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Inside NXP Merger: Dos & Don’ts

AUSTIN, Tex. — Let’s not sugarcoat this. In 2015, when the merger mania hit the global semiconductor industry — affecting people and their jobs at Broadcom, Avago, Altera, Intel, Freescale, NXP, Atmel, Dialog Semiconductor, Fairchild and On Semiconductors, the first instinct for anyone working at these companies would be understandably to assume the worst: There goes my job.

Even if you don’t get the pink slip initially, you assume that your job or your project is at risk. You haven’t seen a new organizational chart. You don’t know who will head up your business unit.

You have no idea what it’s like to work for another company who has just acquired your employer. You’ve never met your new bosses, let alone talk to them in person.

You notice your colleagues starting to jockey for position at the newly merged company, trying to shine the best light on themselves.

If you are an engineer, you start getting calls from head hunters. You’re flattered ’til you figure out that the headhunters — all contracted by the same company to look for candidates — might be pitching the same position over and over again, to many candidates.

You aren’t just distracted. The longer you’re in the dark, the more frustrated you become. Your life is turning upside down.

Raising NXP flag

Raising NXP flag

On Day One of the Freescale-NXP merger Monday (Dec. 7), EE Times visited the Austin campus of ex-Freescale Semiconductor, now NXP. Our objective was to understand the integration process of two big companies. We hoped to find out what it’s like inside the merger. We wanted an insiders’ look at the turmoil, to find out what, if anything, the workers in the middle have learned.

The longer the period of uncertainty is, the harder the task of managing the transition gets. In the Freescale-NXP merger, it lasted almost nine months, from the first announcement in March to the moment last month when the new entity finally cleared the last regulatory hurdle.

John Dixon, director of corporate marketing for NXP Semiconductors, said that the announced deal involved roughly 17,000 people from Freescale and 25,000 people from NXP. That’s a small city.

Acknowledging that uncertainty breeds fear, Dixon said that setting up milestones and communicating progress — in a clear, transparent manner — with the whole company was absolutely the key.

Management at Freescale and NXP acted with remarkable swiftness, however.

Within a month after the merger was disclosed, the companies internally announced five separate markets — security & connectivity, automotive, RF, digital networking and standard products — on which the new entity will focus. They also assigned executives to head up the new business units.

Both NXP and Freescale, early on, set up integration teams (Dixon was the fourth member of the 12-men integration team at Freescale) and met weekly with a steering committee consisting of CEOs, CFOs and product line leads from both companies.

During the process, “We needed to break down the complex transition process in manageable pieces,” said Dixon. For that, each integration team member looked at his own organization and set up “15 or 16 streams,” while assigning a lead, with permission from the union, to each stream to tackle specific tasks. Those streams ranged from IT systems, websites and organizational structure to sales and marketing, strategies, etc.

However, over the last nine months, people at both companies — from executives to rank and file — were prevented from discussing any roadmaps or sharing financial details/forecast numbers. U.S. Securities and Exchange Commission (SEC) rules prohibit any such communication.

Clean room

Because executives had no access to certain information about each company, a team of independent consultants was hired. Their responsibility was to collect information, mostly financial data such as forecasting and spreadsheets, in “clean rooms,” explained Dixon. The team — from McKinsey & Company — couldn’t share specifics but it helped the two companies’ management team understand where the companies stand, identified areas that need attention and provided information to help them negotiate contracts with suppliers. 

The integration process, leading up to Day One of the merger, was perplexing to some. It resembled a “mating ritual” — like getting to know each other better in early days of a dating process — according to Matt Johnson, vice president and general manager of Automotive Microcontrollers at NXP.

To read the rest of this article, visit EBN sister site EE Times.

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