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ST-Ericsson facing uncertain future


Didier Lamouche

Ericsson said it had begun negotiations on the ownership of its troubled ST-Ericsson joint venture, after partner STMicroelectronics announced its intention to “exit ST-Ericsson after a transition period”.

In a statement, the infrastructure giant said that it “continues to believe that the modem technology, which it originally contributed to the joint venture, has a strategic value in the wireless industry”.

ST-Ericsson has been loss-making for some time – in Q3 2012, it reported a pro-forma net loss of US$190 million, compared to a US$211 million loss in the prior year period, on revenue of US$359 million, compared with US$412 million.

It has struggled as it has migrated from its legacy products to newer offerings, and has also suffered due to the weak performance of customers such as Nokia.

The company has seen some wins for its latest NovaThor integrated products recently, including a deal to power Samsung’s Galaxy S III mini, and its customers also include Sony Mobile and Lenovo.

In a statement, Didier Lamouche, president and CEO of ST-Ericsson, said: “ST-Ericsson set a new strategic direction in April this year to develop competitive system solutions either directly or with partners. We have been executing steadily and aggressively on our strategy and delivered on our commitments.”

It was reported in October that ST-Ericsson had appointed an external advisor to “ensure the best possible future” for the firm, with the company issuing a statement which noted that it is “natural for the parent companies to continuously review the strategy of the company”.

It was suggested at that time that possible options included a number of disposals split by technologies, or the re-absorption of various divisions by the parent companies.

Earlier this year, ST-Ericsson’s  future application processor development was shifted to STMicro. Both Ericsson and ST-Microelectronics said they will not be presenting further details of the possible future ownership of the joint venture at this time.

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