By Cornelius Rahn and Chiara Remondini - Nov 28, 2011 6:19 PM GMT+0700
ST-Ericsson, Europe’s largest semiconductor maker, named Didier Lamouche as its third chief executive officer since 2009 to help it recover lost ground in the growing market for smartphone chips.
Lamouche will replace Gilles Delfassy as CEO and president on Dec. 1, the company, a joint venture of STMicroelectronics NV (STM) and Ericsson AB (ERICB), said in an e-mailed statement today. Delfassy will advise Lamouche, who joined the venture’s board in April, during a transition period, it said.
“Lamouche has been brought on board to try and turn around the company, which has missed on execution and breakeven target,” Adnaan Ahmad, a London-based analyst at Berenberg Bank, said by phone.
The company, formed in 2009, has switched its focus to Internet-capable devices and wants to add customers and cut costs. In June, it pushed back a break-even target from the second quarter of 2012, without providing a new date. ST- Ericsson is suffering as sales of older chip lines decline, while its newer smartphone and tablet chips are just getting started. The Geneva-based chipmaker has to attract clients and boost volumes to offset the decline in so-called legacy products.
ST-Ericsson, whose third-quarter loss widened as sales slumped 27 percent, this month won a contract to supply chipsets for future devices made by Nokia Oyj (NOK1V) using the Windows Phone system.
‘Crucial Phase’
Lamouche, who joined STMicroelectronics a year ago, headed Bull SA (BULL), a French information-technology company, between 2005 and 2010. He has worked as vice president of International Business Machines Corp.’s semiconductor operations and overseen the creation of Altis Semiconductor, a venture between IBM and Infineon Technologies AG.
“Didier Lamouche’s background and extensive industry experience will bring important additions to ST-Ericsson during this crucial phase in the company’s evolution,” said Hans Vestberg, ST-Ericsson’s chairman and CEO of Ericsson.
Lamouche, who will remain chief operating officer at STMicroelectronics, will “focus full time” on leading ST- Ericsson, it said.
STMicroelectronics rose 2.9 percent to 4.48 euros as of 12:20 p.m. in Milan, giving it a market value of 4.07 billion euros ($5.44 billion). Ericsson gained 1.8 percent to 66.70 kronor in Stockholm.
‘No Divergence’
STMicroelectronics CEO Carlo Bozotti said Nov. 17 that ST- Ericsson, currently managed as an independent venture, could be run closer to either of its parent companies. STMicroelectronics and Ericsson are “very much aligned and there is absolutely no divergence of view,” he said then. The parent companies are committed to their 50-50 venture and will continue to support its bid to create a “sustainable financial return,” according to today’s statement.
Ericsson last month agreed to sell to Sony Corp. its 50 percent stake in their 10-year-old mobile-phone venture Sony Ericsson Mobile Communications AB. Berenberg Bank’s Ahmad said Ericsson may also “ultimately” seek to dispose of its holding in ST-Ericsson.
“They’re not going to find a buyer, not even STMicroelectronics, until the venture becomes profitable,” Ahmad said. “Their hands are tied now.”
To contact the reporters on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net; Chiara Remondini in Milan at cremondini@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
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