STMicroelectronics N.V. ($STMPA)

Ladies and gentlemen, welcome to the ST The Leo Opportunity Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, it is my pleasure to hand over to Jerome Ramel, EVP, Corporate Development and Integrated External Communications. Please go ahead, sir.

Thank you. Thank you, everyone, for joining ST the EO Opportunity Conference Call. Hosting the call today is Remi El-Ouazzane, President, Microcontrollers, Digital ICs and RF product books. This live webcast and presentation materials can be accessed on the ST Investor Relations website. A replay will be available shortly after the conclusion of this call. This call will include forward-looking statements that involve risk factors that could cause ST results to differ materially from management expectations and plans. We encourage you to review the safe harbor statement contained in the press release. [indiscernible] and also in [indiscernible] finding for a full description of these risk factors. Also to ensure all participants have an opportunity to ask questions during the Q&A session. Please limit yourself to 1 question and a brief follow-up. I'd like now to turn the call over to Remi El-Ouazzane.

Good morning, and good afternoon, everyone. It's great to be with you today. As a space electronics market is becoming an increasingly important topic. We're going to share ST perspective on the LEO opportunity, why it matters and how it is translating into growth for our company. For us and to use aphorism, it's been a 10-year overnight success. We look at the market momentum, the technology shifts driving this expansion and the pivotal role ST is playing and will play across the LEO ecosystem. So let's get started. I want to begin with the broader orbital infrastructure landscape. We can actually split it into 2 fairly distinct words. The first is traditional space. This includes exploration missions as well as operation in geostationary and medium Earth orbit. This world remains very important for applications such as video broadcasting, radio broadcasting, mythology and GNSS. These are established mission-critical domains. They are typically based on large satellites have long-term development and life cycles and follow highly predictable service models. The second word is what we call new space. This is mainly centered on orbit, and it is expanding rapidly into broadband connectivity, direct-to-sale services and eventually orbital data centers. This segment is driven by smaller satellite, much faster deployment, lower latency and entirely new business models aimed at individual users and mass adoption. This shift is not only about Orbit altitude. It's really a change in the economics of space. It means a broader set of applications, much higher deployment volumes and much stronger semiconductor intensity. On a live note and in reference to the date, we have selected for this event. Maybe some of you have supported a very special star. On the upper left part of this chart that is at the very far end of the Galaxy. And although we won't be discussing that type of object today, made the fourth be with us throughout this presentation. ST has been active in space for more than 45 years. Over that time, our technology has supported the full spectrum of space application. On the traditional space side, we are in [indiscernible] Arian launches and major exploration missions, including the Chinese [indiscernible] telescope. As such, it should not be a surprise that ST was also involved in new space from the very beginning, enabling with our technology the first generation of large-scale LEO programs, both in space and on the ground. Now let me double-click on SC's LEO business. We have seen a very sharp increase in revenues from this business, reaching approximately $600 million in '25 up from about $175 million in 2021. That represents a compounded annual growth rate of about 36%. This is a strong and solid performance that it positions ST as the leading semiconductor players in the LEO market. In fact, John estimates our RF market share for LEO at about 90% in '25. We are just in the early innings of this market. Later, I will explain our ST's position to sustain and extend this growth with our differentiated technology, our manufacturing strength and the breadth of our portfolio. To understand why LEO is getting so fast, we need to look at the technology and the economics behind the disruption. The changes have made large-scale LEO constellations possible. First, the higher launch base of reusable rockets has allowed thousands of satellites to be put into a bit at a much more affordable cost. Let me share a few numbers. The cost of launch per kilogram decreased from about $10,000 on Falcon 1 in the mid-2000 to $2,000 in the following decade with Falcon 9 and is expected to be divided by a further factor of 10 on starship. Second, satellite themselves have changed. They have now become lighter, more stabilized, enabling upscale and faster manufacturing cannot be launched in groups for example, 25 per launch. They are increasingly embedding innovation such as software-defined digital payloads and inter-satellite optical lens. Third and last, the user terminal has evolved dramatically. It has moved from a traditional parabolic antenna to electronically steered