So Ericsson Mobile Platforms is to be shut down, with the loss of around 1600 jobs. Not to mention billions of dollars that ST and Ericsson sunk into the joint venture in an attempt to create a competitor to Qualcomm.
The history actually goes back a bit further. Nokia originally had an internal semiconductor design group and in 2007 they decided to get out of doing their own chip design and relying on Texas Instruments and ST Microelectronics. This included transferring most of their chip designers to ST.
Then NXP, the old Philips Semiconductors, had a mobile design group, many of which were the old VLSI Technology engineers in Sophia Antipolis. They merged this group into ST but retained an ownership share, although later ST bought out this remaining share.
Next Ericsson had an internal group called Ericsson Mobile Platforms (EMP). Its business plan was to create IP (software, silicon IP etc) to license to people who wanted to get into mobile, especially in upcoming markets like China.
The final step in the creation of ST-Ericsson happened 4 years ago when Ericsson set up a joint-venture with ST and merged the ST design group along with the EMP group.
STE had two lead customers: Sony-Ericsson (based across the traffic circle from EMP in Lund, Sweden) and Nokia (based in Finland of course). But both these companies initially screwed up the transition to smartphones when Apple and Samsung took all the profits. STE suffered too as Nokia and Sony-Ericsson dramatically lost market share.
Last year Ericsson decided to get out of the Sony-Ericsson joint venture and sold their half to Sony. Sony is now doing OK in the smartphone market but I don’t think it is primarily built on STE chips.
Meanwhile, Nokia decided to put all their eggs in the Microsoft Windows Phone basket. But Windows Phone only runs on Qualcomm chips so STE lost that customer.
So despite apparently having reasonable technology, including for 4G LTE, STE didn’t really have any customers. Both Ericsson and ST announced that they would look for a strategic buyer but nobody was interested. Today they announced that they would shut the company down completely. Some personnel would be repatriated and brought back into the parent companies but not everyone. And some technology, such as the LTE modem design, will live on.
What killed them? Firstly, the transition from featurephones to smartphones blindsided them. Nokia was doing well in smartphones but then decided to switch to Microsoft, which explicitly is specified to run on Qualcomm Dragonball processors only. STE was screwed as a side-effect. They lost their biggest customer. And Sony-Ericsson only made the transition to smartphones work after Ericsson bailed on that JV.
Apple and Samsung design their own silicon and/or use Qualcomm for the modems, so there is only a limited market for 3rd party silicon, although with companies like Huawei and Lenovo starting to get traction it might be increasing. It is an interesting case study in looking at a market that is booming (semiconductor is flat outside mobile) but where it is still possible to fail.Share this post via: