816



52



9,799Cumulative effect of FIN 48 adoption














(8
)










(8
)Capital increase






2



















2Stock-based compensation expense






74



58



(58
)










74Comprehensive income (loss):Net income (loss)














(477
)






6



(471
)Other comprehensive income, net of tax


















504



1



505Comprehensive income


























34Dividends, $0.30 per share














(269
)






(6
)


(275
)Balance as of December 31, 2007


1,156



2,097



(274
)


5,274



1,320



53



9,626Repurchase of common stock










(313
)














(313
)Issuance of shares by subsidiary






152















246



398Stock-based compensation expense






75



105



(105
)










75Comprehensive income (loss):Net income (loss)














(786
)






6



(780
)Other comprehensive loss, net of tax


















(226
)


(19
)


(245
)Comprehensive loss


























(1,025
)Dividends, $0.36 per share














(319
)






(10
)


(329
)Balance as of December 31, 2008


1,156



2,324



(482
)


4,064



1,094



276



8,432Purchase of equity from noncontrolling interest






119















(211
)


(92
)Business combination






















1,411



1,411Stock-based compensation expense






38



105



(105
)










38Comprehensive income (loss):Net loss














(1,131
)






(270
)


(1,401
)Other comprehensive income, net of tax


















70



15



85Comprehensive loss


























(1,316
)Dividends, $0.12 per share














(105
)






(5
)


(110
)Balance as of December 31, 2009


1,156



2,481



(377
)


2,723



1,164



1,216



8,363   The accompanying notes are an integral part of these audited
    consolidated financial statements
 F-7




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
  1.
    THE
    COMPANY      2.
    ACCOUNTING
    POLICIES    2.1 
    Principles of consolidation
      2.2 
    Use of estimates
    
    sales returns and allowances,
    determination of best estimate of selling price for deliverables
    in multiple element sale arrangements,
    inventory reserves and normal manufacturing capacity thresholds
    to determine costs capitalized in inventory,
    accruals for litigation and claims,
    valuation at fair value of acquired assets including intangibles
    and assumed liabilities in a business combination, goodwill,
    investments and tangible assets as well as the impairment of
    their related carrying values,
    the assessment in each reporting period of events, which could
    trigger interim impairment testing,
    estimated value of the consideration to be received and used as
    fair value for asset groups classified as assets to be disposed
    of by sale and the assessment of probability to realize the sale,
    measurement of the fair value of debt and equity securities
    classified as available-for-sale, including debt securities, for
    which no observable market price is obtainable, F-8




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
   
    the assessment of credit losses and other-than-temporary
    impairment charges on financial assets,
    the valuation of noncontrolling interests, particularly in case
    of contribution in kind as part of a business combination,
    restructuring charges,
    assumptions used in calculating pension obligations,
    assumptions used to measure and recognize a liability for the
    fair value of the obligation the Company assumes at the
    inception of a guarantee,
    deferred income tax assets including required valuation
    allowances and liabilities as well as provisions for
    specifically identified income tax exposures and income tax
    uncertainties.    2.3 
    Foreign currency
        2.4 
    Financial assets
     F-9




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
      Held-for-trading
    financial assets
    Available-for-sale
    financial assets
        2.5 
    Derivative financial instruments and hedging
    activities
   F-10




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
          Derivative
    financial instruments classified as held for trading
    Cash Flow
    Hedges
       F-11




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
        Fair
    Value Hedges
    2.6 
    Revenue Recognition
    Net
    sales
     F-12




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
          Other
    revenues
    Funding
   F-13




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
        2.7 
    Advertising costs
    2.8 
    Research and development
    2.9 
    Start-up and
    phase-out costs
  Start-up start-up 6-months Start-up
  2.10 
    Income taxes
   F-14




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
          2.11 
    Earnings per share (EPS)
   F-15




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    2.12 
    Cash and cash equivalents
    2.13 Restricted
    cash
    2.14 
    Trade accounts receivable
      2.15 
    Inventories
      2.16 
    Goodwill
   F-16




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    2.17 
    Intangible assets
    Trademarks
    and technology licenses
    Contractual
    customer relationships
    Computer
    software
      2.18 
    Property, plant and equipment
      Buildings


33 yearsFacilities & leasehold improvements


5-10 yearsMachinery and equipment


3-10 yearsComputer and R&D equipment


3-6 yearsOther


2-5 years  F-17




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
  300-mm 300-mm 300-mm
          2.19 
    Investments
   F-18




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
         F-19




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
      2.20 
    Employee benefits
  (a)
    Pension
    obligations       F-20




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
  (b)
    Other
    post-retirement obligations    (c)
    Termination
    benefits      (d)
    Profit-sharing
    and bonus plans    (e)
    Other
    long-term employee benefits    (f)
    Share-based
    compensation  Nonvested
    shares
   F-21




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
      2.21 
    Long-term debt
  (a)
    Convertible
    debt      (b)
    Bank
    loans and senior bonds      2.22 
    Share capital
      2.23 
    Comprehensive income (loss)
   F-22




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
  2.24 
    Provisions
      2.25 
    Recent accounting pronouncements
  (a)
    Accounting
    pronouncements effective in 2009     F-23




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
               F-24




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
            (b)
    Accounting
    pronouncements expected to impact the Companys operations
    that are not yet effective and have not been adopted early by
    the Company   F-25




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
      3.
    MARKETABLE
    SECURITIES    Increase in

Other thanfair value

temporaryincluded in

impairmentOCI* for

charge





Foreignavailable-

and realized





exchange

Foreignfor-sale

losses





result

exchangeDecember 31,

marketable

on marketable





through

result

December 31,2008

securities

securities

Purchase

Sale

P&L

through OCI

2009In millions of U.S. dollarsAaa debt securities issued by the U.S. Treasury














1,060



(720
)










340Aaa debt securities issued by foreign governments














670



(543
)


14



3



144Senior debt Floating Rate Notes issued by financial institutions


651



8











(108
)






(3
)


548Auction Rate Securities


242



15



(140
)






(75
)










42Total


893



23



(140
)


1,730



(1,446
)


14







1,074     *
    
    Other Comprehensive Income   F-26




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
           F-27




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    4.
    TRADE
    ACCOUNTS RECEIVABLE, NET    December 31,


December 31,2009


2008Trade accounts receivable


1,386



1,089Less valuation allowance


(19
)


(25
)Total


1,367



1,064       5.
    INVENTORIES,
    NET    December 31,

December 31,2009

2008Raw materials


73



76Work-in-process


769



1,124Finished products


433



640Total


1,275



1,840     6.
    OTHER
    RECEIVABLES AND ASSETS    December 31,

December 31,2009

2008Receivables from government agencies


208



125Taxes and other government receivables


272



238Advances


79



83Prepayments


50



64Loans and deposits


14



18Interest receivable


10



16Financial instruments


36



37Held-for-trading
    cancellable swaps






34Other current assets


84



70Total


753



685   held-for-trading
 F-28




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    7.
    BUSINESS
    COMBINATIONS  Genesis
    Microchip Inc.
      NXP
    Wireless
    step-up
 F-29




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
  sub-contractors.
    Twelve Months EndedDecember 31,

December 31,2009

2008In millions of U.S. dollarsNet loss attributable to parent company


(1,131
)


(786
)Transfers (to) from noncontrolling interests:Increase in parent companys capital surplus for purchase
    of outstanding 20% of ST-NXP shares


119



Change from net loss attributable to parent company and
    transfers (to) from noncontrolling interests


(1,012
)


(786
)   Ericsson
    Mobile Platforms
      Consideration transferred:Noncontrolling interest in the Companys business
    contributed


1,105Cash received by the Company


(700
)Equity investment in JVD


(99
)Total consideration transferred


306Acquisition related costs included in SG&A


9Assets acquired and liabilities assumed:Cash in JVS


445Other current assets and liabilities  net


(47
)Customer relationships


48Property, plant and equipment


23Total identifiable net assets


469Noncontrolling interest in EMP business acquired


(306
)Goodwill


143Total


306    F-30




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    2009-2013,
    Twelve Months EndedDecember 31,


December 31,Pro forma Statements of Income (unaudited)

2009


2008In millions of U.S. dollarsNet revenues


8,536



10,485Gross profit


2,640



4,027Operating expenses


(3,688
)


(4,308
)Operating loss


(1,048
)


(281
)Net loss attributable to parent company


(1,113
)


(798
)Loss per share (basic)


(1.27
)


(0.89
)Loss per share (diluted)


(1.27
)


(0.89
)   Twelve Months EndedDecember 31,


December 31,Statements of Income, as reported

2009


2008In millions of U.S. dollarsNet revenues


8,510



9,842Gross profit


2,626



3,560Operating expenses


(3,649
)


(3,758
)Operating loss


(1,023
)


(198
)Net loss attributable to parent company


(1,131
)


(786
)Loss per share (basic)


(1.29
)


(0.88
)Loss per share (diluted)


(1.29
)


(0.88
)    F-31




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    8.
    GOODWILL      AutomotiveConsumerComputer and



Industrial andCommunication

Wireless

MultisegmentInfrastructure

Sector

Sector(ACCI)

(Wireless)

(IMS)

Other

TotalDecember 31, 2007


41



147



100



2



290Business Combination


15



669











684PGI goodwill impairment


(4
)










(2
)


(6
)Incard goodwill impairment










(7
)






(7
)Foreign currency translation


(1
)






(2
)






(3
)December 31, 2008


51



816



91







958Business Combination






131











131Vision goodwill impairment


(6
)














(6
)Foreign currency translation


(2
)


(11
)


1







(12
)December 31, 2009


43



936



92







1,071            F-32




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
   9.
    OTHER
    INTANGIBLE ASSETS    Gross


Accumulated


NetDecember 31, 2009

Cost


Amortization


CostTechnologies & licences


787



(501
)


286Contractual customer relationships


485



(70
)


415Purchased software


302



(226
)


