RealTime IT News

Ericsson Sells Semiconductor Business to Infineon

Sweden's Ericsson Wednesday sold its semiconductor business to Germany's Infineon Technologies AG for some $377 million.

Infineon will pay $400 euros worth of stock for Ericsson Microelectronics (MIC) in a deal slated to reach fruition this summer. The deal also had the effect of making chipmaker Infineon, which had focused on making semiconductors for mobile phones, a strategic supplier of Ericsson's wireless infrastructure and phones. Ultimately, the two firms will hash out 2.5G and 3G products as well.

Ericsson is a noted purveyor of the Bluetooth wireless standard, and Infineon said it plans to expand its business in Bluetooth products and radio frequency (RF) components for mobile phones as well as mobile infrastructure. Infineon also plans to take advantage of Ericsson MIC's high end power amplifiers for base stations.

"This strategic partnership will significantly strengthen our communications business", commented Dr. Ulrich Schumacher, President and CEO of Infineon Technologies. "In addition to building on our wireless design expertise, Infineon will team up with Ericsson as a leader in the wireless world and become a strategic supplier", Schumacher continued.

Infineon will take over 700 employees, products, research and development, as well as manufacturing and production equipment.

The deal comes as no surprise, although Ericsson and investors would have preferred a cash deal to stock. In April, Ericsson reported a loss of $289 million and said that it would both cut roughly 20 percent of its workforce and try to raise almost $3 billion to cope with its situation.

Th four-cents-per-share hit was enough to make Ericsson pledge to purge up to 17,000 employees by 2003, with 7,000 to go this year. Up to an additional 10,000 may be let go next year. Ericsson's job cuts have been large and steady, as the company pink-slipped about 10,000 in 2001, and additionally 3,000 in the first quarter of 2002.

The firm has largely acknowledged that its cable business is up for sale, too.

Ericsson is hardly the only troubled phone maker, although its quest for money may be more dire. Nokia Tuesday said it will miss its second-quarter sales because of a slump in demand for mobile phones and network equipment.