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Ericsson, STMicroelectronics Launch Joint Venture

Swedish wireless equipment maker and STMicroelectronics NV's unveiled plans to create a 50-50 joint venture to make wireless chipsets for mobile handsets.

STOCKHOLM, Sweden (AP) -- Swedish wireless equipment maker LM Ericsson AB and Switzerland-based chip-maker STMicroelectronics NV's on Wednesday unveiled plans to create a 50-50 joint venture to make wireless chipsets for mobile handsets.

The merger of Ericsson's mobile platforms unit and ST's ST-NXP Wireless division will have 8,000 employees and be headquartered in Geneva, Switzerland. Pro-forma sales for 2007 are calculated at $3.6 billion.

The company will supply four of the industry's top five handset manufacturers, they said, including Nokia, Samsung, Sony Ericsson, LG and Sharp.

Ericsson Chief Executive Carl-Henric Svanberg said that "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."

Ericsson and ST will appoint four directors each to the company's board and Ericsson's CEO Svanberg will be chairman.

ST's CEO Carlo Bozotti will be vice chairman. ST will also appoint the CEO of the new company.

ST will contribute with its multimedia and connectivity solutions and a 2G/EDGE, or a second-generation wireless telephone technology, a third-generation mobile broadband offering and customer relationships with Nokia, Samsung, and Sony Ericsson.

Ericsson is contributing with its third-generation and Long Term Evolution platform technology and customer relationships with Sony Ericsson, LG and Sharp.

The joint venture will also include hardware, software and support to enable handset manufacturers to develop mass-market products.

Of the nearly 8,000 staff, 5,000 come from ST and around 3,000 from Ericsson.

Ericsson said it would contribute $1.1 billion net to the joint venture, out of which $0.7 billion will be paid by the joint venture to ST. The joint venture is subject to ordinary regulatory approvals.

Ericsson shares rose 0.46 percent to 65.80 kronor ($10.32) in early Stockholm trading.

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