Sitronics-ZTE unveil $2 billion joint venture plans

Leading Russian microelectronic device maker Sitronics and Chinese firm ZTE signed a memorandum announcing their planned joint venture at the St. Petersburg International Economic Forum last week

The document was signed by Vladimir Evtushenkov, a major owner of Sitronics mother company Sistema, and ZTE President president Shi Lirong in the presence of Russian President Dmitry Medvedev and Chinese President Jintao.

According to the memorandum, which is not legally binding, Sistema and ZTE will invest their production facilities – Sitronics’ three plants in Zelenograd and ZTE’s manufacture in Hangzhou and two R&D centers, one from each side – into the future joint venture as soon as the end of this year.

The total sum of investments in the project in the form of cash, intellectual property and production facilities would be no less than $2 billion, Evtushenkov told journalists on the sidelines of the memorandum signing ceremony.

Though the memorandum between Sistema and ZTE is not legally binding, both parties seem to be eager to develop the joint project. The new venture will, in particular, churn out radio frequency identification (RFID) tags, the general manager of Sitronics Sergey Aslanyan previously told in his interview to Vedomosti. RFID is a technology that uses communication through the use of radio waves to transfer data between a reader and an electronic tag attached to an object for the purpose of identification and tracking.

The new JV is planned to start producing software and RFID equipment for fleet and goods monitoring as well as for retail trade in 2011-2012. The new company will also produce devices and software employing the functions of Russia’s GLONASS satellite based navigation system. Equipment for WiMAX networks is named as another possible vector of development.

The partners have already started seeking customers for the output of their new JV. During the St. Petersburg Forum, particularly, Sitronics has signed a covenant with the Russia’s state-owned nanotechnology company Rusnano to launch a pilot project to implement RFID tags in the retail outlets of Russia’s largest food retailer, X5 Retail Group.

With $1.17 billion in revenues in 2010, LSE traded Sitronics is the high tech arm of AFK Sistema a Russian diversified conglomerate controlled by Vladimir Evtushenkov, a prominent Russian businessman.

Source: Vedomosti, AFK Sistema

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