Philips: In The Chips

Will the Dutch giant sell its star unit?

Boasting is not quite the thing in staid Eindhoven, the Dutch town Royal Philips Electronics has dominated for a century. But Arthur van der Poel, the 51-year-old chief executive of Philips Semiconductors, can barely restrain himself. His division is outshining the rest of the company. Fueled by explosive demand for cell phones, the $5 billion division is racing ahead at 40% growth. Van der Poel is spending $2 billion to boost capacity on three continents. For Philips Chairman Cor Boonstra, the chip business is an answered prayer. Chips account for just 16% of group sales--but nearly half of Philips' earnings.

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