NXP and STMicroelectronics are spinning out their wireless chip businesses into a new joint venture company with sales of $3bn.
STMicroelectronics will take an 80% stake in the joint venture. For this ST is paying NXP $1.55bn.
The new company will combine design, sales and marketing, and back-end manufacturing assets from both companies. It will use the parent companies and foundries for wafer fabrication services.
The joint venture will also integrate the Silicon Laboratories’ wireless and GloNav’s GPS operations recently acquired by NXP.
“The wireless semiconductor industry requires huge investments in new technology and innovative product roadmaps. This move will see two strong players propelling themselves into a leadership position,” said Frans van Houten, president and CEO of NXP.
“By creating this joint venture, we put most of the competitors at a distance. Together we will accelerate innovation which we anticipate will contribute to market share gains and improved financial performance," said van Houten.
The venture will target markets such as the emerging 3G Chinese market as well as WiFi, Bluetooth, GPS, FM Radio, USB, and UWB (Ultra-wideband). It will design and supply handset silicon, mainly. The wireless infrastructure chip businesses of the parent companies are not included in the jv.
The parents have also agreed on a future exit mechanism for NXP’s ongoing 20% stake, which involves call options, exercisable beginning 3 years from the formation of the venture.
The new company will be incorporated in the Netherlands and headquartered in Switzerland with approximately 9,000 employees worldwide.