SAN FRANCISCO—STMicroelectronics NV has been ordered to pay about $59 million to NXP Semiconductors BV by an arbitration tribunal to settle a dispute over charges for wafers NXP supplied to ST's wireless joint venture in 2008 and 2009, ST said Monday (April 9).
ST (Geneva) 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. According to businessdictionary.com,
underloading is defined as a "situation in which a machine or plant is runt at less than full capacity, usually to accommodate process time or production rate variances, or to insure 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 through a statement.
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.