Ericsson will sack 600 workers at its chip-making unit on top of 2,500 cuts to its mobile phone division following combined losses of almost €1.4bn for 2009.
Sales by Sony Ericsson, the 50:50 mobile phone joint venture, collapsed 40% as sales of touch-screen smartphones took off faster than expected, said the firm's president, Bert Nordberg. As a result, the firm showed a loss of €837m compared to a loss of €73m in 2008.
ST-Ericsson, a joint venture of STMicroelectronics and Ericsson, lost €539m for the year despite becoming the market leader by selling more than 6.5 million chip sets to China.
Nordberg said the firm would return the company to profitability by establishing Sony Ericsson as the communication entertainment brand based on a portfolio of mid- and high-end products, such as the recently announced Android-based phone, the Xperia X10.
"2010 will still be challenging as the full benefit of cost improvements will not impact results until the second half of the year. However, we are confident that our business is on the right track," he said.
ST-Ericsson president and CEO Gilles Delfassy said the industry was evolving to embrace a wider multimedia ecosystem. "The mobile platform has now become the convergence point for most consumer electronics, changing consumers' lives and opening up new opportunities even outside the traditional handset market," he said.
He said the firm would use its expertise in modems and multimedia processing to prepare the company for profitable growth.