Ericsson and Switzerland-based chip-maker STMicroelectronics unveiled plans to create a 50-50 joint venture to make wireless chipsets for mobile handsets.
An Associated Press report also said 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.
'This is a great day for us. What really makes a phone is what's inside a phone,' Ericsson CEO Carl-Henric Svanberg, quoted by the report, said.
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 3G 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, the Associated Press report further said.