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Striving for wireless glory

Posted: 03 Mar 2009 ?? ?Print Version ?Bookmark and Share

Keywords:LTE? wireless? 3G? Long Term Evolution?

ST-Ericsson's chief puts R&D near top of post-merger priorities.

It was touch and go for a while, but the legal and financial folks sorted out the details in time for ST-Ericsson's debut at last month's Mobile World Congress. EE Times Europe's John Walko caught up with Alain Dutheil, newly installed CEO of the company, which is vying for second in the wireless chip business. It's looking to increase its odds by making the most of a rich portfolio inherited from its three parents: STMicroelectronics, NXP Semiconductors and Ericsson Mobile Platforms (EMP).

Now that the mergers have been completed, what do you see as the main tasks ahead, and what are the company's targets and opportunities?
We intend to be a key player in the wireless industry with complete solutionsand that means not only platforms for 2G and 3G and, in timely fashion, for LTE [Long Term Evolution], but also components. The strength we start with is that all the companies had, and have, strong, enviable partnerships with major handset makersST with Nokia, EMP with Sony Ericsson and NXP with Samsung.

We will have to build on that, and will do so through innovation and making use of the 8,000 people we now have, 7,000 of whom are working in R&D.

That seems like a very high percentage. Is this sustainable in the long term?
Well, for a fabless company such as we are now, this is the type of ratio that can be typical. As to whether 7,000 people working on R&D is the right proportion, we will have to wait and see if this is the right figure for the market situation we are facing now. It is, after all, a huge resource and translates to annual expenses exceeding $1 billion.

Naturally, this is a question high on the agenda. Of course, even before EMP joined, we as ST-NXP Wireless unfortunately had to lay off 500 people. Now we are seriously scrutinizing all the platforms [and] resources we have, and seeing where there are synergies. We will need to decide on the correct level in view of the new realities of the wireless market. This will happen over the next few weeks and will probably be announced when we report our first quarter's trading results sometime in April.

Would you agree the biggest challenge is this merging of three large and, to an extent, overlapping organizations' technologies into a whole?
Well, it is certainly the case that we have inherited a lot of intellectual property and platforms. The main priority in the short term is to ensure there is no discontinuity in the way we support customers. Over a slightly longer time frame, we of course have to work out what parts, platforms and maybe even partnerships to keep, and what will not be relevant going forward. This will take some time.

Would you say that perhaps you have too many technologies in the cupboard? After all, there are three disparate protocol stacks; three potential offerings for 3G baseband, including access to Nokia's modem IP; and, again, three choices of application processors, with the Nomadik from ST, the Nexperia range from NXP and EMP's.
Let's clarify. It is fair to say the three companies have a fair amount of overlap in technologies, and that is already being addressed. We have an excellent opportunity to streamline these portfolios so we have one technology base across the group.

Reshaping that road map will take some time, but we have already made a start, and the focus is that we have to exploit the economies-of-scale advantage the mergers have created.

Furthermore, it is important to underline that the 400 or so engineers we acquired from Nokia in a deal last year were not, as some have suggested, developing an applications processor or platform, but are focused on RF and power devices.

No decisions have yet been taken, but clearly, we plan to push EMP's excellent modem technology forward. This is [in-house]-developed technology that can be extended to cope with the type of data rates needed for HSPA/HSPA+ [high-speed packet access] now and LTE in the near term. And on the applications processor side, the Nomadik effort has been excellent, and we will continue to invest in that.

Finally, what will be crucial for long-term survival is that in each category, we can convince our customers that our solution is the best. Are we going to convince them? That is the biggest question for this new enterprise.

What is your manufacturing strategy going forward? To what extent are you tied in to the legacy of STMicroelectronics?
We will certainly continue to rely on our parentindeed, we have signed long-term production contracts with them for both front- and back-end operations--but we can and will supplement this with production at foundries and at test and assembly contractors. Clearly, for now, the majority of production will be at ST's factories.

What are your plans for moving to 32-nanometer and more-aggressive process technologies?
We are designing chips that will need to be made on, certainly, a 32nm process. There are two clear possibilities. [One is to] work with foundries; for instance TSMC [Taiwan Semiconductor Manufacturing Co.] is a partner in the Crolles2 effort for 32nm, and we are also involved in the major IBM alliance for 32nm. Once that is ready, this too will be transferred to Crolles2.

And we are also working on derivative technologies, for instance RF CMOS and mixed-signal processing technologies.

- John Walko
EE Times Europe

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