76Other intangible assets


119



(77
)


42Total


1,693



(874
)


819   Gross


Accumulated


NetDecember 31, 2008

Cost


Amortization


CostTechnologies & licences


707



(365
)


342Contractual customer relationships


436



(22
)


414Purchased software


253



(200
)


53Other intangible assets


125



(71
)


54Total


1,521



(658
)


863           Year2010


2352011


2152012


1552013


582014


39Thereafter


117Total


819  F-33




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
   10.
    PROPERTY,
    PLANT AND EQUIPMENT    Gross


Accumulated


NetDecember 31, 2009

Cost


Depreciation


CostLand


96







96Buildings


1,004



(294
)


710Capital leases


79



(61
)


18Facilities & leasehold improvements


3,158



(2,332
)


826Machinery and equipment


13,765



(11,632
)


2,133Computer and R&D equipment


544



(458
)


86Other tangible assets


252



(146
)


106Construction in progress


106







106Total


19,004



(14,923
)


4,081   Gross


Accumulated


NetDecember 31, 2008

Cost


Depreciation


CostLand


89







89Buildings


1,001



(264
)


737Capital leases


68



(53
)


15Facilities & leasehold improvements


3,153



(2,115
)


1,038Machinery and equipment


13,700



(11,037
)


2,663Computer and R&D equipment


528



(440
)


88Other tangible assets


187



(127
)


60Construction in progress


49







49Total


18,775



(14,036
)


4,739     step-up
         F-34




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
   11.
    EQUITY
    INVESTMENTS    2009


2008Carrying


Ownership


Carrying


Ownershipvalue


Percentage


value


Percentage(In millions of USD, except percentages)Numonyx Holdings B.V


193



48.6
%


496



48.6
%ST-Ericsson AT Holding


67



49.9
%






Other equity investments


13







14Total


273







510   Numonyx
        other-than-temporary,
 F-35




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
      In million of US dollarsStatement of Income Information:Net sales


1,673Gross profit


289Net income (loss)


(352
)Financial Position Information:Current assets


1,322Noncurrent assets


1,220Current liabilities


348Noncurrent liabilities


894Net worth


1,300   ST-Ericsson
    AT Holding
  ST-Ericsson.
  Hynix-Numonyx
    Joint Venture
   F-36




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    12.
    OTHER
    INVESTMENTS AND OTHER NON-CURRENT ASSETS    December 31,


December 31,2009


2008Investments carried at cost


29



32Available-for-sale
    equity securities


10



5Long-term notes from equity investment


173



168Held-for-trading
    equity securities


7



7Long-term receivables related to funding


8



8Long-term receivables related to tax refund


170



206Debt issuance costs, net


4



7Prepaid for pension


2



1Deposits and other non-current assets


39



43Total


442



477   other-than-temporary other-than-temporary
         F-37




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
  available-for-sale paid-in-kind other-than-temporary
  13.
    OTHER
    PAYABLES AND ACCRUED LIABILITIES    December 31,

December 31,2009

2008Payroll


325



319Social charges


149



146Taxes other than income taxes


80



91Advances


47



51Payables to equity investments


30



7Obligations for capacity rights


21



29Financial instruments


34



5Provision for restructuring


180



197Pension and long-term benefits


30



21Royalties


35



14Acquisition-related expenses


0



17Others


118



99Total


1,049



996      F-38




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
   14.
    LONG-TERM
    DEBT    December 31,


December 31,2009


2008Bank loans:2.10% due 2009, floating interest rate at Libor + 0.40%






501.79% due 2010, floating interest rate at Libor + 1.0%


40



50Funding program loans:2.00% (weighted average), due 2009, fixed interest rate






40.90% (weighted average), due 2010, fixed interest rate


12



243.27% (weighted average), due 2012, fixed interest rate


6



100.50% (weighted average), due 2013, fixed interest rate


3



20.50% (weighted average), due 2014, fixed interest rate


8



100.50% (weighted average), due 2016, fixed interest rate


2



3.24% (weighted average), due 2017, fixed interest rate


67



720.27% due 2014, floating interest rate at Libor + 0.017%


100



1200.31% due 2015, floating interest rate at Libor + 0.026%


56



650.33% due 2016, floating interest rate at Libor + 0.052%


136



1360.57% due 2016, floating interest rate at Libor + 0.317%


180



1800.49% due 2016, floating interest rate at Libor + 0.213%


200



200Capital leases:5.39% (weighted average), due 2011, fixed interest rate


8



136.00% (weighted average), due 2014, fixed interest rate


9



5.29% (weighted average), due 2017, fixed interest rate


2



2Senior Bonds:1.12%, due 2013, floating interest rate at Euribor + 0.40%


720



703Convertible debt:-0.50% convertible bonds due 2013






1.50% convertible bonds due 2016


943



1,036Total long-term debt


2,492



2,677Less current portion


(176
)


(123
)Total long-term debt, less current portion


2,316



2,554     December 31,

December 31,2009

2008U.S. dollar


1,666



1,840Euro


826



837Other






Total


2,492



2,677    F-39




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    December 31,20092010


1762011


1,0632012


1192013


8362014


114Thereafter


184Total


2,492       th
  available-for-sale.
 F-40




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    Credit
    facilities
    15.
    POST-RETIREMENT
    AND OTHER LONG-TERM EMPLOYEES BENEFITS   F-41




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    Pension Benefits

Other Long-Term BenefitsDecember 31,

December 31,

December 31,

December 31,2009

2008

2009

2008Change in benefit obligation:Benefit obligation at beginning of year


587



590



42



42Service cost


22



20



4



4Interest cost


25



32



2



3Employee contributions


4



3







Benefits paid


(25
)


(35
)


(2
)


(8
)Effect of settlement


(16
)


(5
)


(3
)


Effect of curtailment


(2
)


(1
)






Actuarial (gain) loss


29



15



(1
)


1Transfer in


12



70



1



8Transfer out


(5
)


(53
)


(1
)


(5
)Plan amendment






(3
)






Foreign currency translation adjustment


23



(46
)


1



(3
)Benefit obligation at end of year


654



587



43



42Change in plan assets:Plan assets at fair value at beginning of year


262



278







Expected return on plan assets


16



18







Employer contributions


46



16







Employee contributions


5



2







Benefits paid


(13
)


(11
)






Effect of settlement


(14
)


(2
)






Actuarial gain (loss)


25



(59
)






Transfer in


7



54







Transfer out


(6
)


(5
)


Foreign currency translation adjustments


11



(28
)






Other






(1
)






Plan assets at fair value at end of year


339



262







Funded status


(315
)


(325
)


(43
)


(42
)Net amount recognized in the balance sheet consisted of the
    following:Non current assets


2



1







Current liabilities


(8
)


(5
)


(9
)


(2
)Non Current liabilities


(309
)


(321
)


(34
)


(40
)Net amount recognized


(315
)


(325
)


(43
)


(42
)     Actuarial


Prior service(gains)/losses


cost


TotalOther comprehensive income as at December 31, 2007


12



10



22Net amount generated/arising in current year


74



(2
)


72Amortization


(3
)


(2
)


(5
)Foreign currency translation adjustment


(9
)






(9
)Other comprehensive income as at December 31, 2008


74



6



80Net amount generated/arising in current year


4







4Amortization


(6
)


(2
)


(8
)Foreign currency translation adjustment


4







4Effect of curtailment/settlement


(4
)






(4
)Other comprehensive income as at December 31, 2009


72



4



76    F-42




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    Pension Benefits


Other Long-term BenefitsYear Ended


Year Ended


Year Ended


Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,


December 31,


December 31,


December 31,2009


2008


2007


2009


2008


2007Service cost


22



20



19



4



4



3Interest cost


25



32



28



2



3



2Expected return on plan assets


(16
)


(18
)


(15
)










Amortization of actuarial net loss (gain)


6



2



(3
)


(1
)


1



(4
)Amortization of prior service cost


2



2



2











31Effect of settlement


2



(3
)














Effect of curtailment


(2
)


(1
)


(1
)










Net periodic benefit cost


39



34



30



5



8



32     December 31,

December 31,

December 31,Assumptions

2009

2008

2007Discount rate


5.11
%


5.23
%


5.43
%Salary increase rate


3.08
%


3.46
%


3.24
%Expected long-term rate of return on funds for the pension
    expense of the year


5.28
%


5.69
%


6.34
%       Percentage of Plan Assets at DecemberAsset Category

2009

2008Equity securities


38
%


36
%Bonds securities remunerating regular interest


33
%


37
%Real estate


9
%


6
%Other


20
%


21
%Total


100
%


100
%  F-43




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    Quoted Prices in



SignificantActive Markets

Significant Other

Unobservablefor Identical

Observable Inputs

InputsTotal

Assets (Level 1)

(Level 2)

(Level 3)Cash and cash equivalents


27



27







Equity securities


128



111



17



Government debt securities


57



57







Corporate debt securities


56



52



4



Derivatives


22



16



6



Investment funds


1







1



Real estate


30



3



20



7Other (mainly insurance assets  contracts and
    reserves)


18



1



12



5TOTAL


339



267



60



12         Years

Pension Benefits

Other Long-term Benefits2010


41



32011


21



22012


28



22013


28



32014


37



3From 2015 to 2019


192



17     16.
    SHAREHOLDERS
    EQUITY  16.1 
    Outstanding shares
   F-44




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    16.2 
    Preference shares
      16.3 
    Treasury stock
        16.4 
    Stock option plans
    1996-1998,
  1999-2001,
 F-45




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
        Price Per ShareWeightedNumber of Shares


Range


AverageOutstanding at December 31, 2006


56,325,252


$
12.03 - $62.01


$
30.50Options granted:2001 Plan










Supervisory Board Plan










Options expired


(7,566,170
)

$
24.88


$
24.88Options forfeited


(1,861,960
)

$
16.73 - $62.01


$
31.19Options exercised


(131,487
)

