The European Union cleared the way for Intel and Switzerland's STMicroelectronics to combine troubled units that make a type of flash memory used primarily in mobile phones, an Associated Press report said.
The Associated Press report said the two chip makers and private equity firm Francisco Partners will form a new company that will buy up Intel's and STMicro's NOR flash businesses, a technology that has been steadily losing ground to a cheaper alternative, NAND, for digital cameras and music players.
The European Commission concluded that the joint venture would not cause antitrust problems because strong rivals existed for both types of flash memory and customers would be able to choose from a sufficient number of alternative vendors, the report said.
Intel, which is the world's largest semiconductor company and sells more than three-quarters of all microprocessors that run computers using Microsoft's Windows operating system, will receive $432 million in cash for its NOR flash unit, the report added.
STMicroelectronics, which makes the chips that sense motion in Apple's iPhone and Nintendo's Wii video game console, will sell for $468 million its entire flash memory operation, including the NOR division and its stake in a joint venture with Hynix Semiconductor for NAND flash chips.
Overall revenues for NOR flash chips were $8.3 billion last year, but the entire segment was unable to turn a profit, according to market researcher iSuppli, the report further said.