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Philips set-top box U.S. deal seen as major step
AMSTERDAM, Aug 15 (Reuters) - Philips Electronics' deal to sell a million digital set-top boxes to AT&T Corp is a major step in its push into the U.S. market, analysts said on Tuesday.

Europe's largest maker of consumer products, lighting and semiconductors, said late on Monday it had signed an initial agreement with AT&T Broadband to form a new business alliance. AT&T will begin supplying its U.S. consumers with Philips' boxes in 2001 with an initial volume set at one million units.

Philips, one of the world's top three set-top box producers and joint leader in Europe with Thomson Multimedia , previously decided to develop its market in the United States from scratch rather than buy a U.S. maker. It is believed to have looked into purchasing General Instruments, the U.S. maker that Motorola ended up acquiring.

Analysts said the deal announced on Monday was a demonstration of the success of such a strategy and suggested Philips may be eating into the market dominance of Motorola and Scientific America.

Neither company has said how much the deal is worth.

"It's a terrific order, firstly in terms of size," said Wouter de Ridder, analyst at Kempen and Co.

"The fact that it's a sale to a U.S.-based company is significant... It could be a signal to other customers," said Marc Kennis, analyst at Van Lanschot Bankiers.

By 1124 GMT, Philips shares, also buoyed by a rally of semiconductor stocks in the United States, were up 2.2 percent at 50.40 euros. The shares are 8.3 percent higher this week and 49 percent in the year-to-date.

Philips is steadily increasing its output and range of digital consumer products, ranging from DVD players, television sets and a variety of new audio players.

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