ST-Ericsson looking to split up

Troubled chip vendor ST-Ericsson is to lose one of its parents, as the company looks for a way to turn its fortunes around.

European manufacturer STMicroelectronics said it has taken the decision to exit ST-Ericsson and is currently in negotiations on exit options. The disengagement process has started, with the transition expected to end during the third quarter of 2013.

Throughout the process, ST will continue to support ST-Ericsson as its supply-chain partner, advanced process-technology partner (FD-SOI) and application-processor IP provider, but has its eyes on a different end game.

“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,” said Carlo Bozotti, president and CEO of ST. “Based on that, our new strategy is centred on leadership in sense and power and automotive products, and in embedded-processing solutions. Our specific focus is on five product areas: MEMS and sensors, smart power, automotive products, microcontrollers, and application processors including digital consumer.

“The opportunities in this industry are extremely exciting,” said Bozotti. “As semiconductors continue to be more pervasive, we see a world where ST products are everywhere microelectronics make a positive contribution to people’s lives. With our new strategic plan, we will grow faster, be more profitable and overall become an even stronger company.”

Didier Lamouche, president and CEO of ST-Ericsson, commented on the news: “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. We have started to deliver integrated ModAp platforms to our lead customers and testing in-the-field of our cutting-edge LTE modem, as well as introducing a disruptive technology for the mobile market as we committed earlier this year.”

It was April when ST-Ericsson first announced that it would axe a quarter if its workforce, or 1,700 employees, and take a new strategic direction.

Third quarter loss hit $190m, up from $318m in the second quarter and $211m in the same period last year. So the needle is moving in the right direction, just not fast enough for the investors.