SAN FRANCISCO -- STMicroelectronics NV has been ordered topay about $59 million to NXP Semiconductors BV by an arbitration tribunal tosettle a dispute over charges for wafers NXP supplied to ST's wireless jointventure in 2008 and 2009, ST said Monday (April 9).
ST (Geneva) said the arbitration tribunal, set up accordingto the rules of the International Chamber of Commerce (ICC), ordered the awardin connection with "underloading" charges included in the price ofwafers NXP supplied to ST-Ericsson, the wireless chip joint venture between STand handset maker Ericsson AB, from October 1, 2008, to December 31, 2009.According to businessdictionary.com, underloading is defined as a "situationin which a machine or plant is runt at less than full capacity, usually toaccommodate process time or production rate variances, or to insure itsreliability."
In a statement, ST said the company was disappointed withthe results of the arbitration, which it said were unexpected. But ST said thetribunal stated it chose not to address certain issues raised by ST, but thatthose 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 issueswere.
"ST intends to vigorously pursue its claims in thissecond arbitration aiming to convince the ICC Tribunal to reverse the economiceffect of its award in the first arbitration," ST said through astatement.
ST said the award would be recognized in its first quarterfinancials and is estimated to have a negative impact on the cost of thecompany's sales for that period. It is expected to impact ST's gross margin forthe period by about 2.6 percentage points, ST said. The company lowered itsmargin guidance for the first quarter to between 28.9 and 31.9%.
This story was originally posted by EETimes.
