STMicroelectronics has announced a new strategic plan to focus on five growth drivers and to exit ST-Ericsson by the end of next year. ST CEO Carlo Bozotti identified the five growth drivers for ST as MEMS and sensors, smart power, automotive products, microcontrollers and application processors including digital consumer. ST expects its new focus to enable it to achieve a 10 percent operating margin. The company said it was currently in talks on options to exit from ST-Ericsson after a transition period expected to end in Q3 2013, but provided no further details. ST will continue to support ST-Ericsson as its supply-chain partner, advanced process-technology partner and application-processor IP provider.
Ericsson said it would continue to work with STMicroelectronics to find a suitable strategic solution for ST-Ericsson, without speculating on the possible outcomes, timelines and future ownership structures of ST-Ericsson. Ericsson sees the introduction of LTE modems as a key priority for the joint venture. ST-Ericsson has started working with customers and operators on testing its LTE modem, the core of its next NovaThor and Thor platforms. It has undertaken extensive interoperability testing with Ericsson’s network infrastructure.
ST's new new strategy is based on two product-segment organisations: sense & power and automotive products; and embedded processing solutions. Sense & power includes MEMS and sensors, power discrete and advanced analogue products. Automotive products will range from powertrain to safety, and from body to infotainment. In embedded processing solutions the company will focus on the core of the electronics systems rather than on wireless broadband access. The embedded processing solutions segment includes microcontrollers, imaging products, digital consumer products, application processors and digital ASICs.
In line with the new financial model, ST expects both product segments to be profitable and to generate cash. In particular, embedded processing solutions will turn to profitability leveraging on a stronger product and technology focus, expanded customer base and manufacturing synergies between microcontrollers and digital products.
