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NXP heads towards growth: Mobile payment, IoT, V2V on a roll

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

Keywords:NXP Semiconductors? Apple Pay? mobile payment? IoT? V2V?

NXP Semiconductors has reported its 1Q15 total revenue with an increase of 17.7 per cent over the same period a year ago, which is now pegged at $1.47 billion. NXP CEO Richard Clemmer attributed the Q1 results to the company's "better product mix, which drove better profitability." NXP's non-GAAP operating margin in Q1 was 26 per cent.

A merger of NXP and Freescale is expected in 2H15. Clemmer confidently spoke of significant integration planning already under way. This "should assure a successful Day One execution of the merger," he said.

NXP is also likely to have a buyer for its RF power business in the next few months. Due to the sheer size of the two companies' combined RF power business, Clemmer had previously talked about selling NXP's RF power business in order to meet regulatory guidelines.

Richard Clemmer

NXP CEO Richard Clemmer

NXP has received interest from "quite a number of entities," said Clemmer. "We've actually narrowed that down and have entered a process to try to get to an agreement here over the next couple of months."

NXP divides the company's business into five product categories, including automotive, secure identification solutions, secure connected devices, secure interfaces and power, and high-performance mixed signal and standard products.

IoT: Dot-com phenomena?

NXP, however, does not segment IoT as a separate product category.

One financial analyst said that some competitors are starting to break out IoT in their numbers. When he prodded Clemmer to speculate on the trajectory of the IoT market, Clemmer responded: "It sounds like the dot-com phenomenon."

At NXP, he said "we prefer to call it the smarter world as opposed to the Internet of Things." He added that "smarter world" is "a little bit more descriptive than just the IoT, which is still relatively undefined."

Semantics aside, when it comes to IoT building blocks, Clemmer said that NXP and Freescale combined will have all the fundamental capabilities, including sensing, processing, connectivity and security. He noted that the merged company will be in a "true leadership position" to serve the evolution of IoT beyond "what either of us could have done on a standalone basis."

NXP product revenue

NXP: product revenue, 1Q15 (Source: NXP) Product revenue combines revenue from the high performance mixed signal (HPMS) and standard products (STDP) segments. Per cent of quarterly total amounts may not add to 100 per cent due to rounding.

Clemmer cautioned that IoT will still need more time to generate material revenue. While acknowledging some indications for "ramp-ups of design wins," he noted that any such early successes "still end up being relatively immaterial in the whole scheme of things if you look at the revenue impact itself."

Apple Pay

For NXP watchers, the mobile payment business might be an area of concern, in terms of its growth. In Q1, NXP's revenue in secure identification solutions was $222 million, down 13 per cent from the same period in the prior year and flat sequentially.

Clemmer downplayed the uncertainty of the market, and said, "During the quarter, we began to see incremental improvement in the bankcard market, with positive trends in both China and the U.S."

Further, he added that NXP continues to see "strong growth" in mobile payments.

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