ARM consolidation begins: ST-Ericsson set to split up

European tech powerhouses, Ericsson and STMicroelectronics, have announced that they will share the assets of ST-Ericsson as they proceed to winding up the loss-making semiconductor joint venture.

Ericsson will inherit the LTE multimode thin modem department (Thor, one that includes 2G, 3G and 4G multimode) while STMicroelectronics will take over the rest of the ST-Ericsson product range (which we assume will include the Nova application processor family and Novathor SoCs) in addition to chip making and test facilities.

The process is expected to be finalised by the end of the year with 1,800 ST-Ericsson employees joining Ericsson, nearly a 1,000 going to STMicroelectronics and 1,600 losing their jobs.

The restructuring process will cost between $800 million and $1 billion according to industry analysts, with Ericsson taking a bigger hit.

ST-Ericsson has been on the look for a potential buyer since late last year and has been badly hit by the fall of its main customer, Nokia, the rise of cheap alternatives in Asia (like Mediatek) and the hegemony of Qualcomm.

We recently wrote an article about the incoming consolidation in the ARM market, a process driven by intrinsic nature of the ARM ecosystem and rising competition from Chinese fabless companies.

Back at MWC last month, we had a look at ST Ericsson’s best-of-breed eQuad system-on-chip, the Novathor L8580, which is clocked at up to 3GHz.