Yahoo! News
Swedish wireless equipment maker LM Ericsson AB and Swiss chip-maker STMicroelectronics NV unveiled plans Wednesday to create a 50-50 joint venture that will make a key component known as chipsets for mobile phones.
The merger of Ericsson's mobile platforms unit and ST Micro's ST-NXP wireless division will have 8,000 employees and be headquartered in Geneva, Switzerland. The units' combined sales in 2007 were $3.6 billion.
The as-yet unnammed company is expected to supply four of the wireless industry's top five handset manufacturers, including Nokia, Samsung, Sony Ericsson, LG and Sharp.
"This is a great day for us. What really makes a phone is what's inside a phone," Ericsson Chief Executive Carl-Henric Svanberg said on a conference call.
"By combining the complementary strengths and product offerings of Ericsson and ST in platforms and semiconductors, the joint venture is well positioned to become a world leader."
Ericsson and ST will appoint four directors each to the company's board and Ericsson's Svanberg will be chairman.
ST's CEO, Carlo Bozotti, will be vice chairman. ST will also appoint the CEO of the new company.
Ericsson said it would contribute $1.1 billion to the joint venture, out of which $700 million will be paid to ST. The joint venture is subject to regulatory approvals.