ST-Ericsson

~ the obit ~

ST-Ericsson was formed on 3 February 2009 by folding Ericsson Mobile Platforms into ST-NXP Wireless, a 50/50 joint venture between Ericsson and STMicroelectronics with its head office in Geneva. Ericsson's chief executive Hans Vestberg chaired the board and ST's Carlo Bozotti was vice-chairman, with each parent appointing four directors. It owned no wafer fabs. Everything it designed went out to foundries, which is the normal arrangement and also means that when a fabless company stops designing, there is nothing left over.

The intent was straightforward and, on paper, sound. Ericsson brought its 3G and LTE platform work, and ST brought its multimedia and connectivity products along with a 2G/EDGE platform. Between them they had the pieces to build a complete handset chipset, and Europe badly wanted a chipset vendor of its own while Qualcomm ran away with the market. What the merger did not bring was a customer base large enough to amortize the design cost of a modem generation.

It never broke even. On 11 December 2012 STMicroelectronics announced it was exiting, citing lost market share, and in the four years of the venture ST had slipped from fifth to seventh in global semiconductor rankings. The parents then spent three months looking for a buyer and, according to Bloomberg's reporting in March 2013, found nobody. On 18 March 2013 they announced they would break it up themselves. The transfer took effect on 2 August 2013 and Ericsson and STMicroelectronics confirmed the closing three days later.

~ the rap sheet ~

~ what the parents contributed ~

Ericsson Mobile Platforms is the half with the longer history. It was carved out of Ericsson Mobile Communications in 2001, during the European telecom collapse, and became a pure platform business once all the handset products went across to Sony Ericsson. For eight years its job was essentially one thing: build a UMTS platform other people could ship. The engineering sat in Lund, with satellite development centers as far out as Basingstoke and Research Triangle Park, and it supplied terminal technology to HTC, LG, NEC, Sagem and Sharp as well as to Sony Ericsson. It brought roughly 3,100 staff into the venture.

ST's wireless division arrived with the Nomadik application processor line, which traced back to the STn8800 and had won a Microprocessor Report analysts' award in 2003, plus the Nexperia work it had absorbed from NXP. Nomadik was picked as the starting point for the new company's application processors. So the joint venture began with two credible product lineages and a combined headcount in the thousands, which is more than most chip startups ever assemble, and that is precisely why the outcome is instructive.

~ the chips that shipped ~

From 15 February 2011 the whole portfolio was announced at once. Application processors went out as Nova and modems as Thor, with the combined parts carrying both names at once as NovaThor. The part numbers ran from the A9500 series through the M7450 to the U8500 and the L8580. Reading the list now, the striking thing is how many of them never reached a shipping handset at all.

Some did, and in volume. The U8500 went into the Samsung Galaxy S Advance, the Galaxy Beam and the Galaxy Ace 2, then the Galaxy S III mini, and into Sony's Xperia go, P, Sola and U. In January 2013 ST-Ericsson said it had shipped 10.7 million U8500 units in the final quarter of 2012 alone. Those were mid-range Android handsets, which is to say exactly the phones sold in volume in Turkey, because they were the ones people here could actually afford.

The Galaxy S III mini is the detail that says everything about where this company sat. Samsung did not list the chipset in the phone's official specifications at all, and it was ST-Ericsson that had to put out an announcement confirming its own silicon was inside. A component vendor reduced to publicizing its own design win, because the customer did not consider it worth naming.

The ending has a coda that makes the whole project look worse in hindsight. Ericsson took the LTE multimode thin modem business on 2 August 2013, with about 1,800 employees and contractors moving across, while roughly 1,000 went to ST along with the remaining products and some assembly and test facilities. The GNSS connectivity business had already been sold to Intel in May 2013 for $90 million. Then on 18 September 2014, thirteen months after inheriting the modem line it had fought to keep, Ericsson announced it was exiting the modem business altogether.

~ what lund lost ~

The March 2013 announcement put restructuring at up to 1,600 jobs worldwide, of which 500 to 700 were in Europe, including 400 to 600 in Sweden and 50 to 80 in Germany. Ericsson had already booked a provision of SEK 3.3 billion in the fourth quarter of 2012 for its share of the wind-down. ST put its own total cash cost for 2013 through the end of the venture at roughly $300 to $350 million. Both parents funded the shutdown equally.

Lund took the heaviest share of that, which is the part worth remembering about this company rather than the part numbers. A university town in southern Sweden had spent twelve years as one of the few places in Europe where mobile baseband was designed at scale, and the headcount that walked out in 2013 did not reassemble anywhere.

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