STMicroelectronics NV and Ericsson Agree on Solutions for Split of ST-Ericsson Joint Venture
STMicroelectronics NV announced that Ericsson and STMicroelectronics NV have entered into an agreement on the way forward for the joint venture (JV) ST-Ericsson. Following announcements in December 2012, STMicroelectronics NV and Ericsson have been working together toward a strategic solution for the JV. As a result, several steps have been agreed upon to split up the JV. Firstly, Ericsson will take on the design, development and sales of the long-term evolution (LTE) multimode thin modem products, including 2G, 3G and 4G multimode. Next, ST will take on the existing ST-Ericsson products, other than LTE multimode thin modems, and related business as well as certain assembly and test facilities. Finally, the close down of the remaining parts of ST-Ericsson will be started. The formal transfer of the relevant parts of ST-Ericsson to the parent companies is to be completed during the Q3 of 2013. After the split up, it is proposed that Ericsson will assume approximately 1,800 employees and contractors, with the largest concentrations in Sweden, Germany, India and China. ST will also assume approximately 950 employees, primarily in France and in Italy, to support ongoing business and new products development within ST. In addition, as a result of the agreement, ST expects to incur cash costs, including the covering of ST-Ericsson's ongoing operations during the transition period and its restructuring costs, in the range of approximately USD 350 million to USD 450 million.
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