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STMicroelectronics To Quit ST-Ericsson - Quick Facts

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12/10/2012 1:48 AM ET

STMicroelectronics (STM: Quote) announced its new strategic plan, an outcome of a strategic review started over a year before, as the company witnessed major changes in the dynamics of the wireless market. Owing to the major changes in the dynamics of the wireless market, the company has decided to exit ST-Ericsson after a transition period and is currently in talks on exit options, while it would continue supporting ST-Ericsson as their supply-chain partner, advanced process-technology partner and application-processor IP provider. This disengagement process has begun, with the transition expected to end during the third quarter of 2013.

According to Carlo Bozotti, President and CEO of ST, "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."

The company's new strategy is based on two product-segment organizations namely Sense & Power and Automotive Products; and Embedded Processing Solutions. ST said it would build on its position in Sense & Power, comprosing MEMS and sensors, power discrete and advanced analog products, and in Automotive Products, from powertrain to safety, and from body to infotainment. In Embedded Processing Solutions, the company would concentrate on the core of the electronics systems rather than on wireless broadband access.

ST would address an estimated $140 billion market in 2013 and has significant potential to grow and gain market share. Looking ahead, ST aims for an operating margin of 10 percent or more. Also, ST expects to reduce quarterly net operating expenses to an average quarterly rate in the range of $600 million - $650 million by the beginning of 2014, in order to achieve the new financial model.

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by RTT Staff Writer

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