Ericsson and STMicroelectronics complete ST-Ericsson split

Ericsson and STMicroelectronics have announced the completion of the process to split up ST-Ericsson, the troubled mobile chip joint venture they founded in 2008.

Having reported a sequence of losses since it came into existence, ST-Ericsson (Geneva, Switzerland) was marked for closure by its parents in March this year after failing to attract interest from prospective buyers.

Ericsson and STMicroelectronics have announced the completion of the process to split up ST-Ericsson, the troubled mobile chip joint venture they founded in 2008.

Having reported a sequence of losses since it came into existence, ST-Ericsson (Geneva, Switzerland) was marked for closure by its parents in March this year after failing to attract interest from prospective buyers.

The closure will see Ericsson (Stockholm, Sweden) take over the design, development and sales of LTE multimode thin modem solutions, including 2G, 3G and 4G interoperability, and take on approximately 1,800 of ST-Ericsson’s employees.

Meanwhile, STMicroelectronics (Geneva, Switzerland) will assume responsibility for other parts of the business – minus the Global Navigation Satellite System unit, which was sold to Intel (Santa Clara, CA, USA) in May – and find jobs for another 1,000 ST-Ericsson employees.

Ericsson and STMicroelectronics are assuming equal funding of wind-down activities, said the companies in a statement.

“We welcome the team of about 1,800 modem experts that join Ericsson,” said Douglas Gilstrap, senior vice president and chief strategist at Ericsson. “Ericsson continues to see great value in the LTE multimode thin modems as they are an important part of our vision of 50 billion connected devices in a network society.”

“The market potential is there and Ericsson will now focus on bringing the best modems to market, and work closely with customers to integrate them into our products,” he said.

STMicroelectronics also welcomed the addition of new employees, saying it was keen to acquire “strong competencies in the areas of embedded processing, RF, analog and power technologies, as well as in software and complex system integration.”

Ericsson also added that it will continue to operate the thin modem business as a separate segment once it has been fully integrated into its organization in the fourth quarter.

It expects the unit to generate operating losses of about SEK500 million ($76 million) in the fourth quarter, mainly because of R&D expenses.