Intel to Buy ST-Ericsson's GPS Chip Business
Intel reportedly is adding ST-Ericsson's GPS chip business to its growing portfolio of capabilities.
ST-Ericsson, a failed joint venture of STMicroelectronics and Ericsson, announced early May 28 that it was selling its "Global Navigation Satellite System (GNSS) to an unnamed "leading semiconductor company," setting off a round of speculation about possible buyers that included Intel, Advanced Micro Devices and Nvidia.
Later in the day, Intel spokespeople admitted that the giant chip maker was buying the assets to the GNSS business, adding to the GPS technology it already has, including the Xposys single chip receiver. The deal is expected to close in August.
The deal is the latest step in the dissolution of ST-Ericsson, a Switzerland-based fabless semiconductor company that began in 2009 as a joint venture and has been losing money ever since. The company, which at one time employed as many as 5,000, essentially agreed late last year to disband, and the two parent companies in March agreed to how the company would be broken up. Ericsson grabbed a part of the business that includes modems and about 1,800 employees and contractors, most of them in Europe and Asia.
STMicroelectronics took in several other businesses and about 950 people, primarily in Italy and France. A handful of other businesses—and about 1,600 employees in places like Sweden and Germany—were left unclaimed and with uncertain futures.
Intel will assume another 130 or so people in the U.K., India and Singapore as part of the deal for the GPS business. ST-Ericsson executives said the proceeds from the sale (no financial details were announced), combined with the employee layoff and other restructuring charges that were avoided, will help save the joint venture about $90 million.
"Today's transaction validates the leading innovation developed by ST-Ericsson in mobile navigation systems and marks a further important step towards the execution of our shareholders' decision to exit from ST-Ericsson," Carlo Ferro, president and CEO of ST-Ericsson, said in a statement. "I am pleased that this organization will continue to develop leading-edge technologies and delighted that the team found a new home at a leading player in the semiconductor industry."
ST-Ericsson's GNSS product family includes personal handset receivers that interact with both the United States' GPS technology and Russia's GLONASS geo-location service.
According to ST-Ericsson officials, the market for such location technologies is continuing to grow. Where once they were used primarily in personal navigational devices, they now can be found in almost every smartphone hitting the market and will expand into other segments, company officials said.
The company predicts that, by 2014, four out of every five phones shipped will be location-aware.
That kind of technology is particularly attractive to Intel, which is aggressively pushing its way into the booming mobile device space, particularly markets for smartphones and tablets. Most of these devices currently are powered by systems-on-a-chip (SoCs) that are designed by ARM and made by Samsung, Qualcomm, Nvidia and others.
Intel, which is looking to drive up the performance and energy efficiency in its chips, is relying on its low-power Atom platform as a key driver behind its mobile ambitions. There already are a dozen smartphones—and about 15 tablets—that are powered by Intel chips, but the bulk of those are sold overseas.
However, Intel could be making a significant move into the mobile market if speculation that its Atom "Clover Trail" SoC will power the upcoming Samsung Galaxy 3 10.1 tablet is correct. In addition, Intel officials expect new Atom processors based on the new "Silvermont" microarchitecture will match or exceed what ARM chips can do and will help drive more Atom-based compute systems—not only smartphones and tablets, but microservers and other devices—onto the market starting later this year.