Joint venture to lead industry

Carl-Henric Svanberg, President and CEO of Ericsson, says: "By combining the complementary strengths and product offerings of Ericsson and ST in platforms and semiconductors, the joint venture is well positioned to become a world leader. The industry continues to develop at a swift pace and customers see benefits from our broad offering. This partnership is a perfect fit and secures a complete offering, as well as the necessary scale for technology leadership.”

Building on a strategic relationship they had already established, Ericsson contributes its industry-leading 3G and LTE platform technology and ST its industry-leading multimedia and connectivity solutions as well as a complete world-class 2G/EDGE platform and strong 3G offering.

The businesses being combined are major suppliers to four of the industry's top five handset manufacturers, Nokia, Samsung, Sony Ericsson, LG and Sharp, who together represent nearly 80 percent of handset shipments globally.

For ST, this is the second joint venture it has entered in recent times. ST and NXT announced their agreement to join efforts in April 2008 and together became a top-three global supplier of advanced silicon solutions for mobile products. Carlo Bozotti, president and CEO of ST, calls the venture with Ericsson “another bold step.”

“By combining two industry-leading operations, we will create a world leader in mobile platforms and semiconductor solutions with even stronger capabilities to create customer value and continue to deliver rapid innovation,” Bozotti says.

The joint venture will employ almost 8000 people. ST is expected to exercise its option to buy NXP's 20 percent of ST-NXP Wireless before the closing of the transaction.

Frans van Houten, CEO of NXP, says: “To help ensure the success of the joint venture going forward all NXP's supply and support agreements will continue as planned. The additional proceeds of the 20 percent stake will enable NXP to further build leadership positions through innovation and investment in NXP's core businesses."

The joint venture will be headquartered in Geneva, Switzerland, and governance will be balanced. Each parent will appoint four directors to the board and Ericsson will designate Carl-Henric Svanberg as chairman while ST will appoint Carlo Bozotti as vice chairman. In addition, ST will designate the chief executive officer and Ericsson will appoint the executive vice president to the company.