EU clears STM, NXP venture for mobile phone chips

BRUSSELS, June 27 (Reuters) - STMicroelectronics (STM.PA: Quote, Profile, Research) and NXP won permission from European Commission competition regulators on Friday to merge their wireless chip businesses into a $3 billion joint venture controlled by STMicro.

STMicro said in April it would own 80 percent of the venture -- a first sign of consolidation that had been expected in order to combat falling prices and spread high industry costs for research and development.

STMicro makes chips for third-generation phones with high-speed Web links. NXP [NXP.UL] sells chips for second-generation phones with slower Web connections.

The venture "would not give rise to any competition concerns in the market for wireless handset semiconductors as the new entity would face several significant competitors and customers would continue to have access to a sufficient number of alternative suppliers", a Commission statement said.

The deal is meant to better challenge market leaders Qualcomm (QCOM.O: Quote, Profile, Research) and Texas Instruments (TXN.N: Quote, Profile, Research). (Reporting by David Lawsky and Dale Hudson)