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STMicroelectronics to quit ST-Ericsson

Posted: 11 Dec 2012     Print Version  Bookmark and Share

Keywords:wireless  joint venture  strategic plan  MEMS  automotive 

STMicroelectronics has announced its decision to exit from its wireless chipmaking joint venture ST-Ericssion as part of its new strategic plan to improve financial situation.

The European semiconductor company said it is negotiating "exit options" with Swedish shareholder Ericsson. ST said "this disengagement process has started, with the transition expected to end during the third quarter of 2013."

"Today we are announcing the new ST, aligned with the new market environment," said Carlo Bozotti, President and CEO, ST. "Based on that, we have made the decision to exit ST-Ericsson after a transition period. We will continue to support ST-Ericsson as their supply-chain partner, advanced process-technology partner and application-processor IP provider."

In a separate statement, Ericsson added, "Ericsson will continue to work together with STMicroelectronics to find a suitable strategic solution for the two companies' joint venture ST-Ericsson."

As per the new strategy, ST would focus on five product areas MEMS and sensors, smart power, automotive products, microcontrollers, and application processors including digital consumer.

ST will be divided into two product-segment groups—sense & power and automotive products; and embedded processing solutions.

"In line with the new financial model, the company expects both product segments to be profitable and to generate cash."

ST is targeting an operating margin of 10 per cent.

"In order to achieve the new financial model, ST expects to reduce quarterly net operating expenses to an average quarterly rate in the range of Rs.3,191.49 crore ($600 million) to Rs.3,457.45 crore ($650 million) by the beginning of 2014."

"The new ST will be more focused, leaner and better positioned to deliver value to our customers and our shareholders," added Bozotti.

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