Report: ST-Ericsson plans reorg, could become acquisition target

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ST-Ericsson will unveil a major revamp of its operations in the next two weeks, and could become a takeover target for other chipset makers, according to a Reuters article.

The article, which cited three unnamed sources familiar with the matter, said that ST-Ericsson CEO Didier Lamouche, hired in late November, will soon announce a major restructuring plan that could include site closures around the world and job cuts to lower costs. Additionally, the plan may include seeking a partner for application processors, according to Reuters.

Such a move could make ST-Ericsson a more palatable acquisition target for firms including AMD, Nvidia or Qualcomm (NASDAQ:QCOM). 

ST-Ericsson specializes in baseband processors, but does have a platform called NovaThor, which integrates both baseband and application processors. ST-Ericsson's fortunes have been waning as sales of Nokia's (NYSE:NOK) legacy Symbian smartphones have declined, since Nokia has long been the silicon vendor's largest customer. However, St-Ericsson has said NovaThor will be used by Nokia for upcoming smartphones using Microsoft's (NASDAQ:MSFT) Windows Phone software.

ST-Ericsson's parents, STMicroelectronics and Ericsson (NASDAQ:ERIC), declined to comment, as did ST-Ericsson, according to Reuters.  Ericsson CEO Hans Vestberg said in January that the company remains committed to ST-Ericsson despite having recently shed its investment in its handset joint venture with Sony. STMicroelectronics has also voiced support for the 50-50 joint venture.

Other chipset vendors have already purchased baseband firms though. Intel snapped up Infineon's wireless chip business, Nvidia bought Icera for modems and Broadcom purchased Beceem. "It's only a question of time--either STMicro will buy out Ericsson from the venture or it will be sold to a third party," Sami Sarkamies, an analyst at Nordea, told Reuters.

For more:
- see this Reuters article

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