antennas, leveraging beam forming which can follow moving satellites and hand over from one to the next. These antennas are not produced very efficiently in very high volumes where this was originally monthly at the beginning, a military technology. Together, those 3 ships have created the new new economy. And that economy is large, it's scalable and it's highly semiconductor intensive. So the question is how big can this become? According to Gartner, LEO services spending is expected to reach close to $15 billion globally in 26 this year, and it will continue scaling higher through 3 major services classes. The first and currently the most important is broadband service. Satellite broadband is connecting the unconnected and reducing the digital divide. It gives rural or poorly connected community access to high-speed, low-latency program. Think about this. While there is roughly 1.5 billion broadband users worldwide, Today, almost 3 million people remain on the wrong side of the digital divide. It also provides connectivity and redundancy to corporates and governments and improve resiliency in the event of natural disaster. And because LEO constellation can cover the globe, they are particularly well suited for mobility applications, such as in-flight connectivity, maritime connectivity and even over time, automotive use cases. The second growth engine, which is emerging now is direct to sale. This connects phones or IoT devices directly to LEO satellite that effectively act like a cell tower space. It opens the door to roaming led connectivity, expanded IoT services like asset tracking and helps eliminate mobile coverage holes. And finally, the next frontier is the orbital data center. This is still an emerging category today, but it points to a future where LEO is not just about connectivity. It could become a platform boot scale in orbit, benefiting from the nearly limitless availability of solar energy. This idea of orbital data center becomes more relevant as launch economics improve. As I previously mentioned, the cost per kilogram to orbit has fallen dramatically and will continue to do so, likely eventually down to below $100 per kilogram at some point. That trend makes more ambitious innovate compute concepts increasingly realistic over time. [indiscernible] for instance, there are 5 for 1 million satellites for this purpose. And as Elon Musk [indiscernible], launching 1 million tons per year of satellite generating 100-kilowatt of compute per ton could eventually add 100 gigawatts of AS compute capacity annually with limited operational or maintenance needs. [indiscernible] with Project Sunrise also filed for NCC approval to support data centers in space and Google with its [indiscernible] project is gauging very similar initiatives. So in short LEO is evolving from a connectivity platform into a much wider ecosystem with multiple growth vectors, both emerging in parallel. Now continuing on the service expansion, we just discussed, these opportunities have been amplified by rapid proliferation of LEO constellation. And something important has changed. The earlier space model was largely financed by public investment. [indiscernible] is increasingly driven by massive private capital, which is accelerating constellation deployment supporting new business models and increasing the pace of launches. And because of the first examples of usage of today's LEO constellation, Governments have understood the geopolitical impact of these services. And as a result, Leo is increasingly becoming a global race. Constellation are being deferred across geographies by a mix of established players and new entrants each targeting different parts of the LEO value chain from broadband to direct-to-sale to orbital data centers ambitions. Now let's try to translate this expansion into numbers. Over the next 5 years, the scale of the system will change dramatically. [indiscernible] cast deployed space is expected to grow by roughly 10x by 2030, reflecting the impact of the latest generation of launches and the rapid expansion of Constellation. Interestingly, the capacity deployed space by '28 may represent a similar order of magnitude than the total international Internet bandwidth on earth we would have guessed that 10 years ago. At the same time, the backhaul infrastructure will also expand significantly with the number of gateways increasing by 1.6x. And this infrastructure build-out will enable a steep rise in usage. We are still at the numbers of new subscribers could exceed $200 million by 2030 from about $10 million today, driven by the proliferation and the improved quality of services as well as the arrival of new entrants from all geographies. LEO is no longer just a niche connectivity technology. It's becoming a large-scale communication and eventually compute platform. It's difficult for us to go through a Leo presentation without talking about SpaceX. ST and SpaceX, it's a decade-long partnership built on co-development across key technologies for satellite and user terminals. The collaboration has produced billions of codesign products due to millions of selling new terminals and over 10,000 starting satellites. And products have been critical in helping SpaceX scale production through codesigning key chips, engineering services