STMicro to exit ST-Ericsson after a transition period

As a consequence of the major changes that occurred in the dynamics of the wireless market, ST has taken the decision to exit ST-Ericsson after a transition period and is currently in negotiations on exit options. This disengagement process has started, with the transition expected to end during the third quarter of 2013. No further details can be provided at this time, a press release states. ST will continue to support ST-Ericsson as its supply-chain partner, advanced process-technology partner (FD-SOI) and application-processor IP provider. ST is targeting an operating margin of 10 percent or more. In order to achieve the new financial model, ST expects to reduce quarterly net operating expenses to an average quarterly rate in the range of $600 million to $650 million by the beginning of 2014. “Today we are announcing the new ST, aligned with the new market environment,” said Carlo Bozotti, President and CEO of ST. “Based on that, we have made the decision to exit ST-Ericsson after a transition period. We will continue to support ST-Ericsson as their supply-chain partner, advanced process-technology partner and application-processor IP provider.” “Our new strategy is centered on leadership in sense and power and automotive products, and in embedded-processing solutions,” continued Bozotti. “Our specific focus is on five product areas: MEMS and sensors, smart power, automotive products, microcontrollers, and application processors including digital consumer. These families are expected to experience solid growth rates driven by secular trends and fit extremely well with our market-leading positions and competitive advantages. Our innovative products in these areas combined with our world-class technology and manufacturing, bring us even more opportunities to significantly grow and gain market share. “The new ST will be more focused, leaner and better positioned to deliver value to our customers and our shareholders, targeting to rapidly achieve operating margins of 10 percent.”