STMicro weighs Crolles fab expansion as AI optics demand rises, CEO says

By Nathan Vifflin

June 2 (Reuters) - STMicroelectronics will likely decide on a further expansion of its Crolles chipmaking site in France by the end of 2026, as demand for silicon photonics used in AI data centres accelerates, its chief executive said on Tuesday.

CEO Jean-Marc Chery, speaking at a conference in Geneva, Switzerland hosted by BNP Paribas, said the expected shift towards so-called near-package optics, where optical engines sit closer to processors, would require a capacity decision.

"Here we have to decide between now and the end of the year (on) additional expansion in Crolles," Chery said. "This is most likely what we will do."

The Franco-Italian chipmaker is using its 300-millimetre wafer fabrication plant in Crolles as the main manufacturing base for silicon photonics, a technology used in optical connections inside and between data centres.

Chery said STMicro had already built infrastructure at the plant that could support the silicon photonics business through 2026, 2027 and the start of 2028, but the move towards near-package optics would expand the addressable market.

The chipmaker will not be limited by its own data centre manufacturing capacity over the next three years, Chery said, though he added that STMicro would need to pay attention to its subcontractors, especially in packaging, which is the process of assembling and protecting chips for use in devices.

Earlier on Tuesday, STMicro raised its data centre revenue outlook, targeting about $1 billion this year.

"We are going to be the growth story of that market simply because of the fact that we're starting this year with 5% market share, and our ability to get to 30% is really in sight," STMicro executive Remi El-Ouazzane said.

"We know of the engagements to get there (and) we have the backing of the biggest hyperscaler to get there," El-Ouazzane said, in reference to STMicro's strategic partnership with Amazon Web Services.

(Reporting by Nathan Vifflin in Gdansk, editing by Milla Nissi-Prussak)