STMicroelectronics should persuade Ericsson that they sell off their mobile chip joint venture ST-Ericsson, but probably to some aspiring Chinese company. That is likely to produce the quickest and most profitable - or least loss-making - exit for the two parent companies from what has become a failed project.
The other question to ask is who has the means to make something of
ST-Ericsson. I think that some companies from greater China do and
perhaps Apple, which has been going through a process of re-integration
to give itself the ability to develop and own chips during the roll out
of its mobile device strategy.
An acquisition by Apple or Intel might be the best result for keeping technologies and jobs in the western hemisphere long-term but a big
blockbuster chip company buy does not match Apple's methods to
date. It has preferred to pick up small, young IC design groups that provide
key technology or design capability at the best bang for buck.
Apple does not need all the baggage that would come with ST-Ericsson, or the ability to address multiple
customers. Which is why a sale to
a company such as HiSilicon Technologies Co. Ltd. (Shenzhen, China)
backed by Huawei Technologies Co. Ltd. (Shenzhen, China) might extract
the highest value in the shortest time for ST and Ericsson.
Other Chinese companies that might have an interest in ST-Ericsson could include Rockchip, Xincomm, Leadcore Technology, Nufront and Spreadtrum, Of these HiSilicon with its links with Huawei and Leadcore, aligned with Datang, would appear more likely. In Taiwan Mediatek Inc. (Hsinchu, Taiwan) is also a likely candidate.
Like most mobile chip companies ST-Ericsson has been looking to China and such things as the locally mandated and developed TD-SCDMA standard. For mobile chip companies in China or Taiwan ST-Ericsson could bring the means to address the standard as well as access to additional patents with which to address 3G and 4G markets around the world, depending on how the deal is structured.
However, the geopolitical nature of any such sale of ST-Ericsson should not be underestimated. It would be a loss of face for Europe and for the west and behind the scenes moves may be made to try and keep control of the technology and jobs in the west. But what can Europe do? It is a continent of many bankrupt nations and few successful ones. The 27-nation European Union could try to lean on the likes of Apple and Intel to have them step in and save ST-Ericsson. Apple and Intel want to be good European citizens because of the size of the consumer market the European Union represents.
Of course, such is the power of Apple in the mobile device market these days that one design win with Apple could make many of ST-Ericsson's problems go away – at least until they are designed out again.
(EE Times Confidential has produced a China Fabless Profile & Database report that can be ordered from https://subscriptions.eetimes.com/chinafabless)
Related links and articles:
Report: ST-Ericsson re-org is prep for sale
MediaTek: you need it, we’ve got it
Huawei escalates slim-phone battle, reveals plan for LTE modem IC
ST-Ericsson outlook bleak as large customer cuts orders
ST misses Q4 targets; CEO says bookings bottomed
ST-Ericsson replaces CEO with ST's Lamouche
How long has ST-Ericsson got?