The owners of semiconductor vendor ST-Ericsson have agreed to end the joint venture by splitting or closing down its assets.
Sweden’s Ericsson is taking on the venture’s LTE multimode thin modem product line, while Swiss chip maker…
The owners of semiconductor vendor ST-Ericsson have agreed to end the joint venture by splitting or closing down its assets.
Sweden’s Ericsson is taking on the venture’s LTE multimode thin modem product line, while Swiss chip maker STMicroelectronics will keep other products. The rest of ST-Ericsson will be shut down, impacting a reported 1,600 jobs.
Ericsson and ST expect to complete the asset transfer, which requires regulatory approval, during Q3 2013.
Their decision to exit comes after a review was launched late last year to explore strategic alternatives for the loss making venture, which has struggled to compete with rivals in Asia.
Ericsson has made provisions of SEK3.3bn (US$516m) to cover expected costs relating to the implementation of the strategic option. ST expects US$350m-US$450m in cash costs.
To oversee the transition of assets, the company has promoted COO Carlo Ferro as CEO to replace Didier Lamouche, who recently announced plans to step down to pursue undisclosed opportunities.
Carlo Bozotti, CEO of ST, said: “In line with what we announced in December last year, we have now moved to the next step of our exit process and found a solution with Ericsson that fully aligns with our new strategy.
“The agreement made with Ericsson represents a major step forward in reaching our new financial model target and allows us to further strengthen the skillsets of our company, by welcoming in ST, at completion, additional strong competences to fuel growth in specific key product areas. Moreover, it protects and leverages the ongoing ST-Ericsson’s business, allowing us to reinforce our relationships with key customers, both of ST and of ST-Ericsson.”
JP Morgan reportedly advised the companies on options for the joint venture.
