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What's behind the NXP-Freescale merger?

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

Keywords:microcontroller? infotainment? ADAS? connectivity portfolio?

Breaking down automotive chip business

The merged NXP would become number one in automotive chips, a company "nobody can match," said Clemmer. Taking a look under the hood, aren't the two companies developing similar technologies to enable things like Advanced Driver Assistance Systems, security and connected cars? Not necessarily, said the NXP CEO.

Today, NXP's AM/FM car radio chips are used on "27 out of 28 car audio platforms of choice" used by Tier Ones and car OEMs, said Clemmer. "We've got silicon tuners and DSPs." But once Freescale's apps processors are brought to NXP's car radio platforms, the new NXP would be suddenly able to offer much fuller, compelling car infotainment systems.

NXP has been working on ADAS with Mobileye for vision processors, according to Clemmer. "They're doing a good job," he said, "but Freescale has a very good automotive vision SoC of its own." Freescale's automotive vision SoCs are using CogniVue's APEX Image Cognition Processing technology. Freescale unveiled at the World Mobile Congrees, a new automotive vision SoC, dubbed S32V, which can make safety-critical decisions for drivers to prevent accidents.

Asked about if NXP and Freescale are both pushing for security in connected cars, Clemmer said, "Freescale is doing security in software, whereas we're doing security in hardware" by leveraging NXP's security chips used in identify and banking cards.

Freescale is very strong in radar. But NXP has revealed at the Mobile World Congress this week that the company has developed a CMOS-based small radar chip. In addition to radar developed by Freescale, carmakers can add several tiny radar systems inside a car in order to make cars even safer, Clemmer added.

The biggest difference between the two companies' automotive chip businesses is that NXP is focused on connectivity interface and securitymore of the areas where connected cars are directly exposed to the outside world, while Freescale's strength is in engine controls and power trains.

Luca DeAmbroggi, principal analyst for Automotive Semiconductors, IHS Technology, mostly agreed with Clemmer's assessment.

The analyst said, "The announced merger between Freescale and NXP gives birth to a company that is strongly positioned and one that is able to serve complete automotive semiconductor solutions to all high-growth segments." These segments include infotainment, ADAS and connectivity as well as the "new frontiers" represented by in-vehicle security and hybrid and electric vehicles, he added.

In terms of market share, the NXP-Freescale merger would have formed a company with a turnover of a $4 billion in 2014, at least $1 billion ahead of the next supplier, Renesas.


Asked about layoffs among engineers at both companies, Clemmer said, "We will not be cancelling any development projects currently going on in R&D."

He pegged the "cost synergy"the savings in operating costs expected after the two companies are mergedto be about $1.2 billion in R&D.

The savings will be mostly coming from supporting various CAD tools and models out of one organisation than two, Clemmer explained.

- Junko Yoshida
??EE Times

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