December 10, 2012 - STMicroelectronics has come to a decision about its mobile chip JV with communications giant Ericsson: it's getting out of the business. The company's new strategic plan calls for an exit from ST-Ericsson as part of a broader strategic plan to focus on five product areas: MEMS/sensors, smart power, automotive products, microcontrollers, and application processors including digital consumer, stated Carlo Bozotti, ST's president and CEO.

The new strategy will be based on two product-segment organizations. A "Sense & Power and Automotive" division will include MEMS and sensors and power discrete and advanced analog products, plus everything the company does tied to automotive -- powertrain, safety, body, and infotainment. Another group, embedded processing solutions, will narrow its focus "on the core of the electronics systems rather than on wireless broadband access," according to the company. This includes microcontrollers, imaging products, digital consumer products, application processors and digital ASICs.

"Our new strategy is centered on leadership in sense and power and automotive products, and in embedded-processing solutions," Bozotti explained,. The more focused, leaner structure is expected to be profitable and generate cash in both divisions, rapidly improving operating margins to 10% while addressing a combined $140B market in 2013 (citing WSTS statistics). The embedded unit in particular is anticipated to swing back to profitability thanks to its narrowed technology focus, expanded customer base, and manufacturing synergies between microcontrollers and digital offerings.

That narrowed focus does not, however, leave room for ST's joint venture with mobile giant Ericsson. After a restructuring earlier this year including a workforce reduction, and calling in a strategic advisor just weeks ago (despite industry watchers' doubts that the loss-making unit would find any buyers), ST is currently in negotiations on exit options and plans to be fully out of the business "after a transition period" expected to be complete by 3Q13. ST says it will support ST-Ericsson as a partner in advanced process technology -- notably fully depleted silicon on insulator, or FD-SOI, to create power-sipping chips for future mobile platforms -- as well as a source for application processor IP and supply-chain.

"As semiconductors continue to be more pervasive, we see a world where ST products are everywhere microelectronics make a positive contribution to people's lives," Bozotti said. "With our new strategic plan, we will grow faster, be more profitable and overall become an even stronger company."