ST, Ericsson move ahead on wireless joint venture
Ericsson Mobile Platforms merges into ST-NXP Wireless as TI and Freescale continue to make changes to their wireless businesses.
By Suzanne Deffree, Managing Editor, News -- EDN, February 3, 2009
Change continues to come to the mobile world, as STMicroelectronics and Ericsson today announced the closing of their agreement merging EMP (Ericsson Mobile Platforms) and ST-NXP Wireless into a 50/50 joint venture.
The two companies announced the planned merger on August 20, 2008, just weeks after ST-NXP Wireless officially launched, with the intention to form a formidable competitor to the wireless industry’s mobile semiconductor kingpins including Texas Instruments and Qualcomm.
Prior to that, ST in April announced plans to merge its wireless business with that of NXP, suggesting it would exercise an option to buy NXP’s 20% stake in ST-NXP Wireless. With today's ST-NXP Wireless/EMP merger, ST has done so at an agreed purchase price of $92 million. The price was based on the performance of ST-NXP Wireless business in the last 12 months, ST said.
As part of the closing of the ST-NXP Wireless/EMP merger, Ericsson contributed $1.1 billion net to the joint venture, out of which $700 million was paid to ST.
Alain Dutheil, presently CEO of ST-NXP Wireless and COO of STMicroelectronics, will lead the joint venture as president and CEO. Each parent has appointed four directors to the board, with Carl-Henric Svanberg, president and CEO of Ericsson, as the chairman and Carlo Bozotti, president and CEO of ST, as the vice chairman.
Employing some 8,000 people -- about 3,000 from Ericsson and about 5,000 from ST -- the wireless company is headquartered in Geneva, Switzerland.
According to ST, the joint venture begins as a major supplier to four of the industry's top five handset manufacturers, which together represent about 80% of global handset shipments.
The merger's closing comes just in time for the Mobile World Congress in Barcelona starting on February 16.
The merger's closing also comes at a time of change in the wireless industry. Texas Instruments, which in October said it would sell its cellular baseband operation to put its focus largely on analog and embedded processing, announced last week it would hold on to the business after discussions with potential buyers determined it would be "more financially worthwhile for stockholders" to run the unit internally as an end-of-life business.
Freescale also announced plans to sell off its cellular unit in October on the troubled economy and ongoing handset ties with its loss-ridden parent company Motorola. Freescale said late last week that it continues to evaluate opportunities for that business, including possibly selling it off in piecemeal.
The merger further comes as former top handset maker Motorola today announced a more than $4.16 billion 2008 loss and continues with plans to spin out its mobile devices business.
