Conexant's

(CNXT) - Get Report

wireless business is leaving the family on a high note. The chipmaker announced Monday that it would spin off its wireless unit into a merger with like-minded

Alpha Industries

(AHAA)

, at the same time declaring that its mobile-phone chip darling would push Conexant to an upside revenue surprise in the December quarter.

More than a year ago, the

Rockwell

spinoff announced it would be best-served strategically by splitting into two publicly traded companies focused around its broadband and Internet infrastructure businesses. Monday morning, Conexant increased that number to three, saying that it would break out its wireless segment for independent operation as well. In fact, the mobile-phone chip unit will be the first to leave home, as Conexant heralded its pairing with infrastructure-focused Alpha into a separate company.

Conexant traded up 4.5% on the plan to close at $16.57, while Alpha soared more than 24% to $26.35.

"Our visibility is improving and it is increasingly positive," reported Conexant CEO Dwight Decker. He added that the company's backlog "gives us confidence that we're going to see a continuation of growth into the January quarter, bucking a trend of seasonally down" performance after the holidays.

The chipmaker gave the market 10% sequential revenue growth to look forward to in the December quarter, some $221 million. Conexant originally predicted modest quarter-to-quarter revenue growth of 5% to 7%.

The chipmaker's wireless business spurred the improvement, with revenue in that group now expected to grow 35% sequentially to $88 million. The wireless unit accounted for 32% of Conexant's revenue in the fourth quarter of fiscal 2001 ended Sept. 30. Nonetheless, the company did not review its earnings forecast of a $116 million pro forma loss, about 45 cents a share. Analysts haven't differed in their forecast, with consensus estimates of a 45-cent-a-share loss from Conexant on $215 million in revenue, according to Multex.com.

Alpha CEO David Aldrich will lead the merged entities, with Decker serving as chairman, and he says together they will serve

Nokia

(NOK) - Get Report

,

Motorola

(MOT)

,

Sony/Ericsson

and

Samsung

on the mobile-phone customer list, as well as

Ericsson

(ERICY)

, Nokia, Motorola and

Nortel

(NT)

as equipment customers, the largest names in both segments.

Management hopes to be able to offer products that provide more of the pieces needed by mobile-phone and infrastructure makers. Motorola would be the pair's largest customer come the end of the second quarter of calendar 2002, when management expects to complete the coupling.

As part of the wireless unit-Alpha merger, the combined company will pay the parent company $150 million to purchase a chip plant in Mexicali, Mexico, that employs 2,000. The new company will be renamed and will get a new ticker symbol, and management has no plans for layoffs, intending to employ 4,000 workers. The company will also retain a Newbury Park, Calif., wafer-fabrication facility.

Conexant will not offload any of its more than $700 million in debt onto the spinoff. Shareholders of Conexant will control two-thirds of the new stock, and the two businesses estimate that together they will have a $3 billion

market capitalization.