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TMCNet:  Cosun Group Said to Buy Freescale Mobile Phone Chip Business

[April 28, 2009]

Cosun Group Said to Buy Freescale Mobile Phone Chip Business

HUIZHOU, Apr 28, 2009 (SinoCast Daily Business Beat via COMTEX) -- Cosun Group, one of the top-ranking telecom terminal companies in China, is in talks to buy the mobile phone chip operation from US-based semiconductor maker Freescale Semiconductor, Inc., disclosed Wu Zhiyang, chairman for Qiao Xing Mobile Communication Co., Ltd. (NYSE: QXM), recently.

The two sides have entered into a letter of intent over the deal and are discussing some details, said Mr. Wu, declining to give detailed financial terms.

Freescale, once an outrunner in the mobile phone chip core technology around the world, saw its mobile phone chip business on the decline as mobile phone sales of its major customer Motorola, Inc. (NYSE: MOT) stayed sluggish in recent years.

Freescale derived USD 95 million sales revenue from its mobile phone chip segment in the first quarter of 2009, sagging about 70% from USD 318 million in the comparable period of 2008, said the US chipmaker earlier in its financial report. Notably, the company ranked the eighth by sales revenue in the global mobile phone chip industry last year.

Cosun Group was about to set up an independent company in Beijing to run the Freescale mobile phone chip business, provided that the reported deal made a success, disclosed people in the know.

On the other hand, Dong Defu, chairman for mobile phone design company China Techfaith Wireless Communication Technology Limited (Nasdaq: CNTF and TechFaith), is likely to pump money into the proposed company for a stake, said one source.

However, TechFaith has not been informed of the rumored capital injection yet, said Ji Changxi (transliterated), senior vice president for the Nasdaq-listed company.

The to-be-established company will get investments from Mr. Dong and Cosun Group, while their listed arms will keep away from the deal this time, according to an executive for Cosun Group. Mr. Dong, on the other hand, declined to make a comment on the reported capital infusion.

Incorporated in April 1992, Cosun Group started its business as a traditional fixed-line telephone maker in China. By far, the Huizhou-headquartered company has two US-listed arms, namely Qiao Xing Mobile Communication and Qiao Xing Universal Telephone, Inc. (Nasdaq: XING).

Cosun Group dipped toe in the GSM and CDMA mobile phone manufacturing industry after spending CNY 316 million acquiring CECT in March 2002.

Acquiring the Freescale mobile phone chip operation will enable Cosun Group to step up its R&D and catch up with its global peers in the competition to some extent, pointed out market observers.

(USD 1 = CNY 6.83) Source: (April 28, 2009)

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