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Last Updated: Thursday, 15 December 2005, 11:07 GMT
Philips prepares large chip deal
Philips headquarters
Philips is predicting consolidation in the semiconductor industry
Consumer electronics firm Philips is gathering all its global semiconductor units under one umbrella.

The chip making industry is poised for consolidation and the move is seen as a prelude to a major deal.

"All strategic options are on the table," a Philips spokesman told BBC News.

The options would include either the sale of the legal entity, a merger with or an acquisition of another firm, or a stock market listing, he said.

"Rather than remain behind that trend... we want to get to the forefront of it," said the division's chief executive Frans van Houten.

Analysts see STMicroelectronics or Infineon as possible candidates for a merger with Philips Semiconductors.

Good news

Philips' chip business had sales of 5.5bn euros ($6.6bn; 3.7bn) in 2004.

It is one of the world's largest semiconductor businesses and supplies the chips for an array of Philips products ranging from household appliances to DVD players and medical equipment.

The announcement lifted Philips' shares by 4%.

"This is seen as good news," said one trader.

"The company says scale matters in this business and we see consolidation."

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