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Ericsson and STMicroelectronics announced an agreement on the way forward for the joint venture, ST-Ericsson. As communicated by the parent companies in December 2012, both have been working together toward a strategic solution for the joint venture. After months of intensive joint work, the parent companies have selected the strategic option which maximizes their respective future prospects and growth plans.
The main steps agreed upon to split up the joint venture are: Ericsson will take on the design, development and sales of the LTE multimode thin modem products, including 2G, 3G and 4G multimode; ST will take on the existing ST-Ericsson products, other than LTE multimode thin modems, and related business as well as certain assembly and test facilities; the remaining parts of ST-Ericsson will be closed down.
The formal transfer of the relevant parts of ST-Ericsson to the parent companies is expected to be completed during the third quarter of 2013, subject to regulatory approvals. After the split up it is proposed that Ericsson will assume approximately 1,800 employees and contractors, with the largest concentrations in Sweden, Germany, India and China. It is also proposed that ST will assume approximately 950 employees, primarily in France and in Italy, to support ongoing business and new products development within ST.
It has also been announced that Carlo Ferro is appointed President and Chief Executive Officer of ST-Ericsson, effective April 1, 2013. Ferro is currently Chief Operating Officer of ST-Ericsson and succeeds Didier Lamouche. Ferro will lead the work in securing both business continuity of ST-Ericsson and effective completion of the transition phase.
"Ericsson continues to believe that the thin modems hold a strategic value to the wireless industry. With this move Ericsson will create a highly focused ‘thin modem only’ operation - an area in which both parents have invested significant amounts to establish industry leading technology and Intellectual Property," said Hans Vestberg, President and CEO, Ericsson and Chairman of the Board of Directors, ST-Ericsson. "Initial customer contacts give support to the belief that our modems will meet the requirements of the manufacturers in the rapidly growing smartphone and tablet market."