Semiconductor wafers
Photograph by Will & Deni McIntyre — Getty Images/Photo Researchers RM
By David Meyer
January 27, 2016

The French-Italian chip firm STMicroelectronics is abandoning its set-top box and home gateway business, leading to the loss of up to 1,400 jobs.

ST said Wednesday that its fourth-quarter net revenues totalled $1.67 billion, 8.8% down from $1.83 billion the year before. Net profits were down to $2 million from $43 million the year before.

CEO Carlo Bozotti said this was in line with “guidance within a weak market,” but the conclusions of an internal review were clear: the struggling set-top box business needs to go.

“This difficult decision is consistent with our strategy to only participate in sustainable businesses and is due to the significant losses posted by our set-top box business over the past years in an increasingly challenging market,” Bozotti said.

So much for products such as ST’s “Cannes Wi-Fi” system-on-a-chip, unveiled last September for the benefit of manufacturers wanting to make interactive set-top-boxes with Wi-Fi that can deliver high-def video to multiple rooms.

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The business fell into ST’s digital unit, which also makes smartphone sensors. Its axing will see around 600 jobs redeployed into other parts of the company that make more successful chips for the automotive and industrial sectors, and the Internet of things.

Then there will be a “global workforce realignment” that will affect 430 or so employees in France, 120 in the U.S. and 670 in Asia. An ST spokesman said the company employs 43,200 people at the moment, so that’s around 3%.

The cuts will take time — the immediate step is the discontinuation of new platforms and products for the set-top-box business, and ST expects to shed 1,000 jobs this year.

ST expects to save $170 million a year through the move, while the restructuring costs will be around the same figure. At the time of writing, its share price was up 3% on the Paris stock exchange.

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