“STMicroelectronics NV (STM) and Ericsson AB (ERICB) agreed to split up their unprofitable ST-Ericsson chip venture after failing to find a buyer for the business, cutting about 1,600 jobs as they divide the assets.
Ericsson said today it plans to assume about 1,800 of the venture’s 4,350 employees and contractors in countries including Sweden and Germany, and will continue developing ST-Ericsson’s modem technology. STMicroelectronics will take on the venture’s existing products and 950 employees, mainly in France and in Italy, and incur costs of as much as $450 million.
STMicroelectronics and Ericsson are winding down the 50-50 partnership, which designs chips used in mobile phones, after a three-month search for a buyer failed to produce results. The partnership has accumulated $2.7 billion in net losses since it started in 2009 as it struggled to introduce higher-powered chipsets and platforms while the low-end handset business at customer Nokia Oyj (NOK1V) shrank.
“In 2009 the situation was different, we started with a great base of European customers,” STMicroelectronics Chief Executive Officer Carlo Bozotti said on a conference call. “Unfortunately this customer base has changed.”
Ericsson fell 1.4 percent to 84.25 kronor at 10:30 a.m. in Stockholm. It had advanced 31 percent this year before today. STMicroelectronics, which had gained 9.6 percent this year, climbed 3 percent to 6.06 euros in Paris. The stock lost 4.4 percent on March 12 after Bloomberg reported that ST-Ericsson failed to find a buyer….”
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