Alcatel sells division to STMicro

Geneva, Switzerland & Paris, France — STMicroelectronics and Alcatel have signed an agreement for the acquisition of Alcatel’s Microelectronics activities by STMicroelectronics in a deal valued at Euro 390 million.

As part of this cash transaction, the two companies intend to enter into cooperation for the joint development of DSL chipsets that will also be made available to the open market. The new agreement also calls for STMicroelectronics to become a preferred supplier of Alcatel, thus expanding their long-standing strategic alliance.

In a separate announcement, AMI Semiconductor Inc. (AMIS) and STMicroelectronics have signed an agreement whereby AMIS will purchase from STMicroelectronics the just acquired mixed-signal business activities of Alcatel Microelectronics. The terms of the agreement were not disclosed. The purchase is subject to regulatory approvals.

The AMIS/STM transaction will cover Alcatel Microelectronics’ mixed-signal ASIC business and development groups, including two Alcatel Microelectronics fabrication facilities located in Oudenaarde, Belgium and the associated process technologies. In connection with the transaction, STMicroelectronics and AMIS have signed a supply agreement under which AMIS will provide certain manufacturing services for STMicroelectronics.

Alcatel Microelectronics, headquartered in Belgium, is a leading player in the design, manufacture and marketing of semiconductor components with a focus on telecommunications, automotive and peripheral markets. In particular, it has achieved a global top position in the growing market of DSL chip-sets used in infrastructure and end-user equipment, providing high-speed Internet access. In 2001, Alcatel Microelectronics registered revenues in the range of Euro 350 million.

Through the Alcatel/ST deal, important know-how and a large number of experienced engineers will be added to the current ST resources, significantly enhancing the overall ST capabilities to compete in the telecommunication arena for wireline and wireless applications. The addition of this know-how will allow ST to further enhance its technical expertise and its already significant market offering in central office and mass market DSL modems chipsets, enabling ST to become the worldwide leading supplier of DSL semiconductor products.

Furthermore, the cooperation with Alcatel also complements the recent agreement between the two companies for the development of GSM/GPRS chipsets for mobile phones and other wireless connectivity applications.

For Alcatel, this transaction is a further step towards the focus on its core competencies, the development and marketing of telecommunications networking systems and services. As the global leader in DSL infrastructure solutions, Alcatel will extend its cooperation with STMicroelectronics in the form of joint DSL chip-set development programs. The target of these programs will be to provide Alcatel with cutting edge DSL components to further enhance Alcatel’s leading position in the DSL equipment markets.

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