Ericsson, STMicro Join Forces In Chipmaking Venture

August 20, 2008 11:12 a.m. EST

Paris, France (AHN) - Mobile equipment maker Ericsson and chipmaker STMicroelectronics announced Wednesday plans to create a joint venture supplying chips to cell phone makers, such as Nokia. The new business would compete with Qualcomm and Texas Instruments.

While both companies will have 50 percent stakes in the new Geneva, Switzerland-based company, Ericsson will offer $1.1 billion for the partnership - $700 million to go to STMicro.

The partnership, which will employ almost 8,000 people, will use the existing ST-NXP Wireless business, which already has ties to Nokia, Sony Ericsson, Samsung and LG Electronics.

The ST Micro paid $1.55 billion for its 80 percent stake in ST-NXP. Wednesday, ST said it would acquire the remaining 20 percent stake before the deal with Ericsson closes.