Strategy Analytics: European Cellular Chip Industry Consolidation Creates Strong Player on World Stage

Business Wire, May 1, 2008

BOSTON -- The Strategy Analytics Handset Component Technologies service report, "NXP & ST Micro Wireless Merger Increases Pressure on Freescale, Infineon, MediaTek & Broadcom," analyzes the planned merger of wireless business units of NXP Semiconductors and ST Microelectronics and examines how this deal positions them relative to other cellular chip vendors.

"On paper, the deal appears to be very complementary. The combined entity will hold more than 3500 patents related to semiconductors for wireless. ST will contribute strength in chips for high-end cellphone, ASICs, connectivity ASSPs, multimedia processors and power management, while NXP will contribute single chip baseband-transceivers, low-end and mainstream GPRS and EDGE chipsets as well as expertise in RF," commented Sravan Kundojjala, Analyst at Strategy Analytics. "NXP will fill a low-end market gap for ST."

The merger will make 'NewCo' the third largest wireless semiconductor supplier, which should give it the scale and share needed to generate sustainable profits. Strategy Analytics believes that the 'NewCo' will have presence at almost all the major OEMs. The analysis also looks at the impact of a stronger combined European entity on the other cellular chipset vendors and in particular how this merger puts pressure on Freescale, Infineon, MediaTek & Broadcom.

Stuart Robinson, Director of the Handset Component Services added, "Strategy Analytics also predicts that the NXP-ST deal could trigger further industry consolidation."

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