Chip maker ST Ericsson faces shutdown as STMicro plans to quit JV

STMicroelectronics, Europe’s biggest chip maker, now plans to exit the ST-Ericsson mobile chip joint venture with Ericsson. ST-Ericsson has been losing money for a couple of years now, taking a big hit after its biggest customer, Nokia, decided to switch to Windows Phone and Qualcomm chips.

STMicroelectronics on its part is looking to cut costs and better compete with higher-margin US and Asian rivals like Qualcomm and Texas Instruments.

Swedish Ericsson however also is not likely to be willing to single-handedly takeover the JV that registered an $841 million loss last year.

Analysts don’t write off the possibility of ST-Ericsson, a JV employing more than 5,000 people to get shut down completely and sold to the likes of Intel and Broadcom.

“I think it is going to be a complex deal including some reallocation of employees to Ericsson, and the sale of the wireless modem business to a competitor, and some layoffs,” semiconductor analyst Jerome Ramel of Exane BNP Paribas said.

STMicro shares went up on the announcement which is seen to be good for its business.

source: Reuters
http://www.reuters.com/article/2012/12/10/us-stmicroelectronics-st-ericsson-idUSBRE8B90N520121210?feedType=RSS&feedName=technologyNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FtechnologyNews+%28Reuters+Technology+News%29

Chip maker ST Ericsson faces shutdown as STMicro plans to quit JV