Arbitrator orders ST Micro to pay NXP $59m
ST said the arbitration tribunal, set up according to the rules of the International Chamber of Commerce (ICC), ordered the award in connection with "underloading" charges included in the price of wafers NXP supplied to ST-Ericsson, the wireless chip joint venture between ST and handset maker Ericsson AB, from Oct. 1, 2008, to Dec. 31, 2009. Underloading is a situation in which a machine or plant is run at less than full capacity, usually to accommodate process time or production rate variances, or to ensure its reliability."
In a statement, ST said the company was disappointed with the results of the arbitration, which it said were unexpected. But ST said the tribunal stated it chose not to address certain issues raised by ST, but that those issues would be part of a second arbitration before the same tribunal, which is scheduled to be heard in June. ST did not specify what these issues were.
"ST intends to vigorously pursue its claims in this second arbitration aiming to convince the ICC Tribunal to reverse the economic effect of its award in the first arbitration," ST said.
ST said the award would be recognized in its first quarter financials and is estimated to have a negative impact on the cost of the company’s sales for that period. It is expected to impact ST’s gross margin for the period by about 2.6 percentage points, ST said. The company lowered its margin guidance for the first quarter to between 28.9 percent and 31.9 percent.
If you enjoyed this article, you will like the following ones: don't miss them by subscribing to :
