STMicro reports $152m Ericsson loss; plans $2.64b chip investment

Intel's European rival reports a seventh consecutive quarter of losses on its wireless chip venture with Ericsson but announces a massive new deal with the French government.
Written by Andrew Nusca, Contributor

It's a week of up and down news for STMicroelectronics, Intel's biggest competitor in Europe.

The Swiss semiconductor company today reported a seventh consecutive quarter of net losses at its wireless chip venture with Ericsson, which will be split up next month. The loss for its second fiscal quarter was $152 million, nearly double the $75 million loss it recorded during the same time period a year ago. Revenue dropped 4.8 percent to $2.05 billion.

It's a less than graceful end for the unprofitable venture as STMicro refocuses its attention on putting more of its chips in automobiles and video game consoles, Bloomberg notes, with an eye toward keeping it ahead of Nokia and BlackBerry as those companies plot a resurgence.

To that end, the company said yesterday that it plans to invest almost two million Euros, or about US$2.64 billion per current exchange rates, together with the French government to develop a new line of microprocessors for smartphones, television set-top boxes and home routers to be used to control home security, HVAC and entertainment systems.

The market is estimated to be worth 67 billion Euros (US$88.4 billion) in 2013 alone. Intel, Broadcom, Texas Instruments, Infineon and Sony are vying for a piece of it.

Why a partnership with France, you ask? The countries of France and Italy are the company's biggest shareholders. Together, they hold a combined 27.5 percent stake in STMicro.

The company plans to spend 1.3 billion euros (US$1.7 billion) through 2017 on the collaborative effort, the New York Times reports. Those funds will go toward doubling the capacity of an existing production facility in Crolles, France as well as research and development.


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