ST-Ericsson goes down

Ericsson and ST-Microelectronics will split up their lossmaking chip joint venture, carving up its more valuable assets and shutting down the rest.
 
As expected, the JV's parents revealed a decision to dissolve ST-Ericsson.
 
Ericsson will take the JV's LTE and multimode-LTE thin modem assets and around 1,800 ST-Ericsson jobs.
 
ST-Microelectronics will meanwhile acquire the venture's existing non-LTE products, some assembly and test facilities and 900 jobs.
 
The remaining parts of the company will be progressively wound up, which will likely result in the loss of roughly 1,600 jobs.
 
Ericsson revealed it has set aside 3.3 billion kronor ($512.5 million) to cover the costs of the wind-up. ST-Microelectronics meanwhile estimates that the process will cost it between $350 million and $450 million.
 
Ericsson CEO Hans Vestberg said the company “continues to believe that the thin modems hold a strategic value to the wireless industry. With this move Ericsson will create a highly focused 'thin modem only' operation.”
 
The ST-Ericsson JV was founded in 2009, but has racked up an estimated $2.7 billion in losses for its parents over this time.

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