Chip maker ST-Ericsson speeds up restructuring

Reuters News
Posted: Apr 23, 2012 11:08 AM
Chip maker ST-Ericsson speeds up restructuring

STOCKHOLM (Reuters) - Loss-making chip maker ST-Ericsson said on Monday it would shift some research and development to parent STMicro and expand other cost-cutting moves as it moves to offset a decline in business from feature-phone manufacturers.

ST-Ericsson, a 50-50 joint venture of Sweden's Ericsson and France's STMicroelectronics has lost $2 billion in its three years of operation as revenues from key clients Nokia and Sony Ericsson have shrunk 70 percent.

ST-Ericsson said the new measures in addition to ongoing restructuring plans would bring savings of about $320 million when they were completed at the end of 2013.

Restructuring costs will total $130-150 million.

ST-Ericsson will "transfer to STMicroelectronics its stand-alone application processor activities and ... take additional measures to accelerate time-to-market and lower the breakeven point," the company said in a statement.

ST-Ericsson has been seen as a "strategic asset" for potential buyers such as Nvidia, Intel and Texas Instruments, sources familiar with the situation told Reuters last month.

In addition to modems, ST-Ericsson's strength, today's smartphones use application processors that function in the same manner as a central processing unit (CPU) on a computer, running software and graphics.

ST-Ericsson releases its first-quarter results later in the day, after markets in the United States close.

(Editing by Helen Massy-Beresford)