STMicro Break-Up: Samsung Rumored as Buyer

October 11, 2012 by Jeff Shepard

STMicroelectronics NV is considering a breakup that may lead to a sale of its struggling mobile-phone chip business, according to a report by Bloomberg. Europe's largest semiconductor maker is evaluating the possibility to split its analog business, which makes chips and sensors, from its digital assets, which focus on semiconductors used in set-top boxes, televisions and handsets, the report continued.

This potentially would allow STMicro to focus exclusively on its analog and power management assets, giving it an opportunity to strengthen its position relative to its German competitor Infineon Technologies, recently recognized as the largest makers of power management semiconductors.

Samsung Electronics Co. is rumored to be a potential buyer for the digital assets but Nam Ki Yung, a Seoul-based spokesman for Samsung, said "the rumors are groundless," according to Bloomberg.

In a statement issued this morning, STMicro says it "denies the existence of initiatives which can compromise the unity of the Company. The Company will announce its Q3 2012 results as planned on Oct 23, 2012."

In the first half of the current fiscal year, STMicro's net sales slumped 18 percent to $4.17 billion as revenue from analog chips dropped 15 percent, while digital revenues dropped 24 percent. The opportunity for a sale to Samsung coupled with the stronger long-term potential of the analog unit are thought to be the driving factors in the possible sale to Samsung.

One potential hurdle to a split of STMicroelectronics lies in its ownership. France and Italy's governments control about 27.5 percent of the company. Any reorganization has to allay concerns about possible job cuts in those countries, it was said.