Ericsson and STMicroelectronics combine for semiconductors and platforms

STMicroelectronics and Ericsson have announced an agreement to merge Ericsson Mobile Platforms and ST-NXP Wireless into a joint venture.

The 50/50 joint venture will have a product offering in semiconductors and platforms for mobile applications and will be a major supplier to Nokia, Samsung, Sony Ericsson, LG and Sharp. The fabless joint venture will employ almost 8,000 people with pro-forma 2007 sales of $3.6 billion. ST is expected to exercise its option to buy NXP’s 20% of ST-NXP Wireless before the closing of this transaction.

In the joint venture, ST contributes its multimedia and connectivity solutions as well as a complete world class 2G/EDGE platform and strong 3G offering, including customer relationships with Nokia, Samsung, and Sony Ericsson.

Ericsson contributes its 3G and LTE platform technology as well as customer relationships with Sony Ericsson, LG and Sharp. The joint venture, staffed by proven professionals across all functional areas, is designed for long term stability in its original structure, and is set to become key in product research, as well as design, development, and the creation of cutting edge mobile platforms and wireless semiconductors.

In a business where scale matters, the complementary product portfolios contributed by the parent companies will deliver significant scale and synergies by leveraging and expanding the existing strategic cooperation between Ericsson Mobile Platforms and ST-NXP Wireless.

Carl-Henric Svanberg, president and CEO at Ericsson, stated: “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. The industry continues to develop at a swift pace and customers see benefits from our broad offering. This partnership is a perfect fit and secures a complete offering, as well as the necessary scale for technology leadership.”

The joint venture’s top tier and broad customer base will also benefit from a tighter relationship that follows from the success of the existing cooperation between ST and Ericsson. The businesses being combined are major suppliers to four of the industry’s top five handset manufacturers, who together represent almost 80% of handset shipments, as well as to other exciting industry leaders.