Ericsson and STMicroelectronics are creating a joint venture to supply semiconductors to mobile phone manufacturers in an effort to compete with Qualcomm and Texas Instruments, the biggest mobile chipmakers.

The as yet unnamed venture, which will also supply other handset components, will have annual sales of $3.6bn. Sweden’s Ericsson, the world’s largest maker of mobile phone networks, will inject $1.1bn into the joint venture, $700m of which will be paid to STMicroelectronics.

Geneva-based STMicroelectronics, the fifth-largest semiconductor maker, is contributing its ST-NXP Wireless mobile phone semiconductor business that was formed by another joint venture only 19 days ago. Ericsson will put its mobile platform business into the venture.

The deal underlines how the need for economies of scale continues to fuel consolidation in the telecoms industry. The growth of the mobile internet, which requires more capable handsets, is also pushing companies to pool their capital and research and development resources.

Carl-Henric Svanberg, Ericsson’s chief executive, said the rationale behind the joint venture was based on the complementary nature of STMicroelectronics and Ericsson’s businesses rather than any cost savings. “There has been an increase in complexity in this business. We will provide a complete solution customers have been asking for.”

Mr Svanberg said that the venture would compete with Texas Instruments and Qualcomm as one of the top three mobile semiconductor ­makers.

Intel, the world’s largest semiconductor maker, has also recently stated its intention to move into the mobile semiconductor market. Mr Svanberg acknowledged Intel’s intentions, adding that computers and mobile were “coming to a meeting point”. The joint venture already has relationships with four of the top five handset makers: Nokia, Samsung, Sony Ericsson and LG.

ST-NXP Wireless was formed on August 2 out of the wireless semiconductor operations of ST Microelectronics and NXP, a European rival.

Carlo Bozotti, STMicro-electronics chief executive, said the joint venture with NXP had been designed to strengthen its wireless operations, and described the two successive joint ventures as a “quantum leap”.

Analysts sounded a cautious note, suggesting that Ericsson’s mobile platform had not lived up to its potential and was questionable as a standalone business.

Martin Nilsson, analyst at Carnegie in Stockholm said: “This is a defensive play by Ericsson to ensure they have a business model they can continue to run.”

The new joint venture will have almost 8,000 employees, with about 5,000 coming from STMicroelectronics and 3,000 from Ericsson. It will have headquarters in Geneva and be divided into two companies. The first will focus on research and marketing with its revenues consolidated by STMicroelectronics.

Ericsson will consolidate the revenues of the other company, which will provide platform designs.

Shares of STMicroelectronics gained 2.9 per cent to $12.24 while Ericsson was up 0.5 per cent at SKr65.80.