Ericsson and ST Microelectronics said Monday they may lay off 1,600 people and dissolve a four-year-old joint venture, ST-Ericsson.
Ericsson, a maker of telecommunications gear, and ST Microelectronics, a French-Italian chip manufacturer, plan to end the Geneva, Switzerland-based joint venture for making chips for modems and smartphones. That decision came after the companies had failed to find a buyer for the unprofitable business.
ST-Ericsson tried to commercialize the smartphone chips and software developed by its corporate owners. But Nokia and Sony Ericsson, two of its big customers, ran into their own problems and had to stop buying the chips. Both of those companies lost out with the rising popularity of Apple and Samsung mobile devices. Rivals such as Qualcomm have also seen great success in mobile chips.
Ericsson said it would rehire 1,800 of the 4,350 employees, and ST Microelectronics would hire back 950 of the employees. The remaining 1,600 jobs depend on a global workforce review.
Ericsson’s share of the losses were $2.8 billion over four years. In the fourth quarter of 2012, ST-Ericsson’s operating loss was $1.3 billion for Ericsson alone. The companies announced last year that they planned to end the joint venture started in 2009.