What’s Going on at NXP Semiconductor?

In the last few days, Dutch chip company {complink 9538|NXP Semiconductors N.V.} has been catching some curious headlines and social media hash tags.

There has been Internet scuttlebutt that the Eindhoven, Netherlands-based automotive and multi-market semiconductor company is in takeover talks. Press releases have announced the set up of an automotive technical center in China, and various links have popped up about the company's Radio Frequency Identification (RFID) innovation efforts.

Let’s start with the juicier news. EBN's sister publication, EE Times, last week picked up some reports coming from the Dutch newspaper De Telegraaf , which wrote that NXP was in talks with Intel, Qualcomm, and Broadcom. The Dutch newspaper sourced the takeover speculation to an unnamed banker.

This week, EE Times followed up and cited a Reuters report that quoted NXP CEO Rick Clemmer as saying NXP wasn’t currently in talks. However, Clemmer said he would consider “a high premium offer, such as the one that Texas instruments Inc. has made for National Semiconductor Corp.”

NXP, which separated from {complink 4269|Koninklijke Philips Electronics N.V.} after a private equity buyout in 2006, went public last August (partially listed) and held a secondary shares offering at the end of March. The company supplies high-performance mixed-signal products into the automotive, identification, wireless infrastructure, lighting, industrial, mobile, consumer, and computing sectors, and has a solid footing in the Near Field Communications (NFC) space. (NFC is expected to help companies more efficiently integrate wireless financial transaction capability into cellphones.)

Coming off the news about the recent TI and National deal, it’s good to see that the semiconductor rumor mill is alive and well, churning out possible new pairings to think about as we gear up for another probable round of mergers and acquisitions. An NXP takeover is not too far-fetched, given the current global climate. Even NXP’s Clemmer told Reuters “he reckons the chip sector will start consolidating over the coming three to five years.”

Last week, NXP issued a press release announcing that it's moving some of its automotive operations to China. It's establishing a new automotive technical center there, and is relocating its automotive sales and marketing headquarters to Shanghai.

According to the press release, the technical center will focus on research and development, system innovation, and customer application support. Drue Freeman, vice president global automotive sales and marketing, has formally relocated from Hamburg to Shanghai “as part of NXP’s strategy to locate more of its customer-facing automotive operations closer to its fastest growing markets.”

“Shanghai is the ideal base for me to focus on further accelerating NXP's growth in automotive,” said Freeman in the release. “In addition to the burgeoning domestic China market, all of our major European and American customers are establishing significant business and development operations in China. Furthermore, being in Shanghai will allow me to spend more time with our important Japanese and Korean customers as well.”

In the press release, NXP said it plans to build upon “years of experience in In-Vehicle Networking, Sensors and RFID-based Automotive Security,” which it gained through its successful European automotive technical centers.

“We want to bring the same level of leading-edge product and application expertise we have today in Europe directly to our customers in China,” said Kurt Sievers, senior vice president and general manager of NXP’s automotive business. “We also want to ensure that the Chinese market requirements are being fully captured in our High Performance Mixed Signal innovation focusing on CO2 reduction as well as Connected Mobility.”

I’m not quite sure if I buy the line about ensuring innovation in CO2 reduction and connected mobility. If I had to venture a guess, I’d say these moves are more about being perceived as a “local company” able to serve huge regional market demand while keeping operating costs down.

There was a lot of Twitter and online buzz about the strides NXP is making on RFID; this may have been related to the RFID Journal Live conference going on in Orlando, Fla. Plenty of posts linked to the company’s announcement about launching a Global RFID Innovation Partner Program to stimulate innovation.

NXP said the program “aims to create a community that can share skills and expertise in order to drive RFID innovation. The launch is timely given the growing demand for RFID applications from end users in the fast moving consumer goods (FMCG) and electronics sectors.” (I love the reference to FMCG, which is a new term for me. I must have missed the memo that our industry is now distinguishing slow-moving and fast-moving products astutely.)

In another press release, NXP and UPM RFID announced a collaboration to provide easier access to NFC tags for use in various mobile applications. According to the release: “As part of this agreement, NXP will provide the NFC ICs, and UPM RFID will design and manufacture the NFC tags and inlays.”

I'm not quite sure what’s going on up there in Eindhoven. Maybe spring is in the air, sparking new waves of creative energy. Or maybe something really is afoot below the surface.

7 comments on “What’s Going on at NXP Semiconductor?

  1. jbond
    April 14, 2011

    After hearing all the press releases and the rumors afloat, I would have to agree that something is in the works. There are going to be some more major mergers or purchases in the next few years. In today’s market place it seems like some companies best options to stay in growth mode is to join forces, or have a product nobody else has and everybody wants. There might be some truth to the comments coming from NXP's CEO, but my guess is he is positioning his company so that it looks much better to potential buyers.

  2. Anand
    April 14, 2011


     What do you think about this consolidation that is happening in the semiconductor industry ? Is it good or bad for the overall semiconductor industries growth ?

  3. saranyatil
    April 15, 2011

    It seems like all the companies are fighting for the no 1 place. definitely i feel the rumours of merging is definitely a good call because for any design house, it makes it simple they need not run round in choosing different chips from different companies. it can be seen as a complete solution.

  4. Jennifer Baljko
    April 15, 2011


    Thanks for the questions. Hard to say if semiconductor industry consolidation is good or bad. I'm not sure I would use those words specifically because that's a pretty subjective interpretation and largely depends on where anyone sits in the supply chain.  Rather, I would ask is it healthy for an industry to consolidate. Often, I think, in the long term it can be, depending on who's buying what. While I'm no fan of a having a handful of large monopolies dictate all the rules in the electronics sector and I tend to have a soft spot for underdogs that successfully carve out innovative niches against competitive giants, consolidation usually provides at least a brief reflection and inflection point. It allows companies – both those directly involved in M&A deals and those watching on the sidelines –  to take a closer look at defining what's working and what's not; take stock of where the industry is heading; infuse some new ideas into the mix, and course correct. I see those practices as essential to running a business today. So if the ebb and flow of industry expansion and contraction helps achieve those things, then I would hedge a bet and say it's worthwhile.



  5. stochastic excursion
    April 15, 2011

    Good insights on what happens when an industry consolidates.  I would only add that whether innovation in an industry is held back or stimulated is a good measure of merger's success.  We can look at Silicon Valley to see the success of start-ups that got to where they are through innovation.  On the other hand we can see a giant like Bell Telephone, which had innovative visionaries of its own, invent the transistor and make a generation of start-ups possible.

  6. elctrnx_lyf
    April 16, 2011

    NXP is basically a quite a big of a company to be acquired by another company. Atleast they are very good in the integrated wireless chipsets designed into the mobiles. They are a powerful microcontoller company and is a leading manufacturer of the power amplifier. Philips itself would be probably consuming lot of semiconductors from NXP. I don't really think theis will be sold to anyone atleast as long as philips is doing very good business.

  7. maou_villaflores
    April 27, 2011

    consolidation is good because it will somehow improve the quality of products and more profit for the company. The badside of it is that people might lose job.

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