King Solomon approach
STMicroelectronics and Ericsson have decided to adopt a King Solomon approach to its lost making ST-Ericsson partnership. The loss-making mobile chip joint venture will be divided in two and the bits they don’t want will be shut down.
It will mean that 1,600 will lose their jobs.
The announcement ends months of speculation about the future of ST-Ericsson, which has been hit by a big drop in orders from Nokia. ST-Ericsson was outclassed by chip makers in Asia, which outsource most production and could react quickly to demand changes.
Sweden's Ericsson, which makes telecom network gear, and Franco-Italian chip maker STMicro, had sought a buyer for ST-Ericsson but could not find anyone interested. But then that is not surprising as ST-Ericsson has not made a profit since it was formed in 2008.
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, as well as certain assembly and test facilities. It will take some 950 employees, mostly in France and Italy.