Bolaji Ojo Courtesy of EE Times (04/11/2008 9:37 AM EST)

The headlines are all wrong. STMicroelectronics isn't pooling its wireless business into a joint venture with NXP's wireless chip unit. No. ST is buying NXP's wireless business.

This distinction is important because it is critical to understanding how ST's management is steadily reshaping the Geneva-based company in response to events within the larger semiconductor world and investor dissatisfaction with its depressed stock prices.

The transaction gives NXP a much needed $1.5 billion cash injection. But ST, the majority owner of the new wireless IC company announced Thursday (April 10), gets a double benefit: reduced operating costs and the chance for a hefty payout whenever the JV sells shares to the public.

Over the last two years, ST has engineered several strategic deals that are apparently aimed at making the company leaner and more focused on specific market segments.

For instance, in December 2006 ST announced it would create a stand-alone flash memory group and consolidate all of its NAND and NOR products into the new division.

The transaction with NXP builds on the trend at ST towards reinforcing key operations through strategic acquisitions while spinning off specific businesses to reduce costs and gain market leverage.

While the companies are touting the latest deal as a ST-NXP joint venture, the details show this was all about ST. The company said it would make an initial down payment of $1.5 billion on the transaction to NXP while retaining the right to buy out its JV partner's remaining 20 percent stake.

"In order to create a clear ownership structure, STMicroelectronics will take an 80 percent stake in the joint venture," the companies said in a statement. "The parents have also agreed on a future exit mechanism for NXP's ongoing 20 percent stake."

Translation: ST will own the joint venture and NXP, the junior partner, will exit the organization as soon as the new company can afford to buy it out.