ST Ericsson – No Life in the Old Cat

ST Ericsson is being quietly put to sleep after further failures.

• Ericsson is following Broadcom and Renesas into the void by announcing the closure of the baseband business that it took back from its j.v. with ST Micro in March 2013.
• 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)
• Multiple strategic shifts and numerous management teams have all been unable to revive its fortunes and now it will be closed down just three months after it was re-launched at Ericsson. (see here)
• This confirms my view that Ericsson was never prepared to invest in this business and was simply seeing if there was a greater return to be had from the assets that were returned to it.
• It’s one product, the thin LTE modem M7450, will continue to be delivered to those handset makers that have based handsets on it but there will be no future evolution.
• I suspect that Ericsson has done the rounds with handset and device makers and found that there is no way that it can compete against the technology of Qualcomm or the price of MediaTek.
• This will result in the loss 1,000 job positions but I suspect that a number of these will be able to be absorbed into the base-station business.
• This is due to the high level of cross over between the two businesses when it comes to radio expertise.
• This is yet another sign that the wireless baseband market is becoming very like the market for mobile base-stations.
• At one end there is a technology leader (Qualcomm) and at the other a cost leader (MediaTek).
• Anyone caught in the middle is likely to have an extremely difficult time especially as the biggest handset makers are looking to increasingly insource their chips.
• This is a minor incremental positive for both Qualcomm and MediaTek but the Ericsson chip business is already so small that I suspect it will vanish with barely a ripple.