STMicroelectronics, Ericsson split mobile chip unit, 1600 jobs go
STMicroelectronics and Ericsson will close their loss-making mobile chip joint venture ST-Ericsson by dividing parts of the business between them and shutting the rest with the loss of about 1,600 jobs.
The announcement ends months of speculation about the future of ST-Ericsson, which has been hit by a big drop in orders from top customer Nokia as the phone maker lost market share to Apple and Samsung.
ST-Ericsson has also struggled to compete with more nimble chip makers in Asia, which outsource most production to be able to react quickly to demand changes, as well as the trend among some phone makers like Samsung to make their own chips.
Sweden's Ericsson, which makes telecom network gear, and Franco-Italian chip maker STMicro, had sought a buyer for ST-Ericsson but found no takers. JP Morgan advised the companies on options for ST-Ericsson, which has not made a profit since it was formed in 2008.
"All possible scenarios were considered but the option announced today was always a real possibility," STMicro chief executive Carlo Bozotti told a conference call on Monday.
He added that STMicro had committed to keep making products for ST-Ericsson customers as long as they needed them.
Under the plan, Ericsson will keep around 1,800 employees of ST-Ericsson's total workforce of 4,450 total. Those jobs will mostly be in Sweden, Germany, India and China.
It will also keep a product line of thin 4G "multimode" modem chips, but said it was too early to say when that would break even.
STMicro will keep other existing ST-Ericsson products,
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