Ericsson (ERIC) and STMicroelectronics (STM) have agreed to dissolve their ST-Ericsson joint venture, calling it quits on the effort to establish a competitive European semiconductor supplier for the wireless industry. The dissolution of ST-Ericsson will result in 1,600 layoffs. Last spring, ST-Ericsson cut about 1,700 jobs and said it would narrow its focus to integrated modem plus application processor (ModAp) solutions for smartphones and tablets.
ST-Ericsson lost almost a billion dollars last year, hurt by cuts at Nokia, one of its biggest customers, and by Ericsson’s retreat from the handset business.
STMicroelectronics announced late last year that it would abandon the venture, and since that time Ericsson has been evaluating its options. In a January interview, Ericsson CFO Jan Frykhammer told RCR Wireless News that Ericsson values the venture’s modem business.
“The modem asset [in ST-Ericsson] is important for the wireless industry,” Frykhammer said. “We think that is an important element of the asset.” At Mobile World Congress, Ericsson, ST-Ericsson and China Mobile demonstrated an HD connection between LTE FDD and LTE TDD. Now Ericsson says it will take over STEricsson’s LTE multimode thin modem products, and will take on 1,800 full-time employees and contractors associated with that business. Most of those people will be based in Sweden, Germany, India and China.
Meanwhile STMicroelectronics will take on 950 employees, primarily in France and Italy. STMicroelectronics absorbed ST-Ericsson’s stand-alone applications processor business last year. All remaining ST-Ericsson business units, as well as certain assembly and test facilities, will go to STMicroelectronics, but the future of these businesses is unclear.
Carlo Ferro will assume the role of president and chief executive officer of ST-Ericsson during the dissolution. Current CEO Didier Lamouche had already announced that he would leave at the end of March. The venture had three different CEOs during its four-year life.
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