$
17.08 - $19.18


$
18.90Outstanding at December 31, 2007


46,765,635


$
16.73 - $62.01


$
31.42Options granted:2001 Plan










Supervisory Board Plan










Options expired


(5,923,552
)

$
44.00 - $62.01


$
59.1Options forfeited


(1,410,650
)

$
16.73 - $62.01


$
27.9Options exercised










Outstanding at December 31, 2008


39,431,433


$
16.73 - $39.00


$
27.35Options granted:2001 Plan










Supervisory Board Plan










Options expired










Options forfeited


(1,487,601
)

$
17.08 - $39.00


$
27.69Options exercised










Outstanding at December 31, 2009


37,943,832


$
16.73 - $39.00


$
27.33     December 31,

December 31,

December 31,2009

2008

2007Options exercisable


37,943,832



39,431,433



46,765,635Weighted average exercise price

$
27.33


$
27.35


$
31,42    F-46




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    WeightedWeighted

averageOption price

average

remainingNumber of shares

range

exercise price

contractual life133,966


$
16.73 - $17.31


$
17.05



4.719,744,709


$
19.18 - $24.88


$
21.02



3.8167,350


$
25.90 - $29.70


$
26.96



3.317,897,807


$
31.09 - $39.00


$
34.37



1.8   16.5 
    Nonvested share awards
       F-47




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
         F-48




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
           F-49




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
     F-50




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    Nonvested Shares

Number of Shares


Exercise priceOutstanding as at December 31, 2007


10,510,030


$
0-1.04Awards granted:2007 Employee Plan


135,550


$
02008 Employee Plan


5,723,305


$
02008 Supervisory Board Plan


165,000



1.04Awards forfeited:2005 Employee Plan


(7,900
)

$
02006 Employee Plan


(62,162
)

$
02007 Employee Plan


(141,201
)

$
02008 Employee Plan


(56,185
)

$
02008 Supervisory Board Plan


(22,500
)


1.04Awards cancelled on failed vesting conditions:2007 Employee Plan


(962,703
)

$
0Awards vested:2005 Employee Plan


(903,381
)

$
02005 Supervisory Board Plan


(17,000
)


1.042006 Employee Plan


(1,937,618
)

$
02006 Supervisory Board Plan


(20,000
)


1.042007 Employee Plan


(1,181,630
)

$
02007 Supervisory Board Plan


(52,500
)


1.04Outstanding as at December 31, 2008


11,169,105


$
0-1.04Awards granted:2008 Employee Plan


50,400


$
02009 Employee Plan


5,583,540


$
02009 Supervisory Board Plan


165,000



1.04Awards forfeited:2006 Employee Plan


(8,507
)

$
02007 Employee Plan


(52,896
)

$
02008 Employee Plan


(73,057
)

$
02009 Employee Plan


(42,800
)

$
02009 Supervisory Board Plan


(7,500
)


1.04Awards cancelled on failed vesting conditions:2008 Employee Plan


(3,780,782
)

$
0Awards vested:2006 Employee Plan


(1,694,162
)

$
02006 Supervisory Board Plan


(14,000
)


1.042007 Employee Plan


(1,898,592
)

$
02007 Supervisory Board Plan


(45,000
)


1.042008 Employee Plan


(451,979
)

$
02008 Supervisory Board Plan


(47,500
)


1.04Outstanding as at December 31, 2009


8,851,270


$
0-1.04    F-51




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    2005Employee PlanHistorical share price volatility

27.74%Historical volatility of reference index

25.5%Three-year average dividend yield

0.55%Risk-free interest rates used

4.21%-4.33%                 December 31,


December 31,


December 31,2009


2008


2007Cost of sales


7



15



14Selling, general and administrative


19



37



37Research and development


11



24



22Loss on equity investment


1



2



Total pre-payroll tax and social contribution compensation


38



78



73  F-52




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
      16.6 
    Accumulated other comprehensive income (loss)
    Unrealized





Guidance onForeign


gain (loss) on


Unrealized


defined benefit


Accumulatedcurrency


available-for-sale


gain (loss) on


plans adoption


othertranslation


financial assets,


derivatives,


adjustment,


comprehensiveincome (loss)


net of tax


net of tax


net of tax


income (loss)Balance as of December 31, 2006


860



0



13



(57
)


816Other comprehensive income (loss)


467



(2
)


(1
)


40



504Balance as of December 31, 2007


1,327



(2
)


12



(17
)


1,320Other comprehensive income (loss)


(163
)


(14
)


(1
)


(48
)


(226
)Balance as of December 31, 2008


1,164



(16
)


11



(65
)


1,094Other comprehensive income (loss)


61



10



(5
)


4



70Balance as of December 31, 2009


1,224



(6
)


6



(60
)


1,164     16.7 
    Dividends
       F-53




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
   17.
    EARNINGS
    (LOSS) PER SHARE    Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2009


2008


2007Basic EPSNet income (loss)


(1,131
)


(786
)


(477
)Weighted average shares outstanding


876,928,190



891,955,940



898,731,154Basic EPS


(1.29
)


(0.88
)


(0.53
)Diluted EPSNet income (loss)


(1,131
)


(786
)


(477
)Net income (loss) adjusted


(1,131
)


(786
)


(477
)Weighted average shares outstanding


876,928,190



891,955,940



898,731,154Dilutive effect of stock options










Dilutive effect of nonvested shares










Dilutive effect of convertible debt










Number of shares used in calculating diluted EPS


876,928,190



891,955,940



898,731,154Diluted EPS


(1.29
)


(0.88
)


(0.53
)       18.
    OTHER
    INCOME AND EXPENSES, NET    Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2009


2008


2007Research and development funding


202



83



97Start-up and
    phase-out costs


(39
)


(17
)


(24
)Exchange gain, net


11



20



1Patent costs, net of gain from settlement


(5
)


(24
)


(28
)Gain on sale of long-lived assets, net


3



4



2Other, net


(6
)


(4
)


Total


166



62



48     Start-up start-up
  held-for-trading
 F-54




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
      19.
    IMPAIRMENT,
    RESTRUCTURING CHARGES AND OTHER RELATED CLOSURE COSTS    Total impairment,restructuringcharges and otherRestructuring


Other related


related closureYear Ended December 31, 2009

Impairment


charges


closure costs


costs2007 restructuring plan


(25
)


(69
)


(32
)


(126
)STE restructuring plan






(99
)


(1
)


(100
)Goodwill annual impairment test


(6
)










(6
)Other restructuring initiatives


(4
)


(53
)


(2
)


(59
)Total


(35
)


(221
)


(35
)


(291
)   Total impairment,restructuringcharges and otherRestructuring


Other related


related closureYear Ended December 31, 2008

Impairment


charges


closure costs


costs2007 restructuring plan


(77
)


(79
)


(8
)


(164
)FMG deconsolidation


(190
)


(2
)


(24
)


(216
)Goodwill annual impairment test


(13
)










(13
)Other restructuring initiatives


(10
)


(75
)


(3
)


(88
)Total


(290
)


(156
)


(35
)


(481
)   Total impairment,restructuringcharges and otherRestructuring


Other related


related closureYear Ended December 31, 2007

Impairment


charges


closure costs


costs2007 restructuring plan


(11
)


(62
)






(73
)FMG deconsolidation


(1,107
)






(5
)


(1,112
)Other restructuring initiatives


(5
)


(8
)


(30
)


(43
)Total


(1,123
)


(70
)


(35
)


(1,228
)   Impairment charges and disposal loss
    
    $25 million impairment linked to the 2007 restructuring
    plan. These impairment charges were triggered by the
    reclassification of the Companys long-lived assets of its
    manufacturing site in Carrollton (Texas) (previously designated
    for closure as part of the 2007 restructuring plan) on the line
    Assets held for sale on the consolidated balance
    sheets, pursuant to its decision to sell the facility. The
    reclassified assets are primarily property and other long-lived
    assets that satisfied all of the criteria required for the
    held-for-sale
    classification guidance. The carrying value of the assets to be
    sold totalled $51 million at the date of the
    reclassification, while fair value less costs to sell amounted
    to approximately $30 million, which generated an impairment
    charge of $21 million. Fair value less costs to sell was
    based on the consideration to be received upon the sale, which
    is expected to occur within one year. This fair value measure
    corresponds to a level 2 fair value hierarchy for
    nonfinancial assets measured at fair value on a nonrecurring
    basis, as described in Note 25. The Company also recorded
    impairment charges totalling F-55




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
  $4 million on certain specific equipment of the
    Companys manufacturing site in Phoenix (Arizona), for
    which no alternative future use existed within the Company. Fair
    value was estimated based on broker prices available for similar
    assets from past sales, which corresponds to a level 2 fair
    value hierarchy for nonfinancial assets measured at fair value
    on a nonrecurring basis, as described in Note 25.  held-for-use held-for-sale
  
    $6 million impairment on goodwill, pursuant to the interim
    impairment test on goodwill performed during the first and
    second quarter of 2009. As a result of this testing and a
    decline in the business outlook for the Vision business acquired
    in 1999, the Company recorded a $6 million impairment
    charge. The Vision business is included in the Automotive
    Consumer Computer and Communication infrastructure Product Group
    reporting segment and is dedicated to image sensors, camera
    modules and image processors for mobile phones.
    $3 million
    other-than-temporary
    impairment on an investment carried at cost based on the
    liquidation value of the investment.
    $1 million of other non-cash charges.    
    $190 million loss on FMG deconsolidation, which, together
    with the $1,107 million recorded in the year ended
    December 31, 2007, gives the total loss of the FMG
    deconsolidation of $1,296 million.
    $75 million impairment charge on long-lived assets of the
    Companys manufacturing site Phoenix (Arizona).
    $13 million impairment on goodwill, pursuant to the annual
    impairment test on goodwill and indefinite long-lived assets.
    $6 million
    other-than-temporary
    impairment on investments carried at cost.
    $4 million impairment on certain specific equipment with no
    alternative future use.    Restructuring
    charges and other related closure costs
       F-56




