ST-Ericsson has announced that a "leading semiconductor company" has bought the joint venture's mobile connectivity global navigation satellite system business.
The assets and intellectual property rights associated with the failed firm's navigation satellite system (GNSS) business will be sold. These include personal receivers that interact with GPS technology and GLONASS — a radio-based satellite navigation system operated by the Russian Aerospace Defence Forces.
ST-Ericsson estimates that by selling this section of its portfolio, the chip maker will be able to avoid employee restructuring charges and other associated restructuring costs, which will end up saving the company $90 million.
However, the struggling joint venture has not revealed the buyer, beyond commenting that the deal has been made with a "leading semiconductor company." The deal is expected to be completed in August of this year.
Since the formation of ST-Ericsson, the joint venture between Ericsson and STMicroelectronics has been constantly hemorrhaging money; net losses exceed $2 billion. Ericsson's Q4 results revealed that a $1.2 billion charge is expected due to the failure of the chip maker to turn a profit, but Ericsson still believes the joint venture has "strategic importance" in the wireless industry.
The three-month hunt to find a buyer to take over the business failed. As a result, Ericsson and STMicroelectronics chose to split the company on a 50-50 basis, with Ericsson taking over LTE-related aspects, whereas STMicroelectronics will assume existing products and business from the JV except those related to LTE. Once divided, roughly 1,600 employees will be axed.
The formal split of the joint venture is expected to be finalized in Q3 2013.