European semiconductor businesses start to unwind

Posted by A Staff Writer

It is starting to look like ST-Ericsson might shut its doors, or at least undergo a massive transformation. The joint venture between Ericsson and STMicroelectronics was supposed to revamp the European semiconductor business, but it never quite took off.

The owners are now splitting up the joint venture's assets and laying off 1,600 souls in the process, TechCrunch reports.  ST-Ericsson was created in 2009 and in the last quarter of 2012 it reported net sales of $358 million, along with a $133 million operating loss and a $1.5 billion write down in Q3 2012. It was bleeding money quite profusely and the owners decided to pull the plug.

No buyer could be found for poor ST-Ericsson, although it was hoped that a major player like Qualcomm could go for it. As a result, the company will be split up, with Ericsson taking over modem products, while STMicro will end up with all other products. Unprofitable parts of the company will simply be killed off.

About one third of the layoffs will affect European workers, although thousands more will keep their jobs and change their business cards, as they will be working for Ericsson and STMicro from now on.