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 donâ€™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.