The ST-Ericsson joint venture is losing a partner, but not the partner most analysts expected. STMicroelectronics (STM) says it will exit the venture after a transition period, although it will “continue to support ST-Ericsson as their supply-chain partner, advanced process-technology partner and application-processor IP provider.”
ST-Ericsson is a 50/50 joint venture owned by Ericsson and STMicroelectronics. Last April, the venture said it would transfer its stand-alone applications processor business to STMicroelectronics and eliminate up to 1,700 jobs as part of a restructuring. At that time, ST-Ericsson said it would focus on delivering integrated modem plus application processor (ModAp) solutions for smartphones and tablets. This is a growth area for many semiconductor companies as manufacturers of entry-level smartphones often want a turnkey silicon solution. Just last week, Broadcom (BRCM) announced an integrated chip solution that bundles the applications processor and the modem, as well as a graphics processor and chipsets for Bluetooth, GPS and NFC.
STMicroelectronics is getting out of the joint venture as part of a reorganization. The $9 billion company says that going forward it will have two divisions: One will be called Sense & Power and Automotive Products and the other will be called Embedded Processing Solutions. The applications processors for smart devices will be part of the Embedded Processing Solutions group.
Today’s news leaves Ericsson, one of the world’s two largest telecom infrastructure companies, in the chip business without a partner. Ericsson’s largest competitor is China’s Huawei, a company which has made a very strong commitment to its own semiconductor business. As chipsets become an increasingly important part of infrastructure solutions, particularly in the small cell space, Ericsson may be hesitant to sell the business now known as ST-Ericsson.
