The wave of mergers in the wireless mobile sector drives the IC industry to further integrate

The wave of mergers in the wireless mobile sector drives the IC industry to further integrate

The integration of the semiconductor industry is far from over! But not necessarily in the way most people think. The joint venture planned by STMicroelectronics and Ericsson Mobile Platform Division (EMP) may be another way out for semiconductor development.

Unlike previous integrations and malicious takeovers that have brought a strong impact on the company, this cooperation case was conducted in a gentleman's way. First, NXP withdrew from the mobile handheld device chip business, and then Ericsson set foot in a strong alliance with ST and formed a joint venture company stronger than any independent company.

This powerful alliance created a strong first group company to fight against the biggest competitor in the field of wireless chips. Individually, although EMP is technologically leading, it lacks market momentum. The situation with ST is just the opposite.

In May this year, Deutsche Bank market researchers divided mobile communication chip suppliers into four categories. Although ST has a higher market share, it is only classified in the fourth category, the worst category. Despite its relatively small market share, EMP is listed as a first-class provider. With the planned joint venture, ST ’s wireless business will have the opportunity to reach the first category.

This move proves that ST not only has a long-term strategy for this, but also has the ability to implement the strategy. This highly dramatic collaboration—first with NXP, then Ericsson, and the unspoiled scene left behind by NXP—is the result of an admirable secret outreach. Another point of view is that this unnamed joint venture is the best evidence of an unwritten conclusion in the semiconductor industry-companies that cannot bring enough vitality to the scale of the enterprise often cannot go far. This statement may be too absolute, but it is indeed a phrase for the highly competitive mass market of wireless mobile.

The question is who can get the most benefit from the joint venture.

According to its parent company, the cooperation gives ST the opportunity to expand its market position in the next generation of technology. EMP obtained a complete and consistent hardware platform as the basis for future applications and services. For Ericsson, this cooperation has a decisive position, but ST seems to be the main winner.

For ST, the stakes are much greater than the small but innovative EMP. In fact, although the size of the two parent companies is different from their respective wireless mobile business, the equity of the joint venture company is evenly distributed, and Ericsson even has the power to appoint the chairman of the board of directors. It also shows how important Ericsson's technology is for this French-Italian chip maker.

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