ST-Ericsson, the semiconductor venture between STMicroelectronics NV (STM) and Ericsson AB, said Chief Executive Officer Didier Lamouche resigned as the shareholders seek to exit the unprofitable business.
Lamouche will step down as president and CEO at the wireless chip venture at the end of this month to pursue other opportunities, ST-Ericsson said today, without giving details. The 53-year-old Frenchman also resigned from Geneva-based STMicroelectronics, the company said in a separate statement.
The former STMicroelectronics chief operating officer was appointed in November 2011 as ST-Ericsson’s third CEO in as many years, and was put in charge of reviewing its strategy. ST- Ericsson hasn’t made money since its formation in 2009 as newer smartphone and tablet chips haven’t been able to make up for a decline in sales of older products. The owners are now seeking to pull out of the venture by the third quarter.
“The CEO leaving helps pave the way for action to happen at ST-Ericsson,” said Hannu Rauhala, a Pohjola Bank Oyj analyst in Helsinki. “A Chinese company may be interested in the venture to help build their own chip business for their own phones or tablets. Buying ST-Ericsson would be an easy way to do it.”
Alexis Breton, an STMicroelectronics spokesman in Paris, declined to comment beyond the company’s press release.
“Ericsson is still exploring all options and both parent companies are eager to find a solution,” said Karin Hallstan, a spokeswoman at Stockholm-based Ericsson.
STMicroelectronics fell 1.3 percent to 6.09 euros at 11:34 a.m. in Paris. Ericsson advanced 1.4 percent to 82.30 kronor on the Stockholm exchange.
Ericsson recorded an expense of 8 billion kronor ($1.2 billion) for writing off the value of the venture. On Dec. 20, Ericsson said it’s exploring all options for its half stake and didn’t rule out closing down the unit. JPMorgan Chase & Co. (JPM) is advising STMicroelectronics on its strategy.
The Geneva-based venture has also suffered because of less demand from handset customers such as Nokia Oyj (NOK1V) and BlackBerry. To reduce costs, Lamouche unveiled plans to eliminate 1,700 jobs last year and transfer the development of some of the more advanced processors to STMicroelectronics.
“Didier Lamouche came into ST-Ericsson when the company was in a very challenging situation and has been instrumental in bringing the company to the point where it is more focused on strategy execution, a much lower breakeven point and positive momentum where the new LTE modem-based products are ready for market introduction this year,” Ericsson CEO Hans Vestberg said in today’s statement.
Lamouche said a year ago that he wants to cut some of the venture’s 44 research sites to reduce expenses. Its biggest sites are in Lund, Sweden, and Grenoble, France. The venture has about 5,000 employees, according to a 2012 company document.
STMicroelectronics, which is 27.5 percent owned by the French and Italian governments, may face political hurdles as it moves forward with job cuts. In France, Socialist President Francois Hollande and Industry Minister Arnaud Montebourg have pushed back against companies scaling down. Montebourg in October hosted STMicroelectronics Chairman Didier Lombard at Bercy, France, to discuss strategy.