updated 04:40 pm EDT, Wed August 20, 2008
Ericsson, STMicro join
Ericsson and STMicroelectronics on Wednesday announced they are entering into a joint venture to make wireless chips and software, effectively becoming a supplier to four of the major five cell phone makers with its products. The recent acquisition of Dutch chipmaker NXP by ST resulted in the company becoming the world's third-largest chipmaker, while Ericsson is the largest global mobile telecommunications equipment maker.
The newly formed company will now have the resources to compete with the likes of Qualcomm and Texas Instruments, with the agreement seeing $700 million paid by Ericsson to STMicro, with another $400 million invested into the venture, while STMicro will supply $1.2 billion in assets into the business. Each company will hold 50 percent of the new venture, and the technologies developed by the new company will include second-, third- and upcoming fourth-generation LTE mobile telecommunications standards.
The only main handset maker that will not be supplied by the new merger is Motorola, with ST bringing with it existing customers Nokia, Samsung and Sony-Ericsson, while Ericsson has LG Electronics and its Sony-Ericsson brand. These account for 80 percent of all handsets, with the exception of Sharp.