Ericsson (ERIC) a leading Swedish-based provider of telecommunication and data communication systems, and Swiss chip-maker STMicroelectronics NV (STM) – an electronics and semiconductor manufacturer headquartered in Geneva, Switzerland, according to AP – unveiled plans Wednesday to form 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 with ST Micro’s ST-NXP wireless division – will have 8,000 employees and be headquartered in Geneva, Switzerland. Ericsson’s mobile platforms is one of the leading suppliers of 3G technology to various brands of phones and one of the first co’s to license 3G technology platforms to mobile phone manufacturers. STMicroelectronics is the largest European semiconductors supplier grabbing 3.7% market share in 2007.
“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. 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.
The company is expected to supply four of the industry’s top five handset manufacturers, including Nokia (NOK), Samsung , Sony (SNE), LG and Sharp.
Ericsson, notes AP – would contribute $1.1 billion to the joint venture, out of which $700 million will be paid to STMicroelectronics. The joint venture is subject to regulatory approvals.