ST-Ericsson announces job cuts on failure of joint venture | Business| Economy and finance news from a German perspective | DW | 18.03.2013
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Business

ST-Ericsson announces job cuts on failure of joint venture

Swedish mobile broadband Internet company Ericsson and French chip firm STMicroelectronics have confirmed the failure of their joint venture ST-Ericsson. Thousands of jobs are at stake.

The mobile technology venture between Ericsson and STMicroelectronics announced Monday it would axe up to 1,600 jobs after splitting the unsuccessful operation.

"ST-Ericsson will carry restructuring of its current operations which could impact some 16 hundred employees worldwide," the company said in a statement. "Out of the 1,600 jobs affected, 500-700 are in Europe, including 400-600 positions in Sweden and 50-80 positions in Germany."

The Franco-Swedish joint venture had a workforce of 5,000 in 2012. Founded in 2009, ST-Ericsson set out to conquer new markets after sluggish demand from Nokia and Sony.

Facing up to realities

But the joint venture failed to secure enough new and big clients to ensure profitability. Since its founding, ST-Ericsson had run up losses to the tune of $2.7 billion (2.1 billion euros).

Management said the splitting would be finalized by the fall of this year. It said Ericsson would take over the LTE mobile telephony chip business, with STMicro looking after the rest of the product range and some production facilities.

Reuters news agency reported the Swedish company would have to shell out some 400 million euros to split the operation, while its French partner would incur one-off losses of 345 million euros in the restructuring process.

hg/dr (AFP, Reuters)

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