Ericsson and STMicroelectronics have decided to form a 50:50 joint venture (JV), combining their wireless chip and software businesses. The terms of the deal call for Ericsson to contribute $1.1 billion to the venture, of which $700 million is to be redirected to STMicroelectronics. The remaining $400 million is to be kept on the JV’s balance sheet. The deal will bring together STMicroelectronics’ microchip-making experience and Ericsson’s 3G and 4G cellphone networking technologies. Ericsson will also bring to the table the benefits of its relationships with LG and Sharp and its 50 per cent ownership of mobile phone-maker Sony Ericsson. The new venture will serve the world’s top four phonemakers – Nokia, Samsung, LG and Sony Ericsson. STMicroelectronics is, meanwhile, planning to exercise its option to buy out the remaining 20 per cent it does not yet own in its wireless chip venture with NXP, the former microchip division of Philips Electronics. STMicroelectronics had paid $1.55 billion to NXP in exchange for an 80 per cent stake.
