NEW YORK - For anyone who has known NXP Semiconductors sinceit was the Dutch giant Royal Philips' subsidiary, NXP today feels muchtransformed. Instead of pledging changes every quarter, NXP has grown into acompany with its own distinct personality and disciplines.
Under the leadership of Rick Clemmer, NXP's CEO, the companyhas drastically slimmed its product portfolio. The company's management teamhas cherry-picked product lines that already have either a commanding marketposition or clear potential -- showing "a path to become a leader," Clemmerexplained. "It's all about focus."
Further, there is another vital sign of the company'stransformation. Clemmer said last week in an interview with
EE Times, NXP today is "practically aChinese company."
Say what?NXP makes more money in China than in any other singlecountry, said Clemmer. Moreover, the Dutch company employs 8,000 people inChina, he added. "The only reason we are still a Dutch company is because weenjoy our tax breaks in the Netherlands."
Indeed, to call NXP a European chip company is a littlemisleading, because NXP's shipment-based revenue in Greater China has becometwice as big as that in Europe, and one in every three employees at NXP islocated in China.
Of course, nobody should be surprised. NXP has established astrong presence in China's growing market because China is where a greaternumber of components are procured, designed into systems, and manufactured.
Last week,
EE Timessat down with Clemmer who was here for the announcement of the company's firstquarter financial results. With $978 million in revenue in the first quarter,NXP showed a 5% sequential growth. "We delivered near the upper end of ouroriginal guidance range," Clemmer noted.
When asked how much of that growth owes to the cyclicalupswing of the market, Clemmer responded cautiously. While saying that NXP is"in the early stages of a positive cyclical rebound," Clemmer noted much of itsgrowth actually came from company-specific design wins. The good news is thatNXP is beginning to see "tangible results," he said, of the company'stransformation.
Clemmer was particularly bullish about NXP's Identificationbusiness, serving a range of markets including e-passports, transit ticketing,tags and labels, contact banking cards and e-wallets. In particular, Clemmersaid, For NXP, the e-wallet segment -- where NFC technology together withsecurity components have been embedded in smart phones -- has jumped by 30% inthe first quarter, while the rest of the company's identification business grewby 20%.
Intel-like marketshareIn fact, NXP, a frontrunner in NFC technology, claims a hugelead in NFC-enabled smartphones and tablets -- over such competitors as Qualcomm,Broadcom, and Intel. NXP's customers in NFC-featured smartphones and tabletsare said to include: Apple, Nokia, and Samsung.
Noting that NXP's NFC (its wireless technology and securitycomponents included) is being designed into 130 smartphone models, Clemmerclaimed, "NXP has an Intel-like position" in the red hot e-wallet market. Onethird of those products are shipping today, he added.
As more consumers carry smartphones, transactions completedby simply by waving an e-wallet-enabled smartphone (without a physical creditcard or cash) at the point-of-sale are fast becoming a reality. Contrary to thenotion that it may take a long time before the NFC chips actually get insidesmartphones, Clemmer said, a number of smartphones are already shipping withNFC in them, often without the user's knowledge. The NFC feature is justwaiting to be turned on as the payment infrastructure develops, Clemmerexplained.
According to a recent research by Berg Insight, aSweden-based market research firm serving the telecom industry, global sales ofhandsets featuring NFC increased 10 times in 2011 to 30 million units. Growingat a compound annual growth rate (CAGR) of 87.8%, shipments are forecast toreach 700 million units in 2016, according to the firm.
Rare earth hiccupsUnlike its identification business, where NXP fell flat overthe last two quarters, its lighting business was a key thrust of the company'sInternet of Things initiative launched a year ago.
By giving a unique IP address to every light bulb at home,NXP has been promoting an energy-saving future in which the user can turnlights on and off individually, dimming or creating scenes from his smartphone,tablet, PC, or TV. Clemmer blamed a shortfall of projected revenue in thelighting business to a shortage of rare earth.
China's decision to shut down or nationalize dozens of rareearth metal producers drove up the cost of compact fluorescent light bulbs(CFLs), forcing CFL manufacturers to delay a plan to add IC drivers to theirlight bulbs. Such drivers would enable dimming, coloring or networkingcapabilities in each light bulb. As the price of CFL bulbs shot up, "CFLmanufacturers couldn't simply afford to add those IC drivers," saidClemmer.
NXP's GreenChip-enabled light bulbs, according to thecompany's scenario, will operate on a wireless home sensor network beingdeveloped for energy metering, smart appliances, and security systems. The JenNet-IPnetwork layer software, designed to tie things together, enablesultra-low-power wireless connectivity in the GreenChip smart lighting solution.
Energy reduction --China's five-year planNXP, however, remains optimistic. Just two weeks ago, whenofficials from China's Ministry of Science and Technology were in Europe, theirvisit in the Netherlands included meetings with Philips Lighting and NXP inEindhoven, among others, according to Clemmer.
Describing lighting as "the third largest source of energyconsumption at home," he noted that China is "absolutely serious about ‘energyreduction,'" which is one of the key targets of China's current five-year planspanning to 2015.
Despite current setbacks with CFL lighting, Clemmer isconfident of China's interest in what smart lighting can offer to energyreduction. NXP has recently opened up its JenNet-IP software stacks toselective partners including those in China to foster the development of uniqueapps, according to NXP's CEO.
NXP's third main focus -- aside from identification andlighting -- is automotive. Already dominant in the keyless car entry systemmarket, the company is plotting to expand further by developing NFC-enabledmulti-function car keys. "As we add more smarts into the keyless car entrysystem, we increase semiconductor content in the smart key by three to fourtimes," Clemmer explained.
Unlike other relatively new semiconductors companies, NXP'sgood fortune -- particularly leading positions in such areas as NFC-enabled smartphones,wirelessly connected lighting, and smart keyless car entry systems -- appearsclosely tied to its former self (Philips Semiconductors) and the parentcompany's large R&D investment over the last few decades.
With no disrespect for today's NXP team, one question comesto mind: What will NXP do once it finishes eating the fruit of legacytechnology advantages that date to a previous regime (before it became NXP)?
Clemmer seems little worried. He said, "We continue toinvest in the advancements of each of our leading products ... like substantiallylowering the power and reducing the chip size for NFC chips."
While NXP in old days couldn't help investing in thedevelopment of every conceivable wireless technology on the planet, "we are nowmuch more selective," he added. Again, in Clemmer's mind, it's all about focus.
source: NXP
Note:
-Unit: $Million
-HPMS is the High Performance Mixed Signal segment; STDP isthe Standard Products segment; MFG & OTHER is the combination ofManufacturing Services and other corporate revenue.
source: NXP
Note:
-Unit: $Million
-AUTO is the HPMS Automotive business; IDEN is the HPMSIdentification business; WILI is the HPMS Wireless Infrastructure, Lighting andIndustrial applications) is the HPMS Wireless Infrastructure, Lighting andIndustrial business; MCC is HPMS Mobile, Consumer and Computing business; STDPis the Standard Products segment.
This story was originally posted by EETimes.
