Do pigs fly?

“Do pigs fly?” was the comment of Europe’s leading semiconductor analyst, Macolm Penn, CEO of Future Horizons, when asked if the ST-Ericsson re-structuring would solve the troubled company’s problems.

The re-structuring was more about politics than technology. No French or Swedish engineers will be sacked, but the two UK sites at Daventry and Bristol will be closed.

Also to be closed are sites at Shanghai and Zurich and in Belgium and Finland.

1,000 engineers are to be sacked and 700 transferred to STMicroelectronics which is taking over the applications processor business.

That could be a way of dressing it up for sale to Taiwan, where it announced a co-development deal with HTC – or it could simply be seen as a capability which it needs to have in house.

The French union UNSA has three fears for the re-structured company. Once the LTE development is finished the unit could be sold. ‘Une fois la nouvelle génération de modem LTE sortie, l’activité sera-t-elle vendu comme beaucoup le craignent… avec potentiellement de nouvelles conséquences sociales importantes.’

The second fear is that, once the election season is over, there could be further upheavals. ‘Une fois les élections présidentielles et législatives oubliées, l’afflux d’ingénieurs de STE dans ST provoquera-t-il un plan social (ou PSE) dans l’ensemble de la R&D de ST.’

And the third fear, and the most apocalyptic, is that a failure of ST-Ericsson will bring down STMicroelectroncs. ‘Si ça casse, la crainte de l’UNSA est toujours que STE entraine ST dans sa chute.’

ST-E has now run up a debt of $1bn since starting operations in 2009 and has lost a total of $2bn. It lost $300m in Q1.

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