ST-Ericsson to Unveil Major Operations Revamp

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According to international multimedia news agency Reuters, ST-Ericsson is preparing to unveil a major operations revamp within two weeks. As per the report, the troubled mobile chip company is on track for a takeover by a peer or competitor that would create a formidable rival to Qualcomm Inc.

ST-Ericsson is a 50-50 joint venture of Sweden's Ericsson and France's STMicroelectronics. Some potential buyers identified by Reuters include Advanced Micro Devices (AMD), Inc., Nvidia Corp., Intel Corp. and Texas Instruments Inc. In fact, this information was provided to Reuters by three sources familiar with the situation.

One source told Reuters, “It is the only answer to Qualcomm. On the patent side, they are the one company to go after. That makes sense.”

Reuters reporters Nadia Damouni and Tarmo Virki wrote, “Potential buyers will likely drag out their courtship over a year or two, waiting for ST-Ericsson to first show signs of a turnaround under new chief executive Didier Lamouche, a restructuring expert hired late last year.”

Damouni and Virki further added, “Lamouche is due to unveil by the end of March a restructuring plan that is set to include site closures around the world and major layoffs to lower costs.” The report indicates that the new strategy could also include seeking a partner for application processors.

According to research firm Strategy Analytics, Qualcomm topped the smartphone applications processor market in 2011, capturing about a 50 percent revenue share and taking the long-held crown from Texas Instruments. However, the research firm thinks that ST-Ericsson’s NovaThor chipsets offer one of the few integrated alternatives to Qualcomm's market-leading Snapdragon.

The Reuters report brings a quote from CCS Insight analyst John Jackson, “The holy grail is to sell an integrated modem with an application processor into mainstream smartphones.”

Meanwhile, consolidation is the name of the game in the semiconductor world with major chip suppliers like Intel, Nvidia and Qualcomm fillings holes by acquiring other companies. For instance, Intel acquired Infineon Technologies AG's wireless solutions business to make inroads into smartphones and mobile devices, while Nvidia bought UK semiconductor company Icera and Qualcomm acquired networking and connectivity solutions provider Atheros.






Edited by Jennifer Russell
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