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.