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ST-Ericsson started off with great engineers. For some unknown reason, new product deadlines started to be missed and it is not unreasonable to deduce that this was due to some of the great engineers leaving the company.
ST-Ericsson also started out with money. It was able to lose $2 billion and rack up debt of $800 million in three years of trading.
Process, however, was tricky from the start. Parent company STMicroelectronics had only one 300mm fab – the 4/5k wafers-per-week Crolles facility. ST-Ericsson was therefore obliged to seek process in foundries and, with advanced processes difficult to obtain, the company’s product line obsoleted.
A veteran TI-er was imported to be CEO, followed by a veteran ST-er. The problem with post-Pistorio ST-ers is that, though competent managers, they aren’t leaders.
Pistorio took the mantle of leadership with him when he left ST and no one since has found it.
So there was no one who could find ST-Ericsson access to advanced processes, no one who could drum up new customers when Nokia collapsed, and no one who could get the new products out when the great engineers left.
Meanwhile the money ran out.
The industry hasn’t changed much in 30 years.
It’s about people, process and money
@Greg.
Couldn’t agree more. Increasingly coca-cola (or Unilver) kinda folks are coming in as c-level execs in technology industries. It is no fun trying to “educate” some of these people, and I don’t know if STE is blessed with such people at the top these days.
Not to sound fatalistic, but point is, if there was genuine engineering leadership in a company, why would anyone get a bean-counter to head it? This is what is meant by the “best idea at that time” getting executed…if an engineering company only produces people who are happy engineering and consider management/leadership as a crime (or something of a lesser virtue than engineering), am sorry to say, they deserve the Ed’s they get. Secondly, when there is an Ed at the top, engineers can accept their karma — OR — actually try converting the Ed into someone who could try to do something genuinely good for the company. And this takes a lot of effort on the part of the engineers. Unproductive as it may sound, methinks, it is necessary and could make a difference between success and a fire sale.
Now they announce 0% of salary increase for everybody.
While it makes sense considering losses, it will make that the remaining motivated people will leave or stop being motivated.
Another smart move.
wrt cheeses comments – that has not been my experience at all. The HP culture of management by walking around and talking to the engineers?, I have never seen it. Tell me where it exists, because I want to work there. In fact it has always been management by hiding or self interested deception. There are actually a few management studies which point out that engineers have higher leadership and entrepreneurial traits than most managers. The problem with parachuted managers is that they have been appointed generally as professional c-levels (by the board of investors) to provide a steady ship. Steady ship hands don’t work when you need to change course and so it works at coca cola or the post office, but not so much in tech. They are generally not leaders because people don’t look up to them in any professional sense. You can’t lead if people think you are undeserving of a leadership post ie. lack knowledge of tech/industry or simply have a toffee knosed personality.
Schooling managment on the virtues of a tecnical solution sounds sensible in theory, however, this trick requires a perceptive, perhaps enthusiastic, management capable of taking leadership and ownership. Which is far from anything I ever experienced at STE.
I suspect, cheese, that the extensive lay-offs have injured relationships between management and engineers.
Long ago, I had a wise old German boss who, on hearing innumerable complaints from a bunch of young engineers in the wild, told us that no matter what, it is always the “best idea at any given moment” that gets done. It might not be the best idea, but the idea has been explained to be better than the others. Worse, it might be the only idea around.
ST-E is going through this existential crisis, and if selling it were the best possible thing, then why not? Looking back, if sacking a bunch a engineers was the best possible thing, then why not? It’s too easy to blame management for the crisis in any company. Don’t always ask what the company has done for its engineers – once in a while, let us ask what the engineers could have done to save the company. In an increasingly complex world, explaining technical ideas (so that the best ideas are indeed executed) should be seen as an engineering job. In STE and several such companies, if this has not happened, breast-beaters should stop and rethink.
Disclosure: I don’t work for ST or STE, but have worked closely with (and for a while at) a EU Semi co. The current state of STE is pretty comparable to what I have been through….
That’s it, Bitter, all the smart guys are in a cave in Sicily being groomed in a new culture by Pistorio which will sweep Qualcomm, Samsung and Intel aside and take the IC market by storm.
Another possibility: Maybe the engineers secretly engaged in a silent Ayn Randian-style strike in order to bring down the collectivist nut jobs in charge?
Then one must wonder: Who is John Galt?
Pistorio perhaps?
Well, Bitter, when the company was formed in 2008 practically everyone was in R&D and since then they’ve sacked thousands. Because of the problems they now have, you suspect that either they sacked a lot of the really good engineers or the good engineers walked out because they didn’t like what they saw. Either way, I expect Qualcomm has picked up a lot of exceptional talent. Result – as you say – late and low quality products,
Yes noname, ST-E’s communication problem is dire – always a sign that a company is in deep doo-doo and doesn’t know how to get out of it. Management burrows down deep in the funk hole and becomes incommunicado.
The whole FD-SOI thing is weird, Robert, it’s not clear that they actually have made an FD-SOI chip – merely speculated on what it would look like if they did make one – and they absolutely have no way of making one in volume even if they made one.