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
      
    $100 million for the STE restructuring plan for on-going
    termination benefits for involuntary leaves pursuant to the
    closure of certain locations in Europe, the Unites States of
    America and Asia.
    $101 million for the 2007 restructuring plan primarily
    related to closure costs and one-time termination benefits to be
    paid to employees who render services until the complete closure
    of the Carrollton (Texas) and Phoenix (Arizona) fabs.
    $55 million restructuring charges related to former
    committed restructuring initiatives. These restructuring charges
    consisted primarily of termination benefits in Asia and
    voluntary termination arrangements in certain European
    locations. Additionally, the Company paid $39 million
    related to the restructuring plan announced upon the integration
    of NXP wireless business, as described in Note 7. The
    amounts paid were charged against the liability recorded in 2008
    in the purchase price allocation.    
    $87 million for the 2007 restructuring plan primarily
    related to $75 million accrued one-time termination
    benefits for employees who provide services beyond the legal
    retention period until the complete closure of the manufacturing
    sites of Carrollton (Texas) and Phoenix (Arizona) and
    $12 million of other costs in Morocco and France.
    $26 million of restructuring charges related to FMG
    disposal consisting primarily in phase-out costs.
    $78 million of other restructuring initiatives, consisting
    primarily of $69 million in termination benefits for
    voluntary leaves and early retirement arrangements in certain
    European locations and $9 million final costs relating to
    the former restructuring plans of the Company.
    In connection with the integration of Genesis and of the
    wireless business from NXP, the Company launched in 2008 new
    restructuring initiatives aimed at rationalizing its operations
    and its worldwide workforce. The restructuring provisions
    related to the newly integrated businesses amounted to
    $46 million at acquisition date, of which $44 million
    recorded on the ST-NXP business combination. The latter
    represented estimated redundancy costs that will be incurred to
    achieve the rationalization of the combined organization as
    anticipated as part of the transaction. It covers approximately
    500 people including
    sub-contractors.
    The plan affects mainly employees in Belgium, China, Germany,
    India, the Netherlands, Switzerland and the United States.    
    $62 million for the 2007 restructuring plan
    $5 million of other related closure costs incurred as a
    result of the FMG deconsolidation
    $38 million on other restructuring initiatives (150 mm fab
    plan and the 2005 headcount reduction plan) F-57




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
     STE


2007





OtherRestructuring


Restructuring


FMG


restructuringplan


plan


disposal


initiatives


TotalProvision as at December 31, 2007






60



2



20



82Charges incurred in 2008






87



51



78



216Provision on business combinations














46



46Amounts paid






(34
)


(33
)


(43
)


(110
)Provision as at December 31, 2008






113



20



101



234Charges incurred in 2009


100



101







55



256Amounts paid


(17
)


(156
)


(20
)


(103
)


(296
)Provision as at December 31, 2009


83



58







53



194               20.
    INTEREST
    INCOME, NET    Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2009


2008


2007Income


59



132



156Expense


(50
)


(81
)


(73
)Total


9



51



83   available-for-sale available-for-sale
 F-58




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
   21.
    INCOME
    TAX    Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2009


2008


2007Loss recorded in The Netherlands


(376
)


(1,232
)


(54
)Income (loss) from foreign operations


(1,120
)


409



(440
)Loss before income tax expense


(1,496
)


(823
)


(494
)       Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2009


2008


2007The Netherlands taxes  current


4



(1
)


(4
)Foreign taxes  current


(54
)


(25
)


(121
)Current taxes


(50
)


(26
)


(125
)Foreign deferred taxes


145



69



148Income tax benefit


95



43



23     Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2009


2008


2007Income tax benefit computed at statutory rate


382



210



126Non-deductible, non-taxable and other permanent differences, net


(34
)






(20
)Loss on equity investment


(84
)


(139
)


Valuation allowance adjustments


(56
)


(18
)


(1
)Impact of prior years adjustments


21



48



(17
)Effects of change in enacted tax rate on deferred taxes


(7
)






(21
)Current year credits


76



66



63Other tax and credits


(4
)


2



(3
)Benefits from tax holidays


2



34



122Current year tax risk


(23
)


(31
)


Impact of FMG deconsolidation






(77
)


(113
)Earnings of subsidiaries taxed at different rates


(178
)


(52
)


(113
)Income tax benefit (expense)


95



43



23        F-59




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
        December 31,

December 31,2009

2008Tax loss carryforwards and investment credits


639



460Inventory valuation


34



29Impairment and restructuring charges


95



102Fixed asset depreciation in arrears


53



64Receivables for government funding


18



189Tax allowances granted on past capital investments


1,096



1,086Pension service costs


41



39Stock awards


11



26Commercial accruals


7



9Other temporary differences


62



45Total deferred tax assets


2,056



2,049Valuation allowances


(1,337
)


(1,283
)Deferred tax assets, net


719



766Accelerated fixed asset depreciation


(66
)


(86
)Acquired intangible assets


(31
)


(61
)Advances of government funding


(13
)


(17
)Other temporary differences


(35
)


(32
)Deferred tax liabilities


(145
)


(196
)Net deferred income tax asset


574



570       Year2010


92011


232012


572013


16Thereafter


534Total


639    F-60




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
          Balance at December 31, 2008

$
153Additions based on tax positions related to the current year


38Additions for tax positions of prior years


10Reductions for tax positions of prior years


(9
)Settlements


Reductions for lapse of statute of limitations


Foreign currency translation


1Balance at December 31, 2009

$
193     Balance at December 31, 2007

$
99Additions based on tax positions related to the current year


20Additions for tax positions of prior years


58Reductions for tax positions of prior years


(18
)Settlements


(3
)Reductions for lapse of statute of limitations


Foreign currency translation


(3
)Balance at December 31, 2008

$
153        F-61




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
   22.
    COMMITMENTS    Total


2010


2011


2012


2013


2014


ThereafterIn million US$Operating leases

$
481


$
131


$
98


$
68


$
43


$
26


$
115Purchase obligations


741



604



62



37



20



18



of which:Equipment purchase


267



267



















Foundry purchase


182



182



















Software, technology licenses and design


292



155



62



37



20



18



Other obligations


532



263



135



125



6



2



1Total


1,754



998



295



230



69



46



116           Other
    commitments
      23.
    CONTINGENCIES   F-62




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
   24.
    CLAIMS
    AND LEGAL PROCEEDINGS  and/or and/or
          25.
    FINANCIAL
    INSTRUMENTS AND RISK MANAGEMENT  25.1
    Financial risk factors
     F-63




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    Market
    risk
  Foreign
    exchange risk
        Derivative
    Instruments Not Designated as a Hedge
          Derivative
    Instruments Designated as a Hedge
   F-64




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
            Notional amount forhedge on R&D and other

Notional amount foroperating expense

hedge on manufacturingforecasted costs

forecasted costsIn millions of EurosForward contracts


388



272Currency options


120



160   Cash
    flow and fair value interest rate risk
       F-65




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
  held-for-trading
    As at December 31, 2009


As at December 31, 2008Balance sheet

Fair


Balance sheet

FairAsset Derivatives

location

value


location

valueIn millions of U.S. dollarsDerivatives designated as hedging instruments:Foreign exchange forward contracts

Other receivables and assets


24


Other receivables and assets


19Currency options

Other receivables and assets


9


Other receivables and assets


8Total derivatives designated as hedging instruments




33





27Derivatives not designated as hedging instruments:Foreign exchange forward contracts

Other receivables and assets


3


Other receivables and assets


10Currency options

Other receivables and assets





Other receivables and assets


Cancellable swaps







Other receivables and assets


34Total derivatives not designated as hedging instruments:




3





44Total Derivatives




36





71   F-66




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
  As at December 31, 2009


As at December 31, 2008Balance sheet

Fair


Balance sheet

FairLiability Derivatives

location

value


location

valueIn millions of U.S. dollarsDerivatives designated as hedging instruments:Foreign exchange forward contracts

Other payables and accrued liabilities


(19
)

Other payables and accrued liabilities


(3
)Currency options

Other payables and accrued liabilities


(8
)

Other payables and accrued liabilities


(1
)Total derivatives designated as hedging instruments




(27
)




(4
)Derivatives not designated as hedging instruments:Foreign exchange forward contracts

Other payables and accrued liabilities


(7
)

Other payables and accrued liabilities


(1
)Currency options

Other payables and accrued liabilities





Other payables and accrued liabilities


Total derivatives not designated as hedging instruments:




(7
)




(1
)Total Derivatives




(34
)




(5
)     Amount of gain(loss) recognized inLocation of gain (loss)

earnings on derivativerecognized in earnings

December 31,

December,on derivative

2009

2008In millions of U.S. dollarsCancellable swaps

Interest income, net


3



Other income and expenses, net






1Gain(loss) on financial assets


(8
)


15    F-67




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    Gain (loss) deferred in

Location of gainOCI on derivative

(loss) reclassified

Gain (loss) reclassified from OCI into earningsDecember 31,

December 31,

from OCI into

December 31,

December 31,2009

2008

earnings

2009

2008In millions of U.S. dollarsForeign exchange forward contracts


2



11


Cost of sales


31



6Foreign exchange forward contracts


1



2


Selling, general and administrative


7



(3
)Foreign exchange forward contracts


6



4


Research and development


38



(5
)Currency options


(1
)


1


Cost of sales


(2
)


(2
)Currency options









Selling, general and administrative


(1
)


1Currency options


(1
)





Research and development


(2
)


4Total


7



18





71



1       Gain (Loss) Recognized inEarningsLocation of Gain Recognized in

December 31,


December 31,Earnings

2009


2008In millions of U.S. dollarsForeign exchange forward contracts

Other income and expenses, net


20



(36
)   Credit
    risk
  and/or
      Liquidity
    risk
   F-68




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
      25.2
    Capital risk management
    debt-to-equity
  25.3 Fair
    value measurement
      Fair Value Measurements UsingQuoted Prices inActive Markets for

