MADISON, Wis. — NXP Semiconductors posted in the first quarter of 2015 total revenue of $1.47 billion, an increase of 17.7 percent over the same period a year ago. Richard Clemmer, NXP CEO, attributed the first quarter results to the company’s “better product mix, which drove better profitability.” NXP’s non-GAAP operating margin in the first quarter was 26 percent.
NXP CEO Richard Clemmer
A merger of NXP and Freescale is expected in the second half of this year. 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.
NXP has received interest from “quite a number of entities,” said Clemmer, during the conference call. “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.
NXP: product revenue, Q1, 2015
Product revenue combines revenue from the High Performance Mixed Signal (HPMS) and Standard Products (STDP) segments. Percent of quarterly total amounts may not add to 100 percent due to rounding.
IoT — Dot-com phenomena?
NXP, however, does not segment IoT as a separate product category.
One financial analyst said that some competitors are already 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.”
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.”
For NXP watchers, the bank card business might be an area of concern — in terms of its growth. In the first quarter, NXP’s revenue in Secure Identification Solutions was $222 million, down 13% 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.
Next page: China strategy