Well when you’re sacking people on the grounds of their nationality – as ST-E did in sacking Brits and Swedes while protecting the French, you can see that the company is being run according to values that are not engineering values, [Anonymous] which may explain why ST-E now has engineering problems.
Understanding the future of the market and investing ahead of the market takes vision, leadership and balls, Robert, and those qualities were expunged from ST/ST-E management in the post-Pistorio purge.
“There is definitely brain power inside the company”
Yes, and obviously focusing really hard on maintaining the destructive status quo, as they currently are, and always has, since back in the EMP and NXP days?
“also willingness to make a great chip set”
The late and low quality of the products and deliveries aren’t exactly flattering in illustrating the strength of engineering found at STE?
The STE story continues.
I got a good laugh out of their SOI roadmap, it makes me wonder who they though would be impressed that FD-SOI was required for the processor
Multiple choice (Intel? TI? Nvidia? none of the above? some clueless PE investor? )
Maybe it’s just STE’s way of talking down the price.
I can’t believe that STE management would even suggest that Nokia caused their problems. After TI exited the market STE had more or less sole source to the company producing about 40% of the cell phones. Now that’s a really shitty starting place NOT !!!
Toady Qualcomm is definitely in the drivers seat and will likely remain there. Smartphone market is exploding in China and thereby killing the Feature-phone, and with it the fortunes of Mediatek and Spreadtrum are quickly diminishing. So it’s not just STE that’s caught in the down draft.
It’s all about politics. There is definitely brain power inside the company and also willingness to make a great chip set. But when it’s time to make decisions, there’s nobody to make them. Just endless meetings and responsibility pushing. I’d like to blame it on the French, but maybe I am simplifying the problem too much.
I come from background where we 1) make a decision 2) execute. Now it seems to be 1) push ideas around 2) try to avoid difficult tasks 3) not my problem. And it does not help when top management communicates only via corporate emails.
Hopefully STE gets out of this jam, people get to keep the jobs and the industry will not be dominated only by Qualcomm.
As we say in my country – two turkeys can’t make an eagle
“what chance did they really have”?
$2 billion USD to start with.
But not even that is enough to break down the heavily fortified bastions of mediocrity and stagnation formed around careerism, nepotism and favoritism.
It always had the makings of a disaster about it. Combining design centres in Lund, Grenoble, Basingstoke, Switzerland, Nice, Belgium, Istanbul (to name but a few) was never going to be easy.
A contractor friend told me about the state of their (outsourced) IT systems. It took 6 weeks for them to get a computer on his desk… To be fair, this sort of IT incompetence is by no means limited to just STE…
Then with an over reliance on Nokia, who missed the boat on the smartphone new world, what chance did they really have?
Yes Anonymous, Qualcomm is a formidable competitor and ST just doesn’t have the management firepower to cope. They should have looked for a top-notch CEO for ST-E who could have brought some dynamism and flair to the job
You are right, xxx, the word is they’re talking to Samsung about 28nm fab. If they haven’t got 28nm fab lined up at this stage of the game it shows how piss-poor the management is.
I think part of the answer for ST-E’s decline is the rise of Qualcomm. Qualcomm was able to carve out a market share in 3G chipsets before ST-E really got going. Qualcomm’s expertise in CDMA technology was also a factor. The speed of the transition from 2G to 3G seems to have caught ST-E, or at least it’s management, napping too.
It failed because of poor management. It has good engineer and in technology front it is ahead of others.
That figures, Bitter
Ha Ha Anonymous actually I thought the logo was crap
As one of the ST-Ericsson staff pushed out in 2010 (previously with NXP and with Philips prior to that), I do feel the need to add balance to this discussion, and to recognize also the good work done under the leadership of STM and Ericsson. ST-Ericsson simply do not get the credit they deserve for designing such a great logo.
During my lost years (working for STE), I learned this Universal One Line Truth:
ST-Ericsson: Where the business realities cease to exist and all sane proposals are nixed.
“ST-Ericsson started off with great engineers” – you mean “with some great engineers”. A vast swathe of the company was made up of the incompetents who had such a success with “Nomadik” – remember that? Those guys and girls were left in charge of application processors and the rest is history.
Yes indeed, Bitter, an FD-SOI chip-set with no access to any means of making it is just a laboratory curiosity.
I am not so sure about the bail-out hypothesis. I think it is more genuine than that. 🙂
A fair guess is that the management at STM and Ericsson probably are equally inept, so it is too much to ask from them to call the bluff when their equally incompetent careerist management buddies at STE laid out the unrealistic plans for their new ‘product portfolio’.
Yes Bitter, you get the impression that the ST/ST-E management don’t know what to do when things go wrong. ST-E has been going wrong, very quickly, for a couple of years – delinquent schedules, obsolescent processes, almost total disengagment from a failing Nokia, yet no one seemed to bother about it. The only explanation was they were expecting a bail-out from the French government – of course this may still come especially as Francois Hollande looks like winning the election. The post-Pistorio leadership doesn’t seem to know what it means to be leaders in a crisis.
Throwing an obscene amount of money at STE seems not enough to overcome their ineffiency, incompetence and mediocracy?
So it seems that the pearls was cast upon swine? And the pigsty soon will be up for sale?
Good luck with that Didier!