Hans Vestberg, president and CEO, Ericsson
Telecom Lead America: ST-Ericsson, a joint venture between STMicroelectronics and Ericsson, will be split and eliminate 1600 jobs.
The loss making chip company will be split as both partners could not find a buyer after announcing a review in December 2012.
After splitting the business, the design, development and sales of the LTE multimode thin modem products, including 2G, 3G and 4G multimode will move to Ericsson. Ericsson will assume approximately 1,800 employees and contractors, with the largest concentrations in Sweden, Germany, India and China.
Hans Vestberg, president and CEO, Ericsson, said: “Ericsson believes that the thin modems hold a strategic value to the wireless industry. With this move Ericsson will create a highly focused thin modem only operation.”
Ericsson has already made provisions of SEK -3.3 billion in 2012 which will cover costs related to the implementation of the strategic option.
The multimode thin modem business will generate operating losses of approximately SEK 0.5 billion in Q4, 2013, primarily related to R&D expenses.
ST will get ST-Ericsson products, other than LTE multimode thin modems, and related business as well as certain assembly and test facilities. ST will assume approximately 950 employees, primarily in France and in Italy, to support ongoing business and new products development within ST.
The remaining parts of ST-Ericsson will be shut down affecting 1600 resources.
Out of 1,600 employees worldwide, 500-700 are in Europe, including 400 to 600 positions in Sweden and 50 to 80 positions in Germany.
In addition, ST-Ericsson is pursuing external options for the future of the connectivity business, which employs around 200 employees worldwide.
Carlo Ferro, COO, will take over as president and CEO of ST-Ericsson, effective April 1, 2013.
ST-Ericsson’s sales in Q4 2012 were approximately flat sequentially. Its adjusted operating loss decreased to $133 million.
