* Sells business for around $200 million
* About 1,100 Nokia employees to transfer to Renesas
* Improves Renesas position as chipmaker
* Nokia shares up 2.6 percent in line with European peers
(Adds detail, share price)
By Terhi Kinnunen
HELSINKI, July 6 (Reuters) - Nokia Oyj is selling its wireless modem business, as it drops non-core operations to focus on its key phones unit that is under pressure from rivals such as Apple
Nokia, the world's top mobile phone maker, said on Tuesday it is selling the wireless modem business to Japan's Renesas Electronics for $200 million and the companies will form an alliance to develop modem technologies.
Finland-based Nokia issued a profit warning in June, its second in less than two months, as it struggles to compete against Apple's iPhone.
Analysts said on Tuesday that Nokia's move to divest non-core research and development was a continuation of its earlier decisions to outsource component development.
"It is very logical that this is divested, they should have done it a long time ago, because it hasn't really been core. And I think they can do more of a similar type of agreement," said analyst Martin Nilsson from Handelsbanken Capital Markets.
Pohjola Bank analyst Hannu Rauhala said: "This will decrease somewhat Nokia's R&D costs."
Renesas Electronics, the world's fifth-largest chipmaker, said the deal would allow it offer a one-stop mobile platform that works with different types of wireless standards and help it become one of the strongest chipmakers in the 3G and LTE markets.
The business to be transferred to Renesas Electronics includes Nokia's wireless modem technologies for LTE, HSPA and GSM standards, as well as some patents, Nokia said on Tuesday.
About 1,100 Nokia R&D employees working in Finland, India, Britain and Denmark will be transferred to the new owner in the deal that is expected to complete in the fourth quarter.
Renesas was created in April through a merger of Renesas Technology and NEC Electronics, two loss-making Japanese semiconductor companies hit hard by the global economic downturn.
It is the world's No. 1 microcontroller maker ahead of Freescale Semiconductor, and is aiming to expand its operations, including its mobile business, overseas.
A Renesas spokeswoman said that after the acquisition the firm would aim to double its mobile device business sales to 200 billion yen ($2.3 billion) by March 2013 and quadruple it to 400 billion yen by March 2016.
Nokia shares were up 2.6 percent up at 6.795 euros by 1102 GMT compared with a 2.4 percent higher STOXX Europe 600 Technology Index. (Additional reporting by Sachi Izumi in Tokyo and Simon Johnson in Stockholm; Editing by Dan Lalor and Erica Billingham) ($1=87.77 Yen)