STMicroelectronics Exiting Ericsson Joint Venture By Doug Tsuruoka, Investor's Business Daily Posted 11:01 AM ET
Shares of Swiss-based STMicroelectronics (STM) were up nearly 4% in early trading Monday after the company said it intends to exit its ailing joint venture with Ericsson.
Europe's No. 1 chipmaker is grappling with sagging global demand for phone chips and other devices. It says it's negotiating "exit options" from ST-Ericsson, its joint venture with Swedish telecom gear maker Ericsson (ERIC) to make wireless chips and more. The move is part of a new strategic plan that STMicro's pursuing to kick-start its business.
STMicro says it expects the exit to be completed in Q3 2013.
In a statement, CEO Carlo Bozotti said STMicroelectronics would "continue to support ST-Ericsson" as part of its supply chain and technology partner.
Ericsson, which had another of its joint ventures fall apart last year when it left the mobile handset operations it shared with Japan's Sony (SNE), said it stands by the business plan for ST-Ericsson. Its U.S. shares were up 1.5% early Monday.
"Ericsson continues to believe that the modem technology, which it originally contributed to the joint venture, has a strategic value for the wireless industry," Ericsson said in a statement. The company added that one of its key priorities is the market introduction of new LTE modems that "it is certain will be very competitive and needed in the market."
Stockholm-based Ericsson said it "will not speculate on the possible outcomes, timeliness, and future ownership structures of ST-Ericsson."
RELATED: Ericsson Suing Samsung For Patent Infringement.
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