ST buys Alcatel Microelectronics unit

PARIS: Chip maker STMicroelectronics has agreed to buy telecoms equipment

maker Alcatel's microelectronics unit for 390 million euros ($343.6 million) in

cash, in a deal the companies said would strengthen their strategic partnership.

Franco-Italian ST will keep the two main divisions, wireline and wireless, of

Belgium-based Alcatel Microelectronics but has agreed to sell a smaller third

division, the mixed-signal business, to US AMI Semiconductor Inc. (AMIS), ST

said.

The price terms of the second deal were not disclosed, but an ST spokeswoman

said that ST would keep 350 of the 1,400 staff at Alcatel Microelectronics, and

transfer 1,050 to AMIS.

An accord between ST and Alcatel will see the two cooperate in developing DSL

(digital subscriber line) chip-sets for the open market and will see ST become

Alcatel's preferred supplier, reinforcing a long-standing strategic alliance

with its client.

Alcatel Microelectronics, headquartered in Belgium, designs and makes

semiconductor components with a focus on the telecoms, auto and peripheral

markets. It had sales of around 350 million euros last year.

The acquisition, still subject to regulatory approval, is set to close within

two months, the companies said. Non-listed AMIS, based in Idaho, will gain

itself a base in Europe with the purchase of the mixed-signal business of

Alcatel Microelectronics, which includes two factories in Belgium.

AMIS said in a statement that the purchase would strengthen its position in

the digital and mixed-signal market for telecoms, automotive, medical and

industrial applications and add some $100 million in annual revenues. It has

agreed to provide certain manufacturing services for ST.