Will ST Micro Break-up?

ST Microelectronics reportedly is considering breaking itself up in order to offload its system-on-chip (SoC) business.

ST Microelectronics has been losing sales as its traditional customers such as Nokia and Research in Motion struggle in the smartphone market, which has tended to favour chip vendors such as Qualcomm, Texas Instruments and Nvidia in recent years. Now Bloomberg is reporting that ST Microelectronics is considering breaking up to allow it to offload its SoC business and concentrate on the profitable analog business.

According to Bloomberg’s report the firm is mulling the division of the company into two distinct parts, the analog business and the digital business that designs chips for use in set-top boxes, televisions and smartphone handsets. ST Microelectronics’ analog business includes chips that end up in cars and white goods, areas where there is expected to be significant growth in the coming years.

ST Microelectronics moved quickly to try to put a lid on the report by denying “the existence of initiatives which can compromise the unity of the company”. Nevertheless, the firm’s stock price rose sharply on the rumour, suggesting that the market would welcome such a move and perhaps giving the firm’s board the incentive it needs to put through such a plan.

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