Philips is to quit the chip business, the consumer electronics giant announced this week. It called its withdrawal from the market a "disentanglement" - untying the knot will see its semiconductor division spun off through an IPO.

The share sale will take place in the second half of the year and will leave Philips with a minority stake in the business. The said disentanglement - what a wonderfully evocative description - will be completed by the end of Q3, with the IPO taking place during the fourth quarter.

Philips' most recent figures, for Q1 FY2006, saw the semiconductor division's sales rise 20 per cent year on year, from €1.012bn to €1.219bn. The Group's sales were up 14 per cent, from €6.492bn to €7.374bn in the same periods. The chip wing was the highest sales-growth division during the quarter.

However, Philips wants to move "away from a focus on high-volume electronics and implement a strategy to build a Healthcare, Lifestyle and Technology company", CEO Gerard Kleisterlee told employees by email. To that end, the company announced in December 2005 plans to separate out the semiconductor division, the better to pave the way for a sale, merger or spin-off in due course.

Philips said the chip division will "strongly continue its business renewal strategy" and seek to widen its portfolio of application-specific semiconductors. Its new name will be revealed shortly, Philips said. ®

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