Ericsson, STMicro agree to form mobile JV - Mobile World Live

Ericsson, STMicro agree to form mobile JV

02 NOV 2009

Semiconductor firm STMicroelectronics and the world’s largest mobile network infrastructure vendor Ericsson announced today they are to combine their chip and mobile applications businesses into a 50-50 joint-venture with proforma 2007 sales of US$3.6 billion. The deal will see Ericsson Mobile Platforms and ST-NXP Wireless (the 80-20 venture between STMicro and NXP) merge with a headcount of almost 8,000 (approximately 5,000 from ST-NXP Wireless and 3,000 from Ericsson Mobile Platforms). Ericsson will contribute US$1.1 billion to the venture, out of which US$700 million will be paid by the venture to STMicro. The companies said the joint-venture will have a cash position of about US$400 million. STMicro is expected to exercise its option to buy NXP’s 20 percent of ST-NXP Wireless before the deal is closed.

Ericsson and STMicro said the venture will supply modems, multimedia and connectivity solutions for 2G/EDGE, 3G, HSPA and LTE technologies. It will also include all appropriate hardware, software and support to enable handset manufacturers to develop mass-market products. Headquartered in Geneva, Switzerland, the venture will target the two group’s existing customers such as Nokia, Samsung, Sony Ericsson and LG, four of the industry’s top five handset manufacturers who together represent almost 74 percent of global handset shipments according to CCS Insight. “This deal illustrates once more the strong consolidation trends in the wireless chipset market and the increasing value of software in the mobile industry,” Thomas Langer, analyst at WestLB, told Bloomberg.

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