STMicroelectronics buys Alcatel microelectronics unit

Alcatel SA announced Wednesday it had completed the sale of its microelectronics division to STMicroelectronics NV (STM).

The announcement followed Monday's approval by the European Commission of the €390 million (US$382.5 million) acquisition of Alcatel Microelectronics NV by STM.

As part of the deal, the two companies will collaborate on the development of DSL (digital subscriber line) chipsets for high-speed data communication, to be sold on the open market, the companies said in a statement. STM will also operate as a preferred supplier to Alcatel, extending their long-standing strategic alliance.

Alcatel Microelectronics designs, manufactures and markets semiconductor components mostly for the telecommunication, automotive and peripheral markets. In 2001, the company posted sales of around €350 million.

Amsterdam-based STM also develops and produces semiconductors for a wide spectrum of sectors. In 2001, the company's net revenue was $6.36 billion.

STM was recently chosen to supply silicon sensors to the Cern, Switzerland-based European Organization for Nuclear Research (CERN), which is conducting research into elusive nuclear particles.

On Monday, the Commission acknowledged in a statement that while STM will become the market leader in Europe for ADSL (asymmetric DSL) chipsets, the company "will not have a dominant position." The Brussels authority said STM will "face competition from strong rivals," notably from U.S. suppliers Globespan Virata Inc. and Analog Devices Inc.

In its ruling, the Commission took into consideration the "instability in market shares" of companies in this sector over the past few years, the loss of market share by Alcatel Microelectronics in particular and the "lack of significant barriers to entry" by other players.

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