The story of how NXP has re-invented itself by divesting a lot of what used to be core businesses isn't exactly easy to sell—especially among those of us who knew the Dutch chip company in its heyday, when it was still Philips Semiconductors.
I'll admit some nostalgia here. I remember, for example, when then Philips Semiconductors CEO Doug Dunn unveiled TriMedia, the company's first VLIW architecture-based processor. And it was fun listening to CTO Theo Claasen talking about next-generation process technologies, the company's "platform" strategy, and its plans for Crolles 2.
Now fast forward to NXP, which was spun out of Royal Philips Electronics and forced to fend for its own future. The newborn acronym quickly shed close to 5,000 jobs, managed its debt load, and—in August, 2010—raised nearly $450 million through an initial public offering.
Along the way, NXP got rid of its mobile/wireless group to ST-NXP Wireless, a joint venture established in 2008; NXP also sold its television systems and set-top box business lines—along with its crown jewel video IPs—to Trident Microsystems in 2009.
NXP's message to the world in the last two years was consistent: "Our new focus is on high-performance mixed-signal products."
Talk about your mixed signals! This is when many of us either got confused or just plain lost interest in NXP.
We understood the corporate line here. But what is, really, a high-performance mixed signal? What are its products? Why are they suddenly so important? How significant a business can you get from mixed signals—not just for NXP but for the rest of the semiconductor industry?
Many of us grew up covering highly-integrated digital SoCs, advanced processor architectures and next-generation multimedia applications processors for the next mobile handsets—all of which somehow conditioned us to see them as "glamorous." In contrast, high-performance mixed-signal products seemed—to put it politely—"peripheral."
During the recent Embedded Systems Conference in San Jose, I sat down for about an hour with Mike Noonen, NXP's executive VP for global sales and marketing. Noonen described NXP's new [high performance mixed-signal] strategy more effectively than anyone I've heard before. He said, in essence, "Today, NXP offers products with no big chip in the middle."
Now, I get it.
Picture a block diagram for a handset or media tablet without that big fat SoC hogging all the real estate. No big chip in the middle. Get it?
NXP, once armed with a coveted TriMedia-based solution, no longer offers a big SoC for digital TVs or set-top boxes, either.
Instead of throwing more money at the crowded, cutthroat digital SoC market, up against companies like Broadcom, Qualcomm, MediaTek and Mstar, NXP focuses now on supplying mixed-signal components that these bigwigs don't have.
Look back on NXP several years ago, when it was still bloated with a large—and nebulous—product portfolio. The company now has a sharper focus and a leaner strategy. In fact, "no big chip in the middle" should become NXP's new corporate tagline. It sums up everything that makes the company appealing to Wall Street.
But of course, as a skeptic (journalists are paid for skepticism), I wonder if doing everything but a big chip in the middle is a viable long-term strategy. Much of what you do still aims, eventually, for integration, doesn't it? That's the nature of the semiconductor business.