STMicroelectronics to Acquire Nortel Networks' Silicon Semiconductor Production Operations

N/A> will acquire Nortel Networks' silicon semiconductor production operations located in Ottawa, Ontario, Canada. Upon completion of the acquisition, which is scheduled for late second quarter or early third quarter this year, the two companies will enter into a six-year supply agreement -- valued at up to an estimated US$2 billion over the first three years of its term -- whereby ST will supply to Nortel Networks silicon semiconductor devices.

The companies will also enter into a development agreement regarding technology and product maintenance and development, whereby Nortel Networks and ST will work to develop new silicon semiconductor technologies and products to rapidly meet Nortel Networks' customer demands. Certain of these agreements will include licensing to ST of specific Nortel Networks silicon semiconductor manufacturing technologies and processes used to manufacture the semiconductor devices required by Nortel Networks. STMicroelectronics will also bring to the relationship its proprietary set of technologies, suitable for System-on-Chip implementation, and ensure that its technology roadmap will keep these technologies and derived semiconductor devices evolving to meet its customers' requirements. The new devices will be used in a variety of Nortel's networking solutions and services supporting voice, video and data networking communications for optical networks, carrier networks, broadband access networks, switching systems, and for enterprise connectivity.

This new agreement represents the evolution of an ongoing relationship between the two companies, which have worked together successfully in implementing a similar agreement signed in 1993.

Edited by David Maliniak