NXP sells digital TV chip business, takes stake in Trident

NXP Semiconductors has agreed to sell its TV and digital set-to box IC lines to fabless chip supplier Trident Microsystems.

As a result of the sale NXP will take a 60% shareholding in California-based Trident.

Talks to sell the digital TV business have been taking place since July.

The reason behind the deal seems to be a plan on the part of both companies to achieve what they see as economies of scale in an increasingly fragmented consumer IC market.

“Success in the consumer business requires a company culture based on rapid decision making, a fast pace of innovation, and a highly competitive cost structure,” said Sylvia Summers, president and CEO of Trident.

“This proposed transaction enables Trident to achieve the economies of scale required to compete in the digital home market, while also taking advantage of our start-up culture and cost-efficient Asia-based engineering and operations,” said Summers.

Under the terms of the transaction, NXP will receive newly issued shares of Trident common stock equal to 60% of the total shares outstanding post-closing, including approximately 6.7 million shares that NXP will purchase at a price of $4.50 per share, resulting in cash proceeds to Trident of $30 million.

As a result of adding the NXP semiconductor business Trident estimated it will have revenue of approximately $500m in calendar 2009, with approximately 60% attributable to television and 40% to set-top box.

Upon closing, Trident will have an extensive portfolio of consumer IP applicable to a range of markets, with over 2,000 granted and in-process patents including motion estimation/motion compensation and conditional access, as well as advanced 45nm SoC technology.

“We believe the consumer IC business is a large, high-growth opportunity, best served by a company dedicated to this market with a highly efficient operating infrastructure.  As the single largest shareholder in the expanded Trident, NXP can continue to take part in the significant upside opportunity for this business,” said Rick Clemmer, president and CEO of NXP.

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