Significant Other

SignificantDecember 31,

Identical Assets

Observable Inputs

Unobservable Inputs2009

(Level 1)

(Level 2)

(Level 3)DescriptionIn millions of U.S. dollarsAvailable-for-sale
    marketable debt securities


1,032



1,021







11Available-for-sale
    non-current marketable debt securities


42











42Available-for-sale
    long term subordinated notes


173











173Available-for-sale
    equity securities


10



10







Equity securities held for trading


7



7







Derivative instruments designated as cash flow hedge


6



6







Derivative instruments not designated as hedge


(4
)


(4
)






  F-69




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    Fair ValueMeasurements UsingSignificantUnobservable Inputs(Level 3)In millions of U.S. dollarsJanuary 1, 2009


421Increase in fair value included in OCI for
    available-for-sale
    marketable securities


15Other-than-temporary
    impairment charge and losses on auction-rate securities included
    in earnings on the line
    Other-than-temporary
    impairment charge on financial assets


(140
)Paid-in-kind
    interest on Numonyx subordinated notes


16Change in fair value on Numonyx subordinated notes
     pre-tax


(11
)Settlements and redemptions


(75
)December 31, 2009


226Amount of total losses for the period included in earnings
    attributable to assets still held at the reporting date


72     Fair Value Measurements UsingQuoted Prices inActive Markets for

Significant Other

SignificantDecember 31,

Identical Assets

Observable Inputs

Unobservable Inputs2009

(Level 1)

(Level 2)

(Level 3)DescriptionIn millions of U.S. dollarsInvestments in equity securities carried at cost


29











29Numonyx equity investment


193











193Assets held for sale


31







31



Total


253







31



222     Fair ValueMeasurements UsingSignificantUnobservable Inputs(Level 3)In millions of U.S. dollarsJanuary 1, 2009


528Investments in equity securities carried at cost


(3
)Impairment in Numonyx equity


(200
)Equity share in Numonyx loss


(103
)December 31, 2009


222Amount of total losses for the period included in earnings
    attributable to assets still held at the reporting date


(303
)  F-70




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    2009

2008Carrying

Estimated Fair

Carrying

Estimated FairDescription

Amount

Value

Amount

ValueIn millions of U.S. dollarsLong-term debt Bank loans (including current portion)


829



829



938



937 Senior Bonds


720



712



703



580 Convertible debt


943



918



1,036



918Total


2,492



2,459



2,677



2,435     December 31, 2009Less than 12 months


More than 12 months


TotalFair


Unrealized


Fair


Unrealized


Fair


UnrealizedDescription

Values


Losses


Values


Losses


Values


LossesSenior debt floating rate notes


105



(2
)


209



(7
)


314



(9
)Long-term subordinated notes


173



(11
)










173



(11
)Total


278



(13
)


209



(7
)


487



(20
)     Marketable
    securities
      Foreign
    exchange forward contracts and currency options
    Cancellable
    swaps held for trading
    Equity
    securities classified as
    available-for-sale
    Equity
    securities held for trading
    Equity
    securities carried at cost
   F-71




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
  Numonyx
    equity investment
    Subordinated
    notes received in Numonyx transaction
    Long-term
    debt and current portion of long-term debt
  borrowing-by-borrowing
  Cash and
    cash equivalents, accounts receivable, bank overdrafts,
    short-term borrowings, and accounts payable
    26.
    RELATED
    PARTY TRANSACTIONS    December 31,

December 31,

December 31,2009

2008

2007Sales & other services


356



325



272Research and development expenses


(201
)


(63
)


(68
)Other purchases


(167
)


(77
)


(85
)Other income and expenses






(7
)


(11
)Accounts receivable


58



63



44Accounts payable


60



65



40Other assets










2        F-72




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
          27.
    SEGMENT
    INFORMATION              
    Automotive Consumer Computer and Communication Infrastructure
    (ACCI), comprised of four product lines:  
    Home Entertainment & Displays (HED),
    Automotive Products Group (APG);
    Computer and Communication Infrastructure
    (CCI); and F-73




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
   
    Imaging (IMG, starting January 1, 2009).  
    Industrial and Multisegment Sector (IMS), comprised
    of:  
    Analog, Power and Micro-Electro-Mechanical Systems
    (APM); and
    Microcontrollers, non-Flash, non-volatile Memory and Smart Card
    products (MMS).  
    Starting February 3, 2009, as a consequence of the merger
    of ST-NXP Wireless and Ericsson Mobile Platforms to create
    ST-Ericsson with Ericsson, the Wireless sector
    (Wireless) has been adjusted and is comprised of:  
    Wireless Multi Media (WMM);
    Connectivity & Peripherals (C&P);
    Cellular Systems (CS);
    Mobile Platforms (MP);  ST-Ericsson
  
    Other Wireless, in which the Company reports manufacturing
    margin, R&D revenues and other items related to the
    wireless business but outside the ST-Ericsson JVS.      
    2 GE TD-SCDMA & Connectivity;
    3G Multimedia & Platforms;
    LTE & 3G Modem Solutions;    
    Other Wireless, in which the Company reports manufacturing
    margin, R&D revenues and other items related to the
    wireless business but outside the ST-Ericsson JVS.    start-up
 F-74




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
    Net
    revenues by product segment
  December 31,


December 31,


December 31,2009


2008


2007In million of U.S dollarsNet revenues by product segment:Automotive Consumer Computer and Communication Infrastructure
    (ACCI)


3,198



4,129



3,944Industrial and Multisegment Sector (IMS)


2,641



3,329



3,138Wireless


2,585



2,030



1,495Flash Memory Group (FMG)






299



1,364Others(1)


86



55



60Total consolidated net revenues


8,510



9,842



10,001     (1)
    
    Includes revenues from sales of
    subsystems and other products not allocated to product segments.  Net
    revenues by product segment and by product line
  December 31,


December 31,


December 31,2009


2008


2007In million of U.S dollarsNet revenues by product lines:Automotive Products Group (APG)


1,051



1,460



1,419Computer and Communication Infrastructure (CCI)


932



1,077



1,123Home Entertainment & Displays (HED)


787



1,086



963Imaging (IMG)


417



499



439Others


11



7



Automotive Consumer Computer and Communication Infrastructure
    (ACCI)


3,198



4,129



3,944Analog, Power and Micro-Electro-Mechanical Systems
    (APM)


1,887



2,393



2,313Microcontrollers, non-Flash, non-volatile Memory and Smart Card
    products (MMS)


752



936



825Others


2







Industrial and Multisegment Sector (IMS)


2,641



3,329



3,138Cellular Systems
    (CS)(1)


748



321



Connectivity & Peripherals (C&P)


416



416



207Mobile Platforms (MP)


300







Wireless Multi Media (WMM)


1,110



1,293



1,288Others


11







Wireless


2,585



2,030



1,495Others


86



55



60Flash Memory Group (FMG)






299



1,364Total consolidated net revenues

$
8,510


$
9,842


$
10,001     (1)
    
    Cellular Systems includes the
    largest part of the revenues contributed by NXP Wireless and, as
    such, there are no comparable numbers available for 2007. F-75




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
   Operating
    income (loss) by product segment
  December 31,


December 31,


December 31,2009


2008


2007In million of U.S dollarsAutomotive Consumer Computer and Communication Infrastructure
    (ACCI)


(91
)


136



198Industrial and Multisegment Sector (IMS)


113



482



469Wireless


(356
)


(65
)


105Flash Memory Group (FMG)






16



(51
)Total operating income of product groups


(334
)


569



721Others(1)


(689
)


(767
)


(1,266
)Total consolidated operating loss


(1,023
)


(198
)


(545
)     (1)
    
    Operating loss of
    Others includes items such as unused capacity
    charges, impairment, restructuring charges and other related
    closure costs,
    start-up
    costs, and other unallocated expenses such as: strategic or
    special research and development programs, acquired In-Process
    R&D, certain corporate level operating expenses, certain
    patent claims and litigation, and other costs that are not
    allocated to the product segments, as well as operating earnings
    or losses of the Subsystems and Other Products Group, including,
    beginning in the second quarter of 2008, the remaining FMG
    costs. The 2008 Others also includes non-recurring
    purchase accounting items.    December 31,


December 31,


December 31,2009


2008


2007In million of U.S dollarsTotal operating income of product groups


(334
)


569



721Strategic R&D, other R&D programs and R&D funding


(22
)


(24
)


(20
)Phase-out and
    start-up
    costs


(39
)


(17
)


(24
)Impairment & restructuring charges


(291
)


(481
)


(1,228
)Unused capacity charges


(322
)


(57
)


Subsystems and Other Products Group






3



6Acquired In-Process R&D and other non-recurring purchase
    accounting(1)






(185
)


Seniority awards










(21
)Other non-allocated
    provisions(2)


(15
)


(6
)


21Total operating loss Others(3)


(689
)


(767
)


(1,266
)Total consolidated operating income (loss)


(1,023
)


(198
)


(545
)     (1)
    
    In 2008 non-recurring purchase
    accounting items were related to Genesis business combination
    with In-Process R&D charge for $21 million and to the
    Wireless business acquisition from NXP for $164 million,
    composed of $76 million as In-Process R&D charge and
    $88 million as inventory
    step-up
    charge.(2)
    
    Includes unallocated expenses such
    as certain corporate level operating expenses and other costs.(3)
    
    Operating loss of
    Others includes items such as unused capacity
    charges, impairment, restructuring charges and other related
    closure costs,
    start-up
    costs, and other unallocated expenses such as: strategic or
    special research and development programs, acquired In-Process
    R&D, certain corporate level operating expenses, certain
    patent claims and litigation, and other costs that are not
    allocated to the product segments, as well as operating earnings
    or losses of the Subsystems and Other Products Group, including,
    beginning in the second quarter of 2008, the remaining FMG costs.   F-76




