Ericsson and STMicroelectronics are forming a joint venture to develop new designs for mobile platforms.
The new company, ST-Ericsson, will be based in Geneva and has combined pro forma revenues of about $3.6bn (£2.4bn) in 2008, and a cash position of $400m (£275m). The new company will not operate its own fabrication facilities, but will farm out the work to third parties.
"The strong backing of experienced parent companies, combined with the highly complementary and compatible cultures, gives ST-Ericsson an optimal starting point for quickly consolidating its position as a sustainable leader," said Alain Dutheil, president of ST-Ericsson.
"We have the scale to invest and bring to market the technologies that will give our customers the momentum to succeed. We will build on a well-established tradition of technology and innovation leadership to create a well focused R &D powerhouse."
Up to 85 per cent of the workforce in the new company will comprise R&D staff. The firm will develop new GSM, Edge, WCDMA, HSPA, TD-SCDMA and LTE reference designs.
ST will contribute its chip manufacturing and testing expertise to the deal, and Ericsson will provide the majority of the intellectual property.
ST and Ericsson already have a substantial business supplying mobile phone manufacturers such as Nokia and Samsung.
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