and high-volume manufacturing ST has demonstrated the exceptional value of its innovation and manufacturing capabilities. This collaboration has relied on differential ST technology and on the use of multiple products across the sterling constellation. I will come back later to the specific technology and products building blocks behind this success. But for now, the key message is simple. The collaboration continues with a focus on ramping up rating us ongoing designs, excuse me, and architecting together the next-generation satellites and user terminal. And this partnership has yielded impressive numbers, as you can see on that chart. This chart illustrates the scale Starlink NST average together. To date, ST has delivered more than 7.5 billion is 7.5 followed by [ 9 0 ] and the trajectory continues to accelerate as deployment expands. Now I know it's difficult to visualize what that really means. So let me give you a more tangible image. These close to 20,000 square meters of active silicon ship deliver, both in BiCMOS and [indiscernible] can cover up to 4 American football fields. -- or if you are a basketball fan, 48 basketball courts. This is a strong example of ST's ability to support high-volume space-grade program at industrial scale. It also shows our STC at the heart of stalling growth and execution. I touched base on this earlier when I spoke about capacity. Space capacity is a key to LEO service expansion, especially broadband service expansion. As we discussed earlier, capacity has increased significantly over time from the first generation of stalling satellite to the latest V3 architecture. Across successive generation, Downlink capacity per satellite has increased from 10 gigabits per second to terabit per second level, roughly a 40x improvement. This step-up in performance reflects the evolution of the satellite platform itself. It's more integrated, it's more capable, and it's designed to support much higher throughput. In other words, each new generation of satellite has not only improved technical performance, but it has essentially expanded the economic potential of the network. Parallel to this evolution, the ST bill of material was multiplied by 8x between the 1.5 and the VI satellite, now reaching several tens of thousands of dollars per se. That is important because it shows our STs not only prevent but increasingly embedded in the value creation of the platform. As importantly, let me now turn to the ground LEO infrastructure and specifically the user terminals. Here, we have witnessed a very visible evolution in antenna design. Over time, due to terminal that becomes smaller, more integrated and more affordable, all of which we are critical to making this market scalable with our differentiated and mass-produced technology, supported starting value creation through bill of material cost optimization and product innovation. We have now reached down to only several tens of per user terminal, which makes the user terminal much closer to a consumer like device making LEO broadband services bound to exploring. In practice, this has helped transform satellite broadband from an expensive and niche offering into a mass market product and now addressing more than 155 countries and markets. Lowering the terminal cost has been a key accelerant of Leo broadband service adoption which I will now attempt to scope for you. Based on our current view, SAM for the broadband electronics was around $650 million in 2025, growing to roughly EUR 2 billion in 2028 and reaching close to EUR 3 billion by 2030. This reflects a rapid market growth and importantly, this still excludes additional upside from the orbital data center application. As mentioned earlier, the market is becoming global with new constellation from new geography emerging. While starting still represents the LEO's share of the business today, it is not the only opportunity. On top of Project Kuiper, now rebranded Amazon LEO and European projects, I will also mention 2 Chinese projects, which are today at early stages but with strong growth ambition. The first one is China satellite network also called Starnet was planned 13,130 LEO satellites by 2035 and with 170 satellites in orbit so far. The second Chinese project is space sales satellite, also called [indiscernible] which has planned 15,000 BO satellites by the early 2030s, with 130 satellites in orbit so far. I also want to point to the recently announced Blue Origin TeraWave project for a space-based network optimized for enterprise data centers and government customers. When it comes to as we have already been qualified at another major player, and we continue to build momentum with new constellation at the deploy. Of course, the market growing at a 35% CAGR naturally creates appetite, a new supplier will try to gain share, which we have factored in our numbers. But our outlook remains very positive. The market is expanding fast. Our customers base is broadening. NSC, as you will see soon as a technology, the products and the manufacturing infrastructure to capture that growth. Talking about products, you can see on this chart, our comprehensive is our product offering. To keep it simple, we are present across the 3 layers of the ecosystem, be it satellite, gateways and user terminals. Our portfolio