ST-Ericsson looks to save $120 million per year, may scrap 500 jobs

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ST-Ericsson, a joint venture of STMicroelectronics and Ericsson, this morning announced it will launch a cost savings plan to achieve about $120 million of annualized savings by the end of 2012. The company, which develops a range of mobile platforms and wireless semiconductor solutions, said the plan includes a workforce review that may affect up to 500 employees.

ST-Ericsson, which says more than 4 billion phones have been built using its products and technologies to date, is launching the cost-cutting plan due to “recent changes in the business environment and reduced demand for legacy products at certain customers”.

Gilles Delfassy, president and CEO of ST-Ericsson, says the cost savings plan is meant to improve the financial position of the company but will not compromise the execution of new products and delivery to its customers.

The company also points out that it will take longer to get to break-even than the previously anticipated Q2 2012, but did not provide a more detailed outlook.

ST-Ericsson is a supplier for many of the top handsets manufacturers on the planet, and last year generated sales of $2.3 billion. However, its business has essentially been shrinking from the moment it was formed (in February 2009) and its future looks equally bleak.

For your background: this is actually the fourth cost-cutting plan announced by the Geneva-headquartered joint venture in a little over 2 years in business.