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
  Net
    revenues
  December 31,


December 31,


December 31,2009


2008


2007In million of U.S dollarsThe Netherlands


1,553



2,737



3,123France


139



178



223Italy


121



185



220USA


798



1,032



1,027Singapore


4,697



4,939



4,795Japan


300



492



483Other countries


902



279



130Total


8,510



9,842



10,001   Long-lived
    assets
  December 31,


December 31,2009


2008In million of U.S dollarsThe Netherlands


24



14France


1,623



1,728Italy


850



1,000Other European countries


158



229USA


74



217Singapore


546



675Malaysia


264



306Other countries


542



570Total


4,081



4,739   Payment
    for purchase of tangible assets
  December 31,


December 31,


December 31,2009


2008


2007In million of U.S dollarsThe Netherlands


8



5



4France


242



462



396Italy


44



138



279Other European countries


29



66



53USA


6



2



47Singapore


27



106



180Malaysia


35



104



99Other countries


60



100



82Total


451



983



1,140  F-77




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions of U.S. dollars, except share and per share
    amounts)
  Depreciation
    and amortization
  December 31,


December 31,


December 31,2009


2008


2007In million of U.S. dollarsThe Netherlands


37



47



60France


430



497



432Italy


249



287



327Other European countries


186



93



56USA


62



81



102Singapore


207



195



284Malaysia


83



79



75Other countries


113



87



77Total


1,367



1,366



1,413   28.
    SUBSEQUENT
    EVENTS  30-year
 F-78




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  CONSOLIDATED
    FINANCIAL STATEMENTS
    FOR THE YEAR ENDED DECEMBER 31, 2009
    AND THE NINE MONTH PERIOD ENDED DECEMBER 31, 2008
 F-79




---



##### 



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
 PageReport of Independent Registered Public
    Accounting FirmConsolidated Statements of Operations


F-82Consolidated Statements of Comprehensive Loss


F-83Consolidated Balance Sheets


F-84Consolidated Statements of Cash Flows


F-85Consolidated Statements of Changes in
    Shareholders Equity


F-86    INDEX TO
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   
 PageThe Company


F-87Accounting Policies


F-88Equity Investments


F-93Trade Accounts Receivable, Net


F-94Inventories, Net


F-94Assets Held for Sale


F-94Other Receivables and Current Assets


F-95Intangible Assets


F-95Property, Plant and Equipment


F-96Other Investments and Non-Current Assets


F-97Other Payables and Accrued Liabilities


F-97Post-Retirement and Other Long Term Employee
    Benefits


F-97Share Based Compensation


F-100Long Term Debt and Debt Obligations to Related
    Parties


F-101Other Non Current Liabilities


F-102Shareholders Equity


F-102Other Income and Expenses, Net


F-103Impairment and Restructuring Charges


F-103Interest Income and Expenses


F-104Income Taxes


F-104Financial Instruments and Risk Management


F-107Commitments


F-108Related Party Transactions


F-108Subsequent Events


F-111   F-80




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm        Rolf Johner

Kenneth Postal    F-81




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
    CONSOLIDATED STATEMENTS OF OPERATIONS
    For the year ended December 31, 2009 and nine month period
    ended December 31, 2008
    In thousands of US dollars  2009


2008Net sales

$
1,760,703


$
1,623,189Other revenues


305



456Net revenues


1,761,008



1,623,645Cost of sales


(1,421,017
)


(1,280,463
)Gross profit


339,991



343,182Selling, general, and administrative expenses


(203,599
)


(223,984
)Research and development expenses


(273,002
)


(207,685
)Impairment and restructuring charges


(27,404
)


(74,350
)Other income and expenses, net


607



(37,547
)Operating loss


(163,407
)


(200,384
)Interest expense, net


(74,449
)


(57,060
)Income from equity investment


11,605



5,748Loss before income taxes


(226,251
)


(251,696
)Income tax expense


(20,529
)


(19,125
)Net loss

$
(246,780
)

$
(270,821
)   The accompanying notes are an integral part of these
    consolidated financial statements.
 F-82




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
    For the year ended December 31, 2009 and nine month period
    ended December 31, 2008
    In thousands of US dollars  2009


2008Net loss

$
(246,780
)

$
(270,821
)Other comprehensive (loss) / income, net of tax:Foreign currency translation adjustments


(463
)


6,720Defined benefit pension plans:Actuarial loss during the period


(2,916
)


(414
)Other comprehensive (loss) / income


(3,379
)


6,306Comprehensive Loss

$
(250,159
)

$
(264,515
)   The accompanying notes are an integral part of these
    consolidated financial statements.
 F-83




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
    CONSOLIDATED BALANCE SHEETS
    As of December 31, 2009 and December 31, 2008
    In thousands of US dollars  2009


2008AssetsCurrent assets:Cash and cash equivalents

$
546,979


$
476,810Restricted cash


4,972



4,991Trade accounts receivable, net


173,738



230,901Inventories


511,000



582,140Assets held for sale


78,000



Deferred tax assets


7,506



5,386Other receivables and assets


81,760



159,058Total current assets


1,403,955



1,459,286Intangible assets, net


149,641



208,322Property, plant and equipment, net


365,901



563,725Restricted cash


20,620



24,795Deferred tax assets


33,228



79,100Equity investment


314,529



303,371Other non-current assets


233,688



132,8191,117,607



1,312,132Total assets


2,521,562



2,771,418Liabilities and shareholders equityCurrent liabilities:Debt obligations to related parties


78,000



Current portion of long-term debt


941



Trade accounts payable


214,744



245,645Other payables and accrued liabilities


140,148



146,091Deferred tax liabilities


1,962



3,995Total current liabilities


435,795



395,731Long-term debt


451,616



450,000Debt obligations to related parties


296,297



341,822Pension liability


31,290



28,941Long-term deferred tax liabilities






3,640Other non-current liabilities


45,862



40,423Total Liabilities


1,260,860



1,260,557Commitments and contingencies (Note 22)Share Capital:Common stock (Ordinary shares: 250,000,000 shares
    authorized, 210,700,758 shares issued)


332,703



332,703Preferred stock (Preferred A shares: 14,204,545 shares
    authorized and issued, Preferred
    A-1 shares:
    142,045 shares authorized, none issued)


22,429



22,429Additional paid-in capital


1,420,244



1,420,2441,775,376



1,775,376Accumulated deficit


(517,601
)


(270,821
)Accumulated other comprehensive income


2,927



6,306Shareholders equity


1,260,702



1,510,861Total liabilities and shareholders equity

$
2,521,562


$
2,771,418   The accompanying notes are an integral part of these
    consolidated financial statements.
 F-84




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the year ended December 31, 2009 and nine month period
    ended December 31, 2008
    In thousands of US dollars  2009


2008Cash flows from operating activities:Net loss

$
(246,780
)

$
(270,821
)Adjustments to reconcile net loss to cash flows generated from /
    (used in) operating activities:Depreciation and amortization


243,048



171,349Amortization of debt guarantees


36,999



27,750Non-cash interest expense


32,475



22,734Changes in deferred income taxes


1,979



(18,446
)Income from equity investment


(11,605
)


(5,748
)Impairment and restructuring charges, net of cash payments


17,942



70,541Gain on sale of other non-current assets


(1,157
)


(2,770
)Other non-cash items


6,445



(8,965
)Changes in assets and liabilities:Trade accounts receivable, net


57,163



(230,901
)Inventories


71,140



(1,035
)Trade accounts payable


(30,901
)


58,052Other assets and liabilities, net


(24,075
)


171,738Net cash generated from / (used in) operating activities


152,673



(16,522
)Cash flows from investing activities:Payment for purchase of tangible assets


(66,907
)


(78,100
)Proceeds from sales of tangible assets


5,984



4,579Investments in intangible assets


(16,500
)


(48,600
)Changes in restricted cash


(4,194
)


(29,786
)Net cash used in investing activities


(81,617
)


(151,907
)Cash flows from financing activities:Proceeds from borrowings, net of issuance costs






444,410Proceeds from issuance of preference shares






131,155Proceeds from issuance of related party loan note






19,087Cash received as part of business combination






50,587Repayments of debt


(887
)


Net cash (used in) / provided by financing activities


(887
)


645,239Net cash increase

$
70,169


$
476,810Cash and cash equivalents at beginning of the period


476,810



Cash and cash equivalents at end of the period

$
546,979


$
476,810Supplemental disclosure of cash flow information:Interest paid


(5,500
)


(11,847
)Income taxes paid


(22,040
)


(12,300
)Supplemental disclosure of non-cash investing and financing
    activities:Upon formation, Numonyx Holdings B.V. acquired the contributed
    assets of IntelCorporations NOR flash business. Details of the
    transaction were as follows:Value of non cash assets contributed by Intel Corporation






771,313Common stock issued






(677,472
)Related party note issued






(144,428
)   The accompanying notes are an integral part of these
    consolidated financial statements.
 F-85




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.CONSOLIDATED STATEMENTS OF CHANGES IN
    SHAREHOLDERS EQUITYFor the year ended December 31, 2009 and nine month
    period ended December 31, 2008
    In thousands of US dollars
  AccumulatedCommon





Preferred


Additional





Other


TotalCommon


Stock


Preferred


Stock


Paid in


Accumulated


Comprehensive


ShareholdersStock


(Shares)


Stock


(Shares)


Capital


Deficit


income


EquityBalance at March 30, 2008

$
172,531



109,263,907










$
794,218










$
966,749Issuance of common stock


160,172



101,436,851











517,300











677,472Issuance of preferred stock









$
22,429



14,204,545



108,726











131,155Net loss





















$
(270,821
)






(270,821
)Other comprehensive income

























$
6,306



6,306Balance at December 31, 2008

$
332,703



210,700,758


$
22,429



14,204,545


$
1,420,244


$
(270,821
)