spans RF and digital ads, radiation capable MCUs and a wide range of products in power, analog mens, secure element, filters and more. This depth and breadth give ST a unique positioning in Leo. It means we can address a very wide set of application needs across the value chain while also [indiscernible] our offer to the specific performance and cost requirements of each layer. Let's put some numbers around this now so that you can get a sense of the dollar amount of electronics and serve into this market. We provide that to several tens of thousands of dollars bill of material per satellite, a few hundreds of dollars per gateway and several tens of dollars per user terminal and to appreciate the order of magnitude, let me remind you what we discussed earlier. Thousands of satellites are produced every year, thousands of gateway are being deployed and millions becoming tens of millions of user terminals are being shipped every year. As such, that does represent a very meaningful business opportunity for ST. But to understand why we are so well positioned in we need to look back at the technologies behind the offering. The first pillar is FD-SOI. This is a clear enabler for ASIC and microcontroller. It combines high performance, energy efficiency and structured immunity to radiation, we are also providing robust embedded memory. We are able to supply this unique technology from our 300-millimeter fab in France and also with our foundry partner. The second larger pillar is a winning combination of the content and back-end technology we offer for the user's terminal front-end module. It's based for the front end side on [indiscernible] process, which is the right technology for flag, phased array and tenants, especially for low-noise amplifiers and power amplifiers delivers strong our performance in key satellite communication band with very low noise figures enabling to scale up the numbers of users served simultaneously with high linearity, reducing the numbers of antenna elements itself allowing user terminal cost reduction, hence, service demonetization and with the right balance of performance and cost. This technology is served from both our 20 and 300-millimeter fab in France. Another key enabler is on the back end of panel level packaging also called PLP. In LEO, the scale requirement is massive. So packaging at scale, meaning several million units produced play becomes a real differentiator. PLPs high-volume production, strong RF and thermal performance and miniaturization. PLP is truly a [indiscernible] first. On top of the technology themselves, ST manufacturing independence also provides a market with a unique kind of geopolitical stability, if you wish, through a highly resilient supply chain setup. Now it's one thing for us to sell claims, and it's even better to bullet up its customers' testimonies. And you can see here some quotes from starting executives, recognizing the value of our previously described technology. FD-SOI, including the recently introduced 18-nanometer nodes, for high-performance microcontrollers used installing mini laser system for inter-satellite optical links. CMOS the backbone of Leo user chemical front-end module. And on the back end, the PLP panel level packaging technology I was describing a minute ago. In Starling, is more than a supplier. We are a key technology enabler across the platform, helping starting improved performance, cost and scalability. So bringing together our proven technology of scale of execution and the rapid expansion of the lab opportunity, ST has a very clear ambition. We aim to generate well above EUR 3 billion in cumulative revenue in the space market over the next 3 years from 2026 to 2028 combining LEO and traditional space. On the LEO side, these numbers include only the broadband and direct-to-sale opportunities. Additional opportunities will continue to emerge including LEO data centers, which are not included in this ambition, it could further expand the market over time. We do consider the outlook for SC as quite promising. We have demonstrated strong execution track record, track record, excuse me. We have market leadership, and we see additional growth later. Overall, we are and we intend to remain the leading semiconductor provider in the new space. To wrap things up, let's agree that a major disruption is happening in space, and LEO growth is fast accelerating. There are 4 things that I would like you to take away. First, manufacturing independence and our unique technology and manufacturing capabilities have put us at the heart of the LEO ecosystem. Like I said, like I said at the beginning of this presentation, a 10-year overnight success. Second, we have a differentiated portfolio, spanning every layer of LEO. Third, the LEO [indiscernible] expected to reach around $3 billion by 2030, roughly 4x versus 2025. And while ST is targetd well above $3 billion of cumulative space revenue from 2026 to 2028. And last, the opportunity is still expanding. Orbital data centers will be a further growth driver, even though they are not yet embedded in our revenue ambition. In short, we expect space to be major growth drivers for ST in the coming years. I hope you for this presentation interesting. Thank you for listening, and we are now ready to answer any questions.

