ST-Ericsson, the joint venture by Ericsson and STMicroelectronics, outlined a new strategy and business model to deliver complete system solutions for smartphones and tablets. The company will offer competitive integrated modem plus application processor solutions (ModAp) differentiating a combined approach of development and alliances.
In order to limit and optimize the R&D effort, ST-Ericsson will look to partnerships and alliances to develop key building blocks, such as application processors, modems, connectivity as well as power, RF, analog and mixed signal.
ST-Ericsson will continue to develop modem IP, a key competitive enabler, sell thin modems and possibly license modem IP to third parties.
The first partnership agreement is with the parent firm, STMicroelectronics. Under this arrangement, ST-Ericsson will transfer its application processor R&D activity and employees to STMicroelectronics and will then integrate the application processor in ModAp platforms for smartphones and tablets under a license agreement from ST. The two companies have entered into a commercial agreement to jointly promote and offer stand-alone processors and thin modems, respectively, to a broader range of customers and applications.
ST-Ericsson foresees a global workforce reduction of 1,700 employees worldwide, including the employees that would be transferred to ST as part of the partnership.
