NXP (GENEVA, SWITZERLAND) and STMicroelectronics have agreed to combine key wireless operations to form a joint-venture company with strong relationships with all major handset manufacturers. The new company will have the scale to better meet customer needs in 2G, 2.5G, 3G, multimedia, connectivity, and all future wireless technologies. Specifically, the company will be well positioned for Universal Mobile Telecommunication System (UMTS), the emerging 3G Chinese standard, and other cellular, multimedia, and connectivity capabilities including WiFi, Bluetooth, GPS, FM radio, USB, and Ultra Wideband (UWB). The joint venture will integrate the Silicon Laboratories’ wireless and GloNav’s GPS operations that were recently acquired by NXP.

The combined venture will be created from businesses that together generated $3 billion in revenue in 2007 and will own thousands of communication and multimedia patents. It will have both the scale and expertise to pursue the R&D investments necessary to establish itself as a leading player in the wireless and mobile-multimedia market. The new organization will combine key design, sales, marketing, and back-end manufacturing assets from both companies. For wafer-fabrication services, it will rely on its parent companies and foundries.

Both parent companies contribute strong businesses generating comparable revenue—each with 2007 operating profit of approximately $100 million. In order to create a clear ownership structure, STMicroelectronics will take an 80-percent stake in the joint venture. NXP will receive $1.55 billion from ST including a control premium to be funded from outstanding cash. They also have agreed on a future exit mechanism for NXP’s ongoing 20-percent stake.

The new company will be incorporated in the Netherlands and headquartered in Switzerland with approximately 9000 employees worldwide. It will operate its own assembly and test facilities in Calamba, Philippines and Muar, Malaysia. NXP’s Calamba site will be transferred to the joint venture. In addition, part of ST’s back-end operations in Muar will be separated from the parent company’s existing facility and transferred to the new company. The joint venture will be governed by a board of directors on which both Carlo Bozotti and Frans van Houten will participate. The deal is scheduled to close in the third quarter of this year. For more information, visit www.nxp.com.