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cbbear
Nothing to do with Europe. US-based TI, Intel and Freescale went the same path ...
timemerchant
Maybe not so much lack of engineering skills, but maybe thinking in Europe needs ...
Yoshida in NY: Can ST-Ericsson shrink to survive?
Junko Yoshida
12/11/2012 12:01 AM EST
NEW YORK – How many people does it take to run a mobile chip company these days? Anyone care to guess?
Well, I’ve checked, and apparently you need 4,000 to 5,000 employees.
Until recently, I had no idea on how big an engineering team a mobile chip vendor needs to develop a mobile platform that covers both "global" modem technologies and apps processors.
I was stunned when I heard a Renesas Mobile executive rattling off the number of people he said a mobile chip company needs. Specifically, he cited the manpower needed for everything from the actual development of a modem chip to pushing the modem chip out in the field, to getting an operator’s certification.
I followed up by talking to more people in the mobile IC industry, each time popping the "how-many-people-does-it-take-to-screw-in-a-light-bulb" question. They all confirmed that 1,000 engineers aren’t enough, especially if you’re gunning for the global market.
In early 2009, when ST-Ericsson was born as a result of the merger of Ericsson Mobile Platforms and ST-NXP Wireless, the announcement said 8,500 people would be working for ST-Ericsson.
In April, struggling ST-Ericsson said it would cut 1,700 jobs, or 25 per cent of its workforce, including some senior executives, to reduce administrative expenses. As drastic as this sounded, it would still leave ST-Ericsson today with close to 5,000 employees. After ST’s announcement on Monday (Dec. 10) that it will exit the ST-Ericsson joint venture in the third quarter of 2013, observers in the financial community insisted that ST-Ericsson, if it’s serious about finding a buyer, still needs to shed more workers.
Renesas Mobile, similarly distressed, also employs close to 4,000 people.
MediaTek, 65 percent to 70 percent of whose revenue is generated by the mobile business, employs about 6,600 people. In other words, MediaTek, has more than 4,000 employees committed to mobile technology development.
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GeeKv2
12/11/2012 6:00 AM EST
No doubt ST's exit is a major blow to Ericsson. It would be very interesting to see who would want to partner with them now to fill ST's void. Or who knows, Ericsson will shut the handset modem shop altogether.
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junko.yoshida
12/11/2012 7:12 AM EST
The point of the story is this: As more and more chip companies are asked to do everything from chip design to software development and designing a "platform," chip companies ought to get paid more or find another bis model ( or simply going out of business.) Especially in a highly competitive mobile chip world, this sure ain't looking sustainable.
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iniewski
12/12/2012 10:49 AM EST
5,000 people for a mobile chip company sounds too high and bloated...there are many companies that have less engineers...perhaps having too many people is a problem for Renesas or ST-Ericsson
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junko.yoshida
12/12/2012 11:30 AM EST
That was my original thinking...but then, when you think about all the other telecom operator-related stuff you need to do (beyond chip design)especially when the world has so many different cellular standards with different flavors, it suddenly dawned on me that this may be a business that NO chip company wants to be in. Seriously, it appears to require a lot of people to address the "global" cellular market.
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iniewski
12/13/2012 11:05 AM EST
I see your point Yunko...I still think you don't need that many people...not sure you need to cover in your product line all telecom standards unless you are doing huge SoC that cover all of them
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marcos83
12/12/2012 10:54 AM EST
ST-Ericsson have never seemed a solid company to me. They seemed a mish-mash of several divisions that were formed by necessity rather than some unique ideology such as what Apple have.
ST should be even more ruthless and define a very clear ideology of how they will re-dominate.
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holahola
12/12/2012 1:53 PM EST
Ideally, you would expect a product company to have solid engineering/management skills, but in most cases they have minimal skills and talent (focus more on profit margin and staying afloat and Wall Street expectations, no more focus on real enegineering talent), and so there are plenty of repeated mistakes along the way.
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timemerchant
12/13/2012 8:38 PM EST
Maybe not so much lack of engineering skills, but maybe thinking in Europe needs to change. Clear out the banking type scandals, have smaller companies with less red tape, get the lazy off social life support/ welfare, and actually contribute (ie. Don't outsource to China at costs that don't allow them to produce quality, and then sell the stuff at German quality prices). Markups are too high in Europe or the UK (and Oz), so they will never be able to compete with Asian suppliers. Tax rates and the dole don't help either -- its that simple.
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cbbear
12/17/2012 12:18 PM EST
Nothing to do with Europe. US-based TI, Intel and Freescale went the same path even before ST did.
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