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.
Compare ST's plight with that of Infineon, which got out of communications through the spin-off of its wired chips into Lantiq Deutschland GmbH and the sale of its wireless business unit to Intel. In the later part of the last decade Infineon's CEO Peter Bauer decided to focus on some of the less glamorous but higher margin parts of the chip industry: power, automotive, industrial and security. How smart does that look now?
NXP has a similarly focused strategy with CEO Rick Clemmer taking the company out of a number of consumer markets and now pursuing similar markets to Infineon with high-performance mixed-signal ICs. NXP of course got out of mobile wireless by selling its business to create the joint venture.
Meanwhile ST's CEO Carlo Bozotti, wanted to compete in digital mobile multimedia and tried win through creating a repository of European critical mass. It is perhaps bad luck for Bozotti that the ST-Ericsson's existence has coincided with major upheavals in the global economy and in major changes in the mobile device market.
But it is time for ST to accept that the plan has not worked and to focus on the things that it continues to be good at and that earn good margins, which include such things as MEMS, where it is a world leader, automotive electronics, microcontrollers and embedded applications.
While it is possible that a western company might want to acquire ST-Ericsson and access to patents I think greater interest might come from further east. I don't think Texas Instruments wants to get back into the world of razor-thin margins in smartphones and the while the likes of AMD or Intel may have the appetite but are they going to sit on the sidelines too long waiting for the cuts have their effect.
Nvidia Corp. defnitely want to compete in this area but it has its own line of ARM-based Tegra application processors and is pursuing a modem strategy based on its purchase of Icera Inc. (Bristol England) for nearly $400 million in May 2011. Surely any deal for ST-Ericsson would undermine the value of what Nvidia has already paid.
We all live in a capitalistic society. It doesn't matter whether ST-E serves Europe or NOT. What matters is how to save a company and make it profitable.
Having said that, ST-E seems over-staffed and may need to become lean and mean org.
It's easy to be an arm-chair analyst. But really, if there is one thing you want from ST-E today, what is it?
LTE modem? (But its IPs share the same roots as that of Nokia. Now that Renesas bought Nokia's modem business, ironically, Renesas is the owner of that IPs)
Many of us discussed breaking up the ST-E business, but one could also argue that the strength of ST-E today lies in the fact that it has ALL the elements necessary to make the next smartphone chips.
The new ST-Ericsson LTE/HSPA/GSM modem (in e.g. Thor M7400 and NovaThor L8540) is based on ex-EMP (Ericsson Mobile Platforms) architecture and accelerator IP, and ex-NXP DSP. There is no connection to the Renesas (ex-Nokia) modem.
Unfortunately ( or fortunately ) W. European policymakers do not think the same way as Wall St. / City of London or the masses who have swallowed their Kool-aid of so - called "free - market".
Germany just put out a couple of 100 billons to bail out Greece.
Whats a few more billions if there are no alternative to STE for addressing Europe's hardware needs ? Sale of Volvo to China was quite enuff !
The British, who lost industrial competitivenes to France & Germany almost since the advent of the steam locomotive ( invented actually by the Frenchman Cugnot years before Trevithick ), have long abandoned hard work and innovation needed to promote social responsibility and instead have depended on colonial exploitation and unabashed manipulation of the english speaking masses of America to do their bidding.
It is British interference in US media & policies since Thatcher that have greased the skids for our suicidal policies in the name of "free trade".
This is the normal end of a company which has been managed by poor people (Philips Semi., ex. VLSI France,ex. SiLabs US, shark investor KKR, arrogant ST France, Ericsson) more interested to take over the power from the previous direction than to develop competitive and innovative solutions. This is as well very representative of the history of electronic in Europe. Let's see what will be the next steps of auto-destruction !! We shall certainly have very good suprises.