STMicro and Ericsson agree to split ST-Ericsson as it struggles to make money

STMicro and Ericsson agree to split ST-Ericsson as it struggles to make money

STMicroelectronics and Ericsson agreed to close their loss-making mobile chip joint venture ST-Ericsson. The business will be divided with some 1,600 jobs expected to be lost in the process.

The company experienced a major drop in orders from top customer Nokia as the phone maker lost market share to other handset makers, namely Apple and Samsung. Additionally, ST-Ericsson had tough time competing with chip makers from Asia, as well as phone vendors like Samsung which are now making their own chips.

Under the plan, Ericsson will keep around 1,800 employees of ST-Ericsson’s total workforce of 4,450 total. Those jobs will mostly be in Sweden, Germany, India and China. Additionally, the Sweden-based company will also keep a product line of thin 4G “multimode” modem chips, but said it was too early to say when that would break even.

STMicro on its end will keep other existing ST-Ericsson products, along with certain assembly and test facilities. It will take around 950 employees, mostly in France and Italy.

The rest of ST-Ericsson will be shut down, though no factories will be closed…

[Via: Reuters]

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