[Operator Instructions] Our first question comes from Stephane Houri from ODDO BHF.

I have one question and a follow-up. So the question is I'm trying to reconcile all the numbers that you have given, the sum of $3 billion by 2030. And also $3 billion plus space cumulative revenue by 2028. But at the same time, you you seem to say that you would reach $1 billion already this year. So what kind of trajectory revenue trajectory can we expect from 2026 to 2028 if if you can simplify it for me. And the follow-up would be also to have a view on what kind of market share do you think you will have by 2028 or 2030, if you refer.

Yes. Thank you, Stephane, for the questions. I will clarify the numbers indeed. Over the next 3 years, '26, '27, '28, our ambition is to deliver cumulative revenues of well above $3 billion for space as a whole. You're right, we have indicated in 2026 that we may already be close to $1 billion. The growth rate beyond 2026 will essentially depend on many factors, and I will get back on that in a minute, Stephane. As we said, well above $3 billion, I guess, at least scope for growth and opportunity. We factored in, in our assumptions, some market share loss for our main customer. We do not believe that actually our current market share that is exceeding 90% is something that we can keep as is. The number that we are planting right now do not include any potential upside coming from data center in space in the medium term. ultimately to say that actually our number, our growth rate beyond '26 and the close to $1 billion that I just mentioned, are going to be dependent on the pace of existing and new constellation. And if you need to go atomic as to what is going to be the first level critical path to that, and I would say that actually rocket launcher is at the top of the list. And clearly, we are keeping a close eye and a savvy eye on the success of Starship and ugly, respectively, of SpaceX and Blue Origin. Those are actually real game changer, especially Star chip that would be the largest market build able to carry roughly 5 to 7x more than what you can do with Falcon 9 at 150 tons, and that will make a huge difference in terms of capacity.

The next question comes from Sandeep Deshpande from JPMorgan.

My question is you -- on one of the slides you. [Technical Difficulty] In terms of what keeps your supplier in this market, what is the majority? Is there 1 kind of chip? Is it the RF chips, which are the majority of your revenue? Or is it the MPU where in terms of the satellite mark -- and in terms of where the growth is coming, is it coming from those tips? Or is it some from newer chips that you are supplying into this market? And a follow-up to that would be, where is [indiscernible] comparing for you at this point?

Could you ask -- could you restate the last one, Sandeep?

The last question was, where are you seeing competitive threats at this point in this market?

Okay. Got it. The class of products that we ship into space differ between satellite and user terminal. Clearly, we are not going to give any breakdown, but [indiscernible] terminal are the largest contributors to the revenue when it comes to what we do. And when it comes to the user terminal, the -- they are being essentially dimension by what we call 10 modules. So what is a front-end module, it's actually something that does 4 things: Signal amplification, transmit and receive. Hence, what I mentioned earlier in terms of power amplifier and loose amplifier switching because you need to go and move from talking to listening and filtering to remove electric noise and also the face shifting that is happening when you're creating actually [indiscernible]. They're actually the dimensioning element in the cost of the user terminal and the best technology on the planet to go and build frontier models [indiscernible] CMOS. And as such, I would say, anybody that wants to compete against ST and BiCMOS [indiscernible] as a potential competitors. Our BiCMOS platform, I have to say, is super established in the context of both either its cost optimized patterns for Ku-band or in the context of its performance for KA then the different bands of the LEO market. So we clearly -- this market, like I said, will have competition. But we feel quite strong as well about the front and process technology differentiation we have in the context of our [indiscernible] So I missed middle question, Sandeep but we'll have to go and I'm not sure I capture that one, but the connection was not great.

The next question comes from Gianmarco Bonacina from Banca Akros.

