STMicroelectronics, NXP to make cheaper chips

Chip vendors NXP and STMicroelectronics have announced a joint venture to deliver cheaper chips for phones, an InfoWorld Daily report said. STMicroelectronics will have an 80% stake, while NXP will receive US$1.55 billion (€98 million) from STMicroelectronics, including a control premium, to be funded from outstanding cash.

The JV will be incorporated in the Netherlands with headquarters in Switzerland and have about 9,000 employees worldwide.

The joint venture between NXP and STMicroelectronics will build chipsets for wireless technologies, including 3G, Wi-Fi, Bluetooth, GPS, FM Radio and UWB (ultra-wideband). It will also integrate the Silicon Laboratories' wireless and GloNav's GPS operations recently acquired by NXP.

Leif-Olof Wallin, research vice president at Gartner, commented, 'The chipset vendors have been under an immense price pressure recently. This is a way to cope.'

As mobile phones become more popular in the developing world, new and more advanced phones have to developed at a very low cost. At the same time,they are becoming more complex and R&D intensive. For example, in the last few days, Nokia announced four phones for developing markets, with features like megapixel cameras and price tags of €90 (US$142) and lower. Without cheaper components Nokia can't build such products, according to Wallin.