ST-Ericsson will partner with STMicroelectronics in the development of future application processors. Under the terms of the agreement, ST-Ericsson will transfer its application processor R&D activity and employees to STMicroelectronics and will then integrate the application processor in ModAp platforms for smartphones and tablets under a license agreement from ST.

The entire ST-Ericsson application processor R&D team will continue, under a transitional cost sharing model, the development of the current product generation, ensuring full continuity of ST-Ericsson's product roadmap and full service to customers.

R&D activities will be consolidated into a significantly smaller number of sites, which will be specialized by technology as "centers of excellence." The larger ones will also integrate a wider portion of the smartphone platform value chain, with a view to optimizing time-to-market and delivery efficiency.

This comprehensive site transformation will significantly reduce the number of sites. Additionally the company aims at reducing its SG&A expenses by about 25 percent versus 2011 by streamlining the general and administrative activities and substantially reducing positions within the top paid management.

As a result of all the above initiatives, the Company - subject to negotiations with work councils and employee representatives as required - foresees a global workforce reduction of 1,700 employees worldwide, including the employees that would be transferred to ST as part of the partnership announced today.