OXFORD, United Kingdom—The grand plans by Royal Philips Electronics to become a worldwide player in the cell-phone market have all but disappeared with the announcement that China Electronics Corporation (CEC) will take over the majority of Philips’ cell-phone manufacturing and research and development (R&D) operations. Only three years ago, the company established a joint venture with Lucent in an attempt to become one of the top four manufacturers of cell phones.
The company said that the agreement calls for the R&D arm of Philips Consumer Communications in France to be transferred to a new company called CellOn France, which will be completely owned by CEC Wireless. CellOn will handle R&D for cell phones and employ about 300 people in Le Mans, France. Philips confirmed that it would transfer its manufacturing operations to CEC by selling a controlling interest in SED, a subsidiary of CEC, although it will still hold a minority stake in SED.
A company executive said that Philips would continue to market and sell cell phones under the Philips brand and would form a new wireless unit in its Consumer Electronics division. From early next year, Philips’ DECT business and the remaining cell-phone activities will be integrated into the new unit.
