ST Ericsson – End of the road

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ST Ericsson has effectively committed suicide with its inability to execute.  

  • After failing to find a buyer, ST Ericsson is being split up and handed back to its parents.
  • Ericsson is taking back the LTE multimode thin modem development while STM will take back the other STE products such as application processors.
  • In a nutshell, each company is taking back the assets that it contributed to the jv in the first place.
  • ST-Ericsson has already squandered its last get-out-of-jail-free-card and the only future that it is now left with is ignominious closure.
  • The LTE technology was there, working and ready to be deployed and critically, meaningfully ahead of its rivals.
  • Unfortunately, STE inherited STM’s chronic inability to execute and the LTE modem was perpetually delayed.
  • Consequently, Qualcomm repeated its normal process of out executing everyone else and hovered up all of STE’s willing customers.
  • Now that this lead has been thrown away, STE has nothing left to offer anyone that cannot be found better, cheaper and more reliably elsewhere.
  • This fact is clear from the fact that no one is willing to step up and take it over despite the good technology that the company has and I presume a give-away price tag.
  • I am sure that both Ericsson and STM will now quietly close down all of these operations as there is no future other than on-going losses.
  • This is good news for the rest of the wireless semiconductor industry as the market is looking increasingly crowded as the merchant market shrinks.
  • In this market Qualcomm and MediaTek are holding all the cards, are the most profitable and are likely to be the last men standing.
  • TXN is long gone, Renesas is on the way out and STE will soon be gone.
  • This leaves Nvidia, Intel, Squens, Marvel, Spreadtrum and Broadcom to slug it out as Samsung LSI and Hisilicon will increasingly dominate their in house customers.
  • Looking at cash reserves and other product lines, one has to believe that it will be Intel and Broadcom that will be left when the dust settles.

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.

Blog Comments

I find it strage that ST-E had execution problems since a lot of ex TI’ers joined this JV after TI shut down its cellular business.

TI was a least good at execution…

I dont think it was the incoming ex-TI’ers that messed this up…it was the lot that were already there.

[…] The cat has finally run-out of lives after being reincarnated in a joint venture and merged with the wireless assets of both ST Micro and NXP semiconductor. (see here) […]