STMicroelectronics Malta again in sight for potential ‘trim’

French and Italian governments who own 27.5% of the semiconductor manufacturer ST Microelectronics, are set to fend off any suggestion to shed jobs in their countries and instead shift attention on other plants in Europen and Asia, including Malta.

The 'trim' to the company's resources is expected by April next year, as STMicroelectronics is focusing on stemming huge losses sustained during 2012.

The chipmaker may face political hurdles as it moves forward with job cuts. In France, Socialist President Francois Hollande and Industry Minister Arnaud Montebourg have pushed back against companies scaling down, with ArcelorMittal as the latest example. Montebourg in October hosted STMicroelectronics Chairman Didier Lombard at Bercy, France, to discuss strategy.

STMicroelectronics chief executive officer Carlo Bozzotti said that he was working to "cut costs" by US$150 million a year by the end of 2013, in a move that may affect as many as 500 jobs.

The semi-conductur manufacturer reported total operating expenses of US$1.5 billion for the third quarter and US$943 million for the second quarter of 2012.

Analysts predicted full-year sales will shrink 12% to US$8.48 billion, for a net loss of US$706 million, according to data compiled by Bloomberg before STMicroelectronics unveiled its strategic plan.

STMicroelectronics is working on cutting net operating expenses to a quarterly average of US$600 million to US$650 million by the beginning of 2014, forecasting its operating margins will grow to 10%"rapidly."

ST-Ericsson

STMicroelectronics Chief Operating Officer Didier Lamouche and Finance Chief Carlo Ferro have moved to restructure ST-Ericsson, announcing that it is expected to eliminate some 1,700 jobs in April, and transfer some product development to STMicroelectronics to trim costs.

Ceo Carlo Bozotti has meanwhile announced today that he is discussing options for an exit from ST-Ericsson with Swedish shareholder Ericsson.

Bozotti - refocusing STMicroelectronics's business as it struggles with weakening demand and competition from Asia - has so far pushed to put chips in cars, health and fitness machines, as key handset customers such as Nokia Oyj (NOK1V) and BlackBerry maker Research In Motion Ltd. (RIM) - dragged down revenue at ST-Ericsson and contributed to losses for the venture's parents.

In a separate statement, Stockholm-based Ericsson said it continues to believe that the technology it contributed to the venture has a "strategic value" for the wireless industry.

Ericsson will work with STMicroelectronics to find a "suitable strategic solution" for the venture formed in 2009.

Shares Jump

Shares of STMicroelectronics jumped as much as 8.8% and traded 5.4% higher at €5.27 in early trade this morning in Paris.

The stock's market value had shrunk by about 60% since Bozotti took over as CEO in March 2005 to €4.6 billion as of Dec. 7.

Ericsson slipped 0.3 percent to 64.60 kronor in Stockholm. The world's biggest maker of wireless-networking equipment this year completed the sale of its stake in handset venture Sony Ericsson Mobile Communications AB to Sony Corp.

Ericsson saw its third-quarter profit tumble 43 percent to US$326 million from a year earlier, weighed on by sagging network sales and on wider losses at ST-Ericsson.

Ola Rembe, an Ericsson spokesman, said the company would "intensify the conversation" around finding a long-term solution for the venture.