Infineon and Ericsson in talks

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ITworld.com –

German semiconductor manufacturer Infineon Technologies AG is in advanced negotiations with L.M. Ericsson Telephone Co. about a cooperation with or acquisition of the Swedish company's microelectronics division, both companies said on Friday.

"We have said for the past couple of years that microelectronics is not part of our core operations," said Ericsson spokeswoman Ase Lindskog. "But this doesn't mean that we have to sell the business; we could form a partnership with someone."

Lindskog declined to comment on whether Ericsson is talking to other companies. As for when the Swedish mobile phone equipment manufacturer hopes to make a decision on the division's future, she said: "No dates are set."

Infineon also declined to shed any light on the talks. "We are talking to Ericsson but we have nothing more to say at this time," said spokesman Gunther Gaugler.

The German chip maker could strengthen its mobile chip unit with the acquisition of Ericsson's microelectronics business. Ericsson supplies chips to a number of mobile phone makers, including Sony Corp., which merged its handset business with Ericsson.

Separately, Ericsson announced on Thursday that it had won shareholder backing for its plans to launch a 30 billion Swedish kronor (US$ 3.29 billion) rights issue. The group, which has been badly bruised by the slowdown in telecommunication spending, intends to use the proceeds to strengthen its balance sheet.

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