Reuters reports that STMicroelectronics plans to cut costs by quitting its joint venture with Ericsson. The ST-Ericsson mobile chipset venture made losses equivalent to $841 million last year and has been steadily losing market share.
ST-Ericsson earns lower margins that competitors like Texas Instruments and has been struggling ever since its once-biggest customer Nokia has been facing intense competition in the smartphone space. The venture could be shut down completely and sold in parts to competitors like Intel, Broadcom. CEO Carlo Bozotti forecasts that the move will help them reduce operating expenses to $600-$650 million per quarter by 2014. The company also plans to increase operating margins to 10 percent.