Motorola to Spin Off Chip Business
Oct 7, 2003
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Motorola Inc. said it would spin off its semiconductor unit into a separate company as it focuses more closely on its battle with Nokia over the mobile phone market.

The move by the No. 2 mobile phone maker came just 2 weeks after Chairman and Chief Executive Christopher Galvin's sudden resignation after clashes with the board over strategy. The company has yet to name a successor, which had been expected to be the first step before any major strategic changes.

Analysts and investors have long called for the sale or spin-off of the unit, which is among the world's top 10 wireless chip makers. However, Mr. Galvin had always resisted splitting up the company founded by his grandfather.

Motorola's Semiconductor Products Segment accounts for about U.S. $5 billion of the company's $27 billion in annual revenue, but the business weighed on Motorola as the unit struggled to return to profitability amid the slowdown in the global chip industry.

The chip unit often marred Motorola's overall performance even when its main mobile phone unit was making strides. Motorola has been fighting to keep mobile phone market share after losing its top position to Nokia in the mid-1990s and as Asian manufacturers like South Korea's Samsung Electronics Co. Ltd. have become more aggressive.

The chip unit, which employs about 23,000 people, was the only major Motorola business to post a loss in the second quarter. (Reuters)

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