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NXP CEO defends restructuring moves

Posted: 22 Oct 2009 ?? ?Print Version ?Bookmark and Share

Keywords:NXP restructuring? manufacturing? mixed-signal IC?

NXP BV CEO Rick Clemmer has made a robust defense of the latest restructuring deals he has made, saying that a focus on high-performance mixed-signal ICs at NXP and moving other businesses and some engineering functions out from NXP is producing winners all round.

In a telephone conference with EE Times Clemmer emphasized that NXP is planning for a future as a high-performance mixed-signal company. "We are focused on the business units where we can have leadership from a technology position." When asked if manufacturing would remain a core part of a focused NXP Clemmer answered by saying manufacturing operations must be competitive.

NXP has extensive manufacturing resources including five wholly-owned wafer fabs and six IC assembly and test sites. NXP also has four joint venture wafer fabs.

Clemmer said he did have figures in mind for remaining staff and revenue run rate at the end of 2009, which will be one year after he took office, but declined to share the numbers. NXP employs approximately 29,000 people around the world according to its Website.

"We are focused, we are driven. We said we would move the digital TV and STB business to a better opportunity for us to win. And a place where we have 60 percent of the business is a very elegant solution," Clemmer said.

Under a most recent deal Clemmer plans to move more than 160 engineers who create and maintain intellectual property cores, out to Virage Logic Corp. which will set up shop for them in Eindhoven. Under that deal NXP stands to receive 2.5 million shares in Virage, which is not a controlling interest, and must pay Virage $60 million over the next four years for continued engineering support.

"The IP, IP blocks, technology and patents are associated with leading-edge technology which we don't have a need for," said Clemmer. "What we are selling, well it is not standard because it is advanced technology, but it is CMOS IP that can now be used by the many." Clemmer said NXP would benefit as it can make money on the IP through its interest in Virage.

When asked if the IP cores being moved were building blocks for all of NXP's products Clemmer answered: "This is the biggest chunk associated with the old business units. There are a couple of smaller areas we do not feel fit with our focus on high-performance mixed-signal." Clemmer said that the shares being taken by NXP would give it a single-digit percentage interest in Virage and denied that the company had agreed to pay too much for engineering services from Virage.

"Liquidity is no longer the issue for NXP. Now it is about aligning the company for business success. It would have cost a lot more if we had retained the resourcesand the severance associated with those resources. This is much more attractive; 160 people stay gainfully employed, doing what they enjoy and are good at. It is a true win-win scenario. We can't see anything bad about this dealexcept in the press."

When asked if a leaner NXP would retain the process IP and manufacturing capability traditionally considered integral to making high-performance analog and mixed-signal ICs, Clemmer stressed that process technology IP had not been part of the deal with Virage. He said: "We have to be sure in processing and manufacturing and benchmark as competitive."

As to the applications NXP will pursue Clemmer said high-performance mixed-signal is vital to many electronic functions. He listed automotive, identity and security, power, lighting and base stations. "It is a $85 billion market that we have defined."

- Peter Clarke
EE Times Europe





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