Ericsson and STMicroelectronics split to result in 1,600 job losses

Telecommunication equipment provider Ericsson and semiconductor manufacturer STMicroelectronics are to split up their mobile chip joint venture dubbed ST-Ericsson, leading to a loss of 1,600 jobs.

The 50-50 joint venture was established in February 2009, with headquarters in Geneva, Switzerland, but never made a profit. For three months, the partners looked in vain for a buyer for the whole business, but have now decided to split up parts of the business, and close or sell the rest.

Under their revised plan, Ericsson will take on the design, development and sales of the 4G modem products while ST will take on all other existing ST-Ericsson products, as well as certain assembly and test facilities. All remaining parts of ST-Ericsson will be closed.

Transfers to the parent companies are expected to be completed throughout the third quarter of 2013, subject to regulatory approvals.

ST-Ericsson has about 4,350 staff, of which 1,800 employees and contractors, mainly based in Sweden, Germany, India and China, will move to Ericsson. ST will take on 950 employees, primarily based in France and Italy.

The Guardian stated that about 100 British jobs at the Connectivity Solutions side of the business are affected, and that a further 27 jobs in Daventry, Northamptonshire could also be affected.

It was also announced that Carlo Ferro would replace Didier Lamouche as president and CEO of ST-Ericsson from April 1 2013 to see through the transition.

Ericsson estimates that it will generate operating losses of about £52m in the latest quarter, due to R&D costs. In the fourth quarter of last year ST-Ericsson made an operating loss of £860m. Ericsson has made a loss of $1.8bn since the first quarter of 2009, as a result of the joint venture.