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Intel nabs mobile GPS business of moribund ST-Ericsson

Hemorrhaging slowed but not halted

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Seeking to bolster its position in the mobile chip business, Intel has snapped up the GPS mobile navigation division of failed semiconductor partnership ST-Ericsson for an undisclosed sum.

ST-Ercisson announced the sale on Tuesday without naming the buyer, but Reuters later reported that an Intel spokesperson confirmed Chipzilla's involvement.

The sale gives ST-Ericsson a quick cash infusion while allowing it to avoid various restructuring costs, reducing its immediate cash needs by around $90m.

The ST-Ericsson partnership was formed in 2008 between Swedish telecom equipment maker Ericsson and French-Italian semiconductor firm STMicroelectronics, making the combined venture the second-largest mobile chipmaker after Qualcomm.

But size isn't everything, and ST-Ericsson began posting losses almost immediately. It staggered on for five more unprofitable years before finally announcing in March of this year that it would dissolve, returning its core divisions to their respective founders.

On Tuesday, ST-Ericsson president and CEO Carlo Ferro hastened to put a brave face on the sale of the GPS division to Intel.

"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," Ferro said in a canned statement.

The transaction will transfer all of ST-Ericsson's navigation-related intellectual property to Intel, which is also expected to take on the company's team of 130 GPS-related employees based in the UK, Bangalore, and Singapore.

That's more than can be said for approximately 1,600 ST-Ericsson employees who are expected to get the axe as the partnership winds down operations this year.

Intel's purchase of ST-Ericsson's GPS division is subject to regulatory approval but is expected to close by August 2013. ®

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