NXP Semiconductor is holding an internal debate to decide what to do with the $1.5bn it is to get from STMicroelectronics for the wireless assets which NXP put into the ST-NXP joint venture announced last week.

"There are three lots of people who could have got that money", Theo Claasen, head of business development at NXP, told Electronics Weekly.

"First, the bondholders, but we don't have to pay them; second, the private equity owners (led by Kohlberg Kravis and Roberts) but they have said they are not looking to take the money out of the business. They assume we can deploy the $1.5bn in such a way that it will produce a better return than if they take it now." So, it is the third claimant, NXP, which gets the $1.5bn.

"We are now looking to revisit our strategy where to deploy this money", said Claasen. "We are making an orderly assessment of how to spend the money best on where it will produce the best return on investment."

That means it will be spread over NXP's remaining business divisions of automotive, identification and multi-market semiconductors.

Asked why NXP had been willing to give ST control over its wireless assets, Claasen replied: "In the wireless business there are two leaders: Texas Instruments and Qualcomm; then there were six second tier players, us, ST, Broadcom, Freescale, Infineon and Mediatek. Qualcomm and TI have sales twice as big as ours and their R&D spend is twice as big as ours. To invest in new standards and new capabilities you have to invest $500m per annum in R&D."

Meanwhile the handset manufacturers have consolidated into five big player plus some Chinese indigenous players so, logically, the chip-set suppliers to the hand-set suppliers should also consolidate.

ST and NXP have complementary product lines, according to Claasen, with ST more focused on ASIC-based high-end phones and NXP more on ASSP-based mid and low-end phones.

See also: Mannerisms, the blog of David Manners. Updated twice daily, it's the distinctive, entertaining, authoritative and never dull commentary on the semiconductor industry, from someone who knows...