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ST-Ericsson split makes 1,600 jobs redundant

20 Mar 2013

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STMicroelectronics and Ericsson have announced that they will be splitting up their joint venture (JV), ST-Ericsson. The parent companies believe that this step is the best way forward to maximise future prospects for the parties concerned.

The main steps agreed upon to split up the JV are the following:

  • Ericsson will take on the design, development and sales of the LTE multi-mode thin modem products, including 2G, 3G and 4G multi-mode
  • ST will take on the existing ST-Ericsson products, other than LTE multi-mode thin modems, and related business as well as certain assembly and test facilities
  • Starting the close down of the remaining parts of ST-Ericsson.

The formal transfer of the relevant parts of ST-Ericsson to the parent companies is expected to be completed during the third quarter of 2013, subject to regulatory approvals.

After the split up it is proposed that Ericsson will assume approximately 1,800 employees and contractors, with the largest concentrations in Sweden, Germany, India and China. Meanwhile, ST will assume approximately 950 employees, primarily in France and in Italy, to support ongoing business and new products development within ST. Around 1,600 ST-Ericsson employees worldwide will be laid off.

New CEO
Today, it is also announced that Carlo Ferro is appointed President and Chief Executive Officer of ST-Ericsson, effective April 1, 2013. Ferro is currently Chief Operating Officer of ST-Ericsson and succeeds Didier Lamouche, who will pursue opportunities outside the company. Ferro will lead the work in securing both business continuity of ST-Ericsson and effective completion of the transition phase.

The agreement is fully in line with ST's financial model target of an operating margin of 10 per cent or more and with plans to reduce quarterly net operating expenses to an average quarterly rate in the range of $600 million to $650 million by the beginning of 2014.




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