ST-NXP makes cutbacks to prepare for downturn
Published: 7 November, 2008
Ahead of its merger with Ericsson Mobile Platforms, the ST-NXP Wireless joint venture has announced swingeing cuts, gearing up for the likely downturn in the wireless chip market next year. While the EMP deal will give the group the volume to be a serious contender to Qualcomm and a top three wireless player, executives said it will also be important to be as lean and efficient as possible, in order to chase the San Diego frontrunner.
The 80:20 joint venture - formed just six months ago between two lumbering European chip majors, STMicro and NXP - will cut 500 jobs, or 6.5% of its workforce, and take a $50m restructuring charge. The axe will fall mainly in R&D as the company looks to "rationalize" its product portfolio and its anticipated development efforts. The venture is also looking to accelerate the timescale for achieving cost savings of $250m, as promised when the merger was announced.
There were no further details of which areas would be rationalized, but the venture currently covers most of the wireless bases, using its parents and foundries for fabrication. It said at launch it would target W-CDMA, TD-SCDMA, Wi-Fi, Bluetooth, GPS, FM radio, USB and UltraWideBand. The venture also integrates Silicon Laboratories and the GloNavs GPS units. Some of these activities may now be sidelined, with UWB probably a prime candidate, given the recent cooling of Intel, Texas Instruments and others on the short range standard. When EMP joins the group, forming a 50:50 venture with ST-NXP, it will bring a heavy focus on HSPA modules, especially for embedded 3G. ST is expected to buy out NXP's share at that stage.
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