ST-Ericsson hires new CEO to stem losses
Rumors persist that Ericsson will seek to exit processor venture, as Didier Lamouche takes the helm
Published: 28 November, 2011
READ MORE: People/Management | ST-Ericsson | Semiconductor
ST-Ericsson has been struggling to build sufficient momentum behind its new NovaThor processors to compensate for the fall-off in sales of older products, or the decline of key customers like Nokia. Looking for a more rapid turnaround, the joint venture has replaced its CEO, appointing Didier Lamouche to try to return it to profit.
Lamouche is an internal choice, moving from the post of COO of STMicro, one of STE's parents, and he is the third CEO since the 50:50 venture with Ericsson was formed in 2009. He replaces Gilles Delfassy from December 1.
The official STE statement was upbeat, saying the JV would now "enter a phase with prime focus on proliferating design wins and scaling up and delivering volume, with the objective of translating its new portfolio into sustainable profitability and growth."
But this will be an uphill path. In the recent third quarter, STE saw its losses widen to $211m, from $121m a year earlier, on sales down 27% year-on-year to $412m. In June, the company admitted it would not hit its target of breaking even by the second quarter of 2012, and did not give a revised deadline.
Recent tribulations have inevitably aroused speculation that one or both of STE's parents would try to exit the venture - most probably Ericsson, which has been focusing more heavily on core activities or high growth markets, and which recently sold its 50% stake in its other major JV, Sony Ericsson, to its partner. Chipmaker STMicro - which had previously put its wireless products into a joint venture with NXP before combining that with Ericsson's EMP unit in 2009 - would be less likely to want to lose its mobile business altogether.
In a statement, Ericsson said that "both parent companies, STMicroelectronics and Ericsson, are committed to the 50:50 joint venture and will continue to support its strategy towards industry leadership and sustainable financial return."
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- STE poised for revamp and possible takeover - Mar 16
- Ericsson denies it will exit STE - Jan 16
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