A couple of questions for me. The first one is about the China opportunity. I think you mentioned a couple of Chinese companies that want to be active in terms of the satellite market. Do you think that you can become a vendor given the current geopolitical situation? Or are you already let's say, working with them? And do you think this is a viable opportunity for you? And the second one just about the market share, if I understood correctly, so you will grow from the around $1 billion to clearly above $1 billion. So the market share in 2028 will be well above 50%. How about competition? So how do you think -- what kind of level do you think you can keep going forward, maybe looking at 2030. So is competition very intense? Or do you think that you can keep this, say, above normal market share in this market?

Okay. Look, I start with the chart question. We are unapologetically European. So we end up being actually U.S. and China compatible and the China compatibility will start and finish at user terminal because of export control, we cannot be in the central technology happening in China. So we are focusing our entire energy on user terminal. The entire logic of what I've explained in terms of user terminals or I mentioned and where the performance of the network comes from relating back to buy CMOS, this exact same principle applies to also to Chinese user terminals, regardless if they are actually doing analog or sobering. I have -- we have not yet disclosed anything specifically happening in China, but we are actually quite engaged in user terminal development happening there. And it's a market for us that we are looking into, even though like I've explained, we are in the very, very early innings because their satellite footprint remains quite small, and if I can put it at this stage.

Okay. That's the first question. In terms of market share, looking at that for the coming 5 years till 2030. Yes, for sure, we expect to go in a sustained pretty oversized market share, clearly, lower than the 90% that we're talking about right now. but still quite high in the context of what we're doing with Starlink, also in the context of our positioning, especially when it comes to front-end modules in the constellation. And there will be competition for sure. And the competition, like I said, to find to find -- I'll let you make your work on finding names of competition, but the pedigree of a competitor needs to be a company that is likely that is actually likely doing by CMOS as huge assembly capabilities and is able to master PLP. If you find the cost of company, they are likely to become the competitors of ours.

Next question comes from Didier Scemama from Bank of America.

I just wanted to come back to the question that Sandeep asked. Just wanted to understand -- if you could give us a high-level breakdown of revenues, '25 and whatever you think it could be in '28 between user terminals, gateways and the satellite itself, just high level so that we've got an idea on how to model this business and I really appreciate for all the details you've given. The second part and the follow-up would be, I think from your slide, you mentioned that there was 9 million subscribers to satellite communications. But -- there's been about 20 million user terminal chips being sold, and I think expectations for 30 million from your slide. Can you explain the difference? Are those chips also going into the gateways or any other market that would explain the delta between these 2 numbers?

Thanks for the question, [indiscernible]. The first question, I will not disclose precise numbers. Directionally, I will repeat what I just said earlier, user terminal are the largest contributors to revenue, followed by satellites, while gateways are less materiality when it comes to our revenue at this stage. To date, what you need to understand in terms of numbers of chips sold compare in contrast to numbers of subscribers. I think this was your question, Didier. It's actually a good question. which is a function of the amount of antenna elements in a user terminal. And that amount of interline elements, which what I talked about those content modules that actually manage and can elements to do what I said it was doing in terms of CX informing that actually varies greatly and has been very -- has been moving greatly between different countries of terminals. It's actually -- you need to think of user terminals not as something that is software-defined, the capacity, the bandwidth you will get at all is a function of the capacity of your terminal, the numbers of antenna elements it has -- and that number to make it sure that number can vary anywhere between, I would say, the 100 to more than 1,000. So based on the mix of user terminals and so on and so forth, this is where the close to 10 million subs ended up actually leading to more than 7.5 billion ICs. So you can make the math backwards a little bit [indiscernible]

Okay. Okay. So there are basically multiple antennas per user terminals.

Anywhere from more than one of us to more than 1,000.

The next question comes from [indiscernible] from TD Cowen.

Two from me. So one, and I'm sorry for continuing to ask about the share narrative. It's just we don't get many verticals where companies have 90% share very often. But as we think about the share moving lower over the next several years, how much of that is just naturally from SpaceX having less overall dominant position in the market share as others ramp versus dual sourcing on stock that you're currently engaged in, including at SpaceX. And then for my follow-up, you made a comment before that you think competitors will primarily be IDM. Can you walk through the logic here? I mean there are third-party foundries that offer FD-SOI and buy CMOS, for instance, is it because you anticipate these large satellite customers needing some element of customization or something else that's driving that the logic about it needing to be from IDMs.

