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Taking a closer look at NXP, Freescale's merger plans

Posted: 04 Mar 2015 ?? ?Print Version ?Bookmark and Share

Keywords:NXP? Freescale? ARM Cortex? MCU? processor?

Like the fragmented MCU business, the two companies serve a broad set of embedded markets. Outside of greater heft in automotive, the merger does nothing to provide a sharper or new focus.

Clemmer might decide to divest Freescale's high-end communications business although he said nothing overtly to suggest such a move. When an analyst asked about the segment he noted, "We've been trying to move off the [process] technology treadmill and Freescale is more in line with it... From our due diligence at a very limited level so far, it is still complementary and fits together nicely."

The reality is the communications business is becoming the largest slice of the diverse electronics pie. However it is one where Intel is gaining sway is comms apps move to software running on x86-based systems. Like many embedded chip vendors, Freescale trying to shift to ARM-based SoCs and find ways to differentiate itself here.

It's not clear if Clemmer puts the Freescale comms SoC segment into his overall category of high performance mixed-signal chips he sees as the company's future. From the old NXP point of view, the merger is good because it reduces the company's dependence on relatively low margin so-called standard products from 22 per cent to 12 per cent of revenues.

Rommel sees a "potential downside" to the deal if NXP does not maintain Freescale's focus on software initiatives. He said, "In my opinion, Freescale's increased focus on software solutions and partners has helped them gain share in recent years. Freescale's growth was inhibited for a few years because they did not properly incubate the software and tool assets they acquired with Metrowerks. It is critical the combined entity maintain its investment in these types of enabling software and tool solutions."

Indeed one of the big problems of the semiconductor industry in general is in getting paid for the value of the software it is expected to provide with its chips.

Marriage of convenience seeks growth

NXP's Clemmer's take on HPMS space

Just how NXP's Clemmer defines the high performance mixed-signal (HPMS) space he likes and the standard product space he does not remains to be seen.

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