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Wednesday, January 27, 2016

Falling sales sees ST pull out of set top box business

By Nick Flaherty

The downturn seems to be hitting ST Microelectronics already with a drop in turnover and profits for the last year. This has prompted the company - one of the leading embedded chip makers - to pull out of the set top box chip business where it once led the world.

"After an extensive review of external and internal options for the future of the Company’s set-top box business, ST will discontinue the development of new platforms and standard products for set-top-box and home gateway," said the company. "The slower than expected market adoption of leading-edge products and increasing competition on low-end boxes, combined with the required high level of R&D investment, has led this business to generate significant losses in the course of the last years."

The company was once the dominant supplier of STB chips, battling LSI Logic, but has lost out to lower cost suppliers in recent years. It had been using the transputer architecture acquired from UK firm Inmos as the core controller for these chips, but the move to high end 4K and UltraHD systems has not happened quickly enough to save the business unit as highlighted in today's figures. 

The company saw revenue decline to $6.8bn from $7.4bn last year, with operating profits falling from $258m to $174m, a substantial drop.

"ST’s digital business is at the core of the company’s strategy," it said. "It represents a significant share of ST’s revenues and focuses on growing applications, with a portfolio that includes general purpose and secure microcontrollers, digital automotive products, ASICs and specialized imaging sensors."

As a result, the company is to redeploy about 600 employees currently associated with the set-top-box business, to support ST’s growth ambitions in digital automotive and microcontrollers.

Around 1400 employees will also be affected, with 430 in France through a voluntary departure plan, about 670 in Asia and about 120 in the US. The company had closed is set top box development activity in Bristol, UK, back in 2014.

This will cost $170m but save $170m a year.

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