ST-Ericsson to lay off 500 as part of cost-savings plan

ST-Ericsson is still trying to reach break even

ST-Ericsson this week said it would cut up to 500 jobs as part of a cost-savings plan that could help the company reach profitability sooner.

The company, a joint venture between STMicroelectronics and Ericsson, develops communication radios and application processors for smartphones and tablets. The company is best known for its 2G, 3G and 4G communication radios, and has a small presence in the application processor space.

Jobs will be cut across all functions, including research and developments, sales and administration, said Roland Sladek, a spokesman for ST-Ericsson, in a statement. The company declined to comment on customers or products that affected the company.

ST-Ericsson said it hopes to achieve annualized savings of US$120 million by the end of 2012. ST-Ericsson said the cost-savings plan comes due to a "recent change in the business environment" and reduced demand for older products by certain customers.

Some chip makers have been struggling as smartphone and tablet companies such as Nokia lose market share to companies such as Apple. Texas Instruments earlier this month lowered its revenue forecast for the second fiscal quarter due to lower demand for its products from phone maker Nokia. ST-Ericsson's major customers include Nokia and Samsung.

The company, based in Geneva, started operations in 2009 and is still trying to reach profitability. The company was aiming for break-even by the second quarter of 2012, but said the current conditions could delay that target.

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Tags business issuesEricssonlayoffsSTMicroelectronics

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