So sure. Thanks. Those are 2 great questions. I'll start with the share question. I will not answer it directly. But if I look at the total SAM over the next 5 years, it's actually the life is from a linear standpoint, I mentioned by SpaceX. So as such, I would say that actually our members are more actually are more actually influenced by our market share in SpaceX that they are influenced by the success of names LEO 1 wave or a Chinese [indiscernible]. That's the first answer to your question. That's the answer to your first question, forgive me. The second question, to wire idea, I think it's a great question for -- and there is 2 reasons to that. But 1 is more important than the other. The first is what you've mentioned. -- often for the front-end modules, those are not actually ASSPs, they end up actually custom products. Think of an ASC that has to be debated often, you need to have design resources to go do that, which makes a pure platform a bit more complex. But I tell you, actually, it is a [indiscernible] issue. The first order issue is actually, especially when you build those front-end modules, the back end, end up being as important as the home. I will not share the exact details in terms of cost contribution for a module, but the competitiveness you have to build actually the back end is critical. And if you allow me, I would take a little of 2 on this because it's important for you to understand something. We are actually -- we have developed this technology called panel level packaging. And unlike traditional packaging, we're using circular silicon wafers, actually PLP used large rectangular form factor panels, if you wish, and final label packaging world they are quite large, and by no of millimeter. And we have also developed a specific direct copper interconnect, which allows actually to eliminate electrical resistance and [indiscernible] and making it actually super efficient from a power efficiency and server management. This BAP technology alone without the be will not be as compelling. The reverse is also true. The by small without the PMP technology will not be as company. And that's the reason why George was saying, "Look, when you stack up all those margins and you look at the technology end-to-end, I do believe that it's a bit complex to not be an idea in that market.

The next question comes from Jakob Bluestone from BNP Paribas.

You kind of gave a bit of color around the content per unit for satellites being in the tens of thousands of gateways being in the hundreds of dollars the user terminals being in the tens of dollars. And I was just wondering, can you maybe give us your thoughts on how do you see those numbers evolving? Do you think they'll go up or down over time? And any thoughts you can share with us on pricing trends given that may be a little bit of pressure on market share? [Audio Gap] See quite sizable contribution from others or still very concentrated client base in 2027, 2028?

Product line cycles, I would say, are for user terminal Ale and roughly a month in terms of generation. And you -- and I'm very happy to share that number with you because I've shared some of the economics. And as such, you can now understand why only people with manufacturing excellence are able to go and evolve in type of life cycle because you're doing thermical ramp-up and vertical run down. And obviously, we have engaged customer programs that have told us how to do that at full yield and full quality. There is no coincidence eventually as to why we are where we are. our goal on the customer base will be okay in the next 5 years. I don't see more than 10 players. So [indiscernible] as broad as it gets because you understand the dynamics, right, for you to be relevant. It's completely dimensioned by launches and satellites. So there is only so many companies and so much money able to do that. So I think in terms of scale that will park ST economics, I don't see more than 10 players. And even that I have catched a number a little bit.

We take the follow-up question of Didier Scemama from Bank of America.

Yes. So it's not directly related to LEO satellite, but I wondered, is that number that you've given that just about $1 billion for this year. Does that include also military applications? Because I would imagine is also supplying into the [indiscernible] and some other military equipment? Or is that included in there? And is that substantial? And I've got a quick follow-up.

Not really, it's not and the answer in general outside of this would be its corporately marginal.

And since its May 4. I wondered what would be your silicon content to the [indiscernible].

That is a great question, is will require you to become Jedi foe me to share the answer.

I think this is ending our call for this presentation. So thank you, everyone, for joining us. If you have further questions, feel free to reach out the IR team, and I wish you a happy day. Thank you.

The conference is now over. Thank you for joining Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.