$
6,306


$
1,510,861Net loss






















(246,780
)






(246,780
)Other comprehensive loss


























(3,379
)


(3,379
)Balance at December 31, 2009

$
332,703



210,700,758


$
22,429



14,204,545


$
1,420,244


$
(517,601
)

$
2,927


$
1,260,702  F-86




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    THE
    COMPANY              2008At March 30, 2008 (In Millions)Cash

$
51Inventory


239Fixed assets


356Intangible assets


114Fair value of favorable operating lease


70Liabilities assumed


(8
)Total

$
822   (4-year (9-month (3-year 7-year
     F-87




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
   2.
    ACCOUNTING
    POLICIES    2.1 
    Principles of Consolidation
      2.2 
    Use of Estimates
    2.3 
    Foreign Currency
  non-U.S. currencies,
  2.4 
    Revenue Recognition
       F-88




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
              2.5 
    Other revenue
    2.6 
    Research and Development
    2.7 
    Property, Plant and Equipment
     F-89




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    Buildings

33 yearsFacilities and Leasehold Improvements

5-10 yearsMachinery and Equipment

6 yearsComputer and Research & Development Equipment

3-7 years           2.8 
    Inventories
      2.9 
    Income Taxes
   F-90




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  2.10 
    Cash and Cash Equivalents
    2.11 
    Restricted Cash
    2.12 
    Trade Accounts Receivable
      2.13 
    Intangible Assets
    Loan guarantees


4 yearsLoan arrangement fees


4 yearsContributed technology


3-7 yearsSoftware and licenses


3-5 years       2.14 
    Employee Benefits
  Pension
    Obligations
       F-91




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    Termination
    Benefits
    Stock
    Options
    2.15 
    Long Term Debt and Debt Obligations to Related Parties
    2.16 
    Share Capital
    2.17 
    Comprehensive Income (Loss)
    2.18 
    Recent Accounting Pronouncements
    No. 08-1, (EITF 08-1). EITF 08-1 605-25, EITF 00-21, EITF 08-1 EITF 08-1
 F-92




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    3.
    EQUITY
    INVESTMENT  Hynix
    Numonyx Semiconductor Ltd.
            2009


2008Operating results:Revenues

$
1,557,184


$
1,772,070Net profit


74,392



14,442Balance sheet:Assets

$
3,732,933


$
4,103,446Liabilities


1,691,583



2,168,779  F-93




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
   4.
    TRADE
    ACCOUNTS RECEIVABLE, NET    2009


2008Trade accounts receivable

$
175,993


$
233,340Less allowance for doubtful accounts


(2,255
)


(2,439
)Total

$
173,738


$
230,901     5.
    INVENTORIES    2009


2008Raw materials

$
3,612


$
2,712Work in process


403,337



478,728Finished goods


104,051



100,700Total

$
511,000


$
582,140   6.
    ASSETS
    HELD FOR SALE        2009


2008Property, plant and equipment

$
45,733



Long term deferred tax assets


36,114



Less impairment charge


(3,847
)


Total

$
78,000



    F-94




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
   7.
    OTHER
    RECEIVABLES AND CURRENT ASSETS    2009


2008Receivables from related parties

$
1,622


$
2,491Receivables from government agencies


54,460



65,716Prepayments, advances and other debtors


25,678



90,851Total

$
81,760


$
159,058     8.
    INTANGIBLE
    ASSETS    AccumulatedGross Value


Amortization


Net ValueLoan guarantees

$
148,000


$
(64,749
)

$
83,251Loan arrangement fees


6,750



(2,954
)


3,796Product and process technology


10,800



(3,752
)


7,048Software development and licenses


77,767



(22,221
)


55,546December 31, 2009

$
243,317


$
(93,676
)

$
149,641       AccumulatedGross Value


Amortization


Net ValueLoan guarantees

$
148,000


$
(27,750
)

$
120,250Loan arrangement fees


6,750



(1,266
)


5,484Product and process technology


10,800



(1,608
)


9,192Software development and licenses


76,256



(2,860
)


73,396Supply agreement


18,982



(18,982
)


December 31, 2008

$
260,788


$
(52,466
)

$
208,322      F-95




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
          AmortizationYear

Expense2010

$
64,0002011


60,0002012


15,0002013


5,0002014


4,000Total

$
148,000   9.
    PROPERTY,
    PLANT, AND EQUIPMENT    2009


2008Land

$
570


$
2,515Buildings, facilities and leasehold improvements


56,967



89,582Machinery and Equipment


637,602



597,187Computer and R&D Equipment


18,938



16,951Other Tangible Assets


3,046



2,123Construction in progress


7,276



2,000Total Gross Cost

$
724,399


$
710,358Total Accumulated Depreciation

$
(358,498
)

$
(146,633
)Total Net Cost

$
365,901


$
563,725        F-96




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
   10.
    OTHER
    INVESTMENTS AND NON-CURRENT ASSETS  2009


2008Payments for additional equity investment

$
100,000


$
Fair value of the favorable operating lease


64,511



67,420Long term receivable related to tax refund


42,128



40,423Related party receivable


24,048



24,527Deposits


3,001



449Total

$
233,688


$
132,819             11.
    OTHER
    PAYABLES AND ACCRUED LIABILITIES  2009


2008Taxes other than income tax

$
12,327


$
33,360Salaries, wages and social charges


66,960



37,747Provision for restructuring


4,041



8,541Deferred income on shipments to distributors


12,649



4,525Current portion of pension liability


2,268



2,155Accrued income tax


9,350



13,035Other accrued liabilities


32,553



46,728Total

$
140,148


$
146,091     12.
    POST-RETIREMENT
    AND OTHER LONG-TERM EMPLOYEE BENEFITS     F-97




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
      Funding
    Policy
    Benefit
    Obligation and Plan Assets
    2009


2008Change in projected benefit obligation:Benefit obligation at beginning of period

$
60,165


$
30,175Service cost


5,018



4,149Interest cost


3,143



2,703Plan participant contributions


397



278Actuarial (gain)/loss


3,521



(119
)Benefits paid


(6,305
)


(5,375
)Benefit obligation of acquired business






38,203Currency exchange impact


5,138



(9,849
)Other


(89
)


Ending projected benefit obligation

$
70,988


$
60,165   2009


2008Change in plan assets:Fair value of the assets at beginning of the period

$
29,069


$
Actual return on plan assets


3,184



176Employer contributions


7,977



7,925Plan participants contributions


397



278Benefits paid


(6,305
)


(5,375
)Plan assets of acquired business






31,161Currency impact


1,486



(5,096
)Other


1,622



Ending fair value of plan assets

$
37,430


$
29,069  F-98




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    2009


2008Current liabilities

$
2,268


$
2,155Non-current liabilities


31,290



28,941Total

$
33,558


$
31,096     2009


2008Net actuarial loss

$
(2,916
)

$
(414
)Total

$
(3,327
)

$
(417
)       2009


2008Net actuarial loss at beginning of the period

$
(417
)

$
Amortization of actuarial loss


370



Current year actuarial loss


(3,280
)


(417
)Total

$
(3,327
)

$
(417
)     2009


2008Plans with accumulated benefit obligations in excess of plan
    assets:Accumulated benefit obligations

$
69,420


$
56,950Fair value of plan assets

$
37,430


$
28,863Plans with projected benefit obligations in excess of plan
    assets:Projected benefit obligations

$
70,988


$
60,165Fair value of plan assets

$
37,430


$
29,069   Assumptions
    2009


2008Discount rate


5.09
%


5.19
%Average increase in compensation


3.90
%


3.24
%     2009


2008Discount rate


5.19
%


5.64
%Expected long term rate on plan assets


4.88
%


5.35
%Average increase in compensation


3.24
%


4.30
%    F-99




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Net
    Periodic Benefit Cost
    2009


2008Service cost

$
5,018


$
4,149Interest cost


3,143



2,703Expected return on plan assets


(1,581
)


(1,322
)Other


(632
)


678Net periodic pension cost

$
5,948


$
6,208   Plan
    Assets
      Quoted Pricesin ActiveMarkets for


Significant


SignificantIdentical


Observable


UnobservableAssets


Inputs


InputsAsset Category

Total


(Level 1)


(Level 2)


(Level 3)Insurance contracts

$
37,430






$
37,430



Total

$
37,430






$
37,430



   Funding
    Expectations
    Estimated
    Future Benefit Payments
    Years

Pension Benefits2010


4,1922011


4,9092012


4,6102013


5,2252014


5,628From 2015 to 2019


28,324   13.
    SHARE
    BASED COMPENSATION   F-100




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
        Weighted(In thousands, except weighted average fair value amounts)

Number of Shares


Average Fair ValueAs at December 31, 2008





$
Granted


11,180



2.83Vested






Forfeited


(468
)


2.83As at December 31, 2009


10,712


$
2.83Expected to vest as of December 31, 2009


10,712


$
2.83   14.
    LONG-TERM
    DEBT AND DEBT OBLIGATIONS TO RELATED PARTIES  Debt
    obligations to related parties
        Debt
    obligations to third parties
    2009


2008Bank loan

$
450,000


$
450,000Finance lease obligations


1,616



Total

$
451,616


$
450,000    F-101




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
            2009


20082010

$
78,941



2011


1,077



2012


450,539



450,0002013






2014






Thereafter


296,297



341,822Total

$
826,854


$
791,822   15.
    OTHER
    NON-CURRENT LIABILITIES  2009


2008Related party payable

$
42,489


$
40,423Other


3,373



Total

$
45,862


$
40,423     16.
    SHAREHOLDERS
    EQUITY  Outstanding
    Shares
    
    250,000,000 ordinary shares of one Euro each;
    14,204,545 convertible preferred shares A of one
    Euro each; and
    142,045 preferred shares A-1 of one eurocent (EUR
    0.01) each.    Preference
    Shares
   F-102




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##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
      17.
    OTHER
    INCOME AND EXPENSES, NET    2009


