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ST-Ericsson sacking 1,700, moving processors to ST

Posted: 25 Apr 2012 ?? ?Print Version ?Bookmark and Share

Keywords:application processor? smartphone? restructuring? licensing agreement?

ST-Ericsson NV has revealed its new strategic direction and plans to lay off 1,700 employees to lower its breakeven point. The mobile chip joint venture between STMicroelectronics and Ericsson also said it would transfer its standalone application processor activities to ST but reaffirmed its aim to be a leader in smartphone and tablet computer platforms.

The list of electronics building blocks for mobile devices includes application processors, modems and wireless connectivity as well as power management, RF, analog and mixed-signal functionality. Those blocks will be developed either by ST-Ericsson or by partners and then assembled by ST-Ericsson to improve time-to-market. Meanwhile, ST-Ericsson said it would continue to develop modem intellectual property, sell thin modems and possibly license modem IP to third parties.

ST-Ericsson has agreed to transfer its application processor business and employees to ST. It will then create app processor-plus-modem platforms under a licensing agreement with ST. The company said the ST-Ericsson application processor R&D team would continue development of the current product generation under a transitional cost sharing model.

Remaining ST-Ericsson activities will be consolidated into a "significantly smaller number" of sites, with an eye toward reducing 2012 general sales and administrative costs by 25 percent compared with 2011, the company indicated.

ST-Ericsson said it foresees a global workforce reduction of 1,700 employees worldwide, including the employees who would be transferred to ST. Those cuts plus existing restructuring plans would result in annual cost savings of $320 million. Total restructuring costs are estimated to be about $130 million to $150 million through completion.

"ST-Ericsson has a unique ability to develop and integrate complete mobile platforms for mainstream smartphones and tablets. This will be our strategic focus moving forward, while continuing to master leading-edge modem IP. We believe this is the best way to deliver those world-class technologies and services that our customers are expecting in order to shape tomorrow's mobility and connected world," Didier Lamouche, president and CEO of ST-Ericsson.

Carlo Bozotti, CEO of ST noted, "Through this partnership, we can expand our offerings beyond our traditional product families and reach a wider customer base in multiple digital segments, further boosting ST's multimedia convergence business toward leadership and improved financial return. We welcome ST-Ericsson's new strategy."

- Peter Clarke
??EE Times

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