2008Start up costs

$



$
39,433Foreign exchange gains


(1,777
)


(986
)Gain on sale of other non-current assets, net


(1,157
)


(2,770
)Other


2,327



1,870Total

$
(607
)

$
37,547     18.
    IMPAIRMENT
    AND RESTRUCTURING CHARGES    2009


2008Impairment charges

$
18,703


$
62,000Restructuring charges


8,701



12,350Total

$
27,404


$
74,350            F-103




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##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    2009


2008Provision as at January 1, 2009

$
8,541


$
Charges incurred during the period


8,701



12,350Change in estimate related to reduction in force


(3,739
)


Amounts paid


(9,462
)


(3,809
)Provision as at December 31, 2009

$
4,041


$
8,541   19.
    INTEREST
    INCOME AND EXPENSES    2009


2008Amortization of loan guarantees

$
36,999


$
27,750Interest on debt obligations to related parties


32,475



22,734Interest on long-term debt


5,488



11,847Other interest


827



1,266Total interest expense


75,789



63,597Interest income


1,340



6,537Total interest expense, net

$
74,449


$
57,060   20.
    INCOME
    TAXES    2009


2008Current:Netherlands

$



$
Foreign


20,800



22,229Total current


20,800



22,229Deferred:Netherlands






Foreign


(271
)


(3,104
)Total deferred


(271
)


(3,104
)Total provision for income taxes

$
20,529


$
19,125    F-104




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##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    2009


2008Provision computed at Dutch statutory rate

$
(57,694
)

$
(64,182
)Foreign rate differential


(2,040
)


171Permanent differences


463



3,534Research and development tax credits


(2,055
)


(3,427
)Current year losses not benefited


78,319



84,184Others


3,536



(1,155
)Provision for income taxes

$
20,529


$
19,125Effective tax rate


(9.1
)%


(7.6
)%     2009


2008Deferred tax assets:Accrued compensation

$
2,820


$
5,106Other reserves and accruals






658Accounts receivable


157



Fixed assets


60,438



118,280Inventory


4,854



Unrealized foreign exchange loss


182



660Research and development credit carryover


2,618



987Net operating loss carryover


99,850



96,678Others


1,607



5,332Total deferred tax assets


172,526



227,701Less: valuation allowance


(129,626
)


(142,229
)Net deferred tax assets


42,900



85,472Deferred tax liabilities:Accrued compensation


(1,643
)


Fixed assets


(2
)


(3,640
)Inventory


(169
)


(1,776
)Accounts receivable


(352
)


(3,205
)Unrealized foreign exchange gain


(822
)


Others


(1,140
)


Total deferred tax liabilities


(4,128
)


(8,621
)Total net deferred tax assets

$
38,772


$
76,851      F-105




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
        Expires by:

2009


20082010

$



$
2011


23,768



2012


1,937



2013






48,0002014






After 2014


463,897



453,000Total

$
489,602


$
501,000Unrecognized tax credits


436



     Unrecognized
    Tax Benefits
    2009


2008Beginning of the year

$
2,369


$
Gross amount of the decrease in unrecognized tax benefits of tax
    positions taken during a prior year


(629
)


Gross amount of the increases in unrecognized tax benefits as a
    result of tax positions taken during the current year


3,460



2,369End of year

$
5,200


$
2,369        F-106




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
      21.
    FINANCIAL
    INSTRUMENTS AND RISK MANAGEMENT  Financial
    Risk Factors
        Foreign
    exchange risk
      Interest
    rate risk
   F-107




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Credit
    risk
  and/or
      Liquidity
    risk
    22.
    COMMITMENTS    Total


2010


2011


2012


2013


2014


ThereafterOperating Leases

$
63,739


$
8,032


$
7,654


$
6,405


$
6,380


$
5,147


$
30,121Purchase Commitments


486,556



320,608



54,631



53,623



32,125



25,569



of which:Equipment and other asset purchases


29,060



28,762



298















Transition Service and Supply Agreement Fees


2,988



2,988



















Other operational expenses


454,508



288,858



54,333



53,623



32,125



25,569



Total

$
550,295


$
328,640


$
62,285


$
60,028


$
38,505


$
30,716


$
30,121       23.
    RELATED
    PARTY TRANSACTIONS     F-108




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##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    Intel:
  Transactions
    during the year ended December 31, 2009 and period ended
    December 31, 2008:
  2009


2008Net Sales to Intel

$
487


$
664Supply
    Agreement(1)


96,834



141,596Service
    Agreement(2)


14,664



28,561Transition Service Agreement
    Fees(3)


39,814



49,664Period
    Costs(4)


289,998



413,164     (1)
    
    During 2008 and 2009, Numonyx
    purchased wafers from Intels facility in Ireland. These
    costs are recorded within cost of sales. This supply agreement
    ended during 2009.(2)
    
    Intels Pudong facility
    performs research and development and assembly/test services for
    Numonyx. These costs are primarily recorded within cost of sales
    and research and development expenses. This service agreement
    substantially ended during 2009.(3)
    
    These expenses include supply
    chain, procurement, site manufacturing, information technology,
    human resource, and finance and accounting services. These costs
    are primarily recorded within cost of sales and selling, general
    and administrative expenses. The transition service agreement
    substantially ended in 2009.(4)
    
    Intel incurs facility-related
    expenses on Numonyx behalf for the Israel and Philippines
    sites. These costs are recorded primarily within cost of sales.
    These costs substantially ended during 2009.  Balances
    as at December 31, 2009 and December 31,
    2008:
  2009

2008Trade Accounts Receivable from Intel,
    net(1)

$
8,686


$
80,105Prepaid operating lease with
    Intel(2)


64,511



67,420Accounts payable to
    Intel(3)


37,586



149,188Other receivables from Intel


1,589



4,700Other accrued liabilities to Intel






5,717     (1)
    
    Trade accounts receivable from
    Intel, net represents monies outstanding from customers to
    Intel, and therefore not yet remitted to Numonyx, relating to
    revenues generated by Intel on behalf of Numonyx.(2)
    
    See Note 10, Other
    Investments and Non Current assets for an explanation of
    the prepaid operating lease.(3)
    
    Accounts payable and other accrued
    liabilities to Intel relate to amounts payable by Numonyx for
    supply agreement, service agreement and other services provided
    by Intel under the Transition Services Agreement.    STM:
  Transactions
    during the year ended December 31, 2009 and period ended
    December 31, 2008:
  2009

2008Transition Services Agreement
    Fees(1)

$
10,136


$
29,108Cost sharing
    arrangement(2)


29,669



54,879Period
    costs(3)


16,198



  F-109




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##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (1)
    
    These expenses include supply
    chain, procurement, information technology, human resource, and
    finance and accounting services provided by STM to Numonyx.
    These costs are primarily recorded within cost of sales and
    selling, general and administrative expenses. The transition
    services agreement substantially ended during 2009.(2)
    
    The cost sharing arrangement is an
    agreement with STM in relation to the Companys facility in
    Agrate, Italy, under which facilities and certain costs are
    shared between STM and Numonyx. The number disclosed above is
    the net costs paid by Numonyx to STM during the period.(3)
    
    These costs relate primarily to
    utilities costs at shared manufacturing facilities. The costs
    incurred by Numonyx as disclosed above are net of recharges made
    by Numonyx to STM and are primarily recorded within cost of
    sales and selling, general and administrative expenses. Period
    costs in 2008 are included within Transition Services Agreement
    Fees in the table above.  Balances
    as at December 31, 2009 and December 31,
    2008:
  2009


2008Trade accounts receivable from STM, net

$



$
111,682Other current receivables from
    STM(2)


1,622



13,200Other long term receivable from
    STM(1)


24,048



24,527Accounts payable to
    STM(3)


5,400



9,890Other long term payable to
    STM(4)


42,489



40,423     (1)

    
    The long term receivable from STM relates to the end of
    employment fund in Italy (see Note 10, Other Investments
    and Non-Current Assets).(2)

    
    Other current receivables from STM relate to non-trade
    receivables.(3)

    
    Accounts payable to STM relate to Transition Services Agreements
    fees and the Cost Sharing Arrangement in Italy.(4)

    
    The long term payable to STM relates to a tax refund in Italy
    (see Note 10, Other Investments and Non-Current
    Assets and Note 15, Other Non Current
    Liabilities.    Francisco
    Partners:
    Hynix
    Numonyx Semiconductor Ltd.:
    Transactions
    during the year ended December 31, 2009 and period ended
    December 31, 2008:
  2009

2008Purchases of semi-finished product

$
268,000


$
77,470   Balances
    as at December 31,2009 and December 31,2008:
  2009

2008Payments for additional equity interest

$
100,000


$
50,000Accounts payable to Hynix Numonyx Semiconductor Ltd.


22,680



9,635Other accrued liabilities to Hynix Numonyx Semiconductor Ltd


11,113



4,053  F-110




---



##### Table of Contents



NUMONYX
    HOLDINGS B.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
   24.
    SUBSEQUENT
    EVENTS   F-111




---



##### Table of Contents



STMICROELECTRONICS
    N.V.
  VALUATION
    AND QUALIFYING ACCOUNTS
  Balance at



Charged to



BalanceValuation and Qualifying Accounts Deducted

Beginning

Translation

Costs and

Additions/

at End ofFrom the Related Asset Accounts

of Period

Adjustment

Expenses

(Deductions)

Period(Currencymillions of U.S. dollars)2009Inventories


72







102



(124
)


50Accounts Receivable


25







2



(8
)


19Deferred Tax Assets


1,283



6



79



(31
)


1,3372008Inventories


39







108



(75
)


72Accounts Receivable


21







1



3



25Deferred Tax Assets


1,123



(6
)


170



(4
)


1,2832007Inventories


47







72



(80
)


39Accounts Receivable


31







1



(11
)


21Deferred Tax Assets


1,039



6



79



(1
)


1,123  S-1