NXP sees demand for NFC, lighting ICs

LONDON – Despite closing wafer fabs and being constrained in manufacturing capacity in some areas, NXP is building capacity in its remaining manufacturing sites, according to CEO Rick Clemmer.

Clemmer, speaking after NXP Semiconductors NV (Eindhoven, The Netherlands) had announced its financial results for the third quarter, said that the deployment of near field communications (NFC) is smartphones and the use of compact fluorescent lamps (CFL) as replacements for incandescent bulbs were two applications that would drive demand in 2011.

Clemmer emphasized that although sales revenue was flat in Q3 manufacturing constraints only applied in some areas and were lifting as order patterns and sales pipelines returned to normal patterns.

"We are less capacity constrained now than we were in Q3 and in Q2," said Clemmer. "For example, we were constrained on 32-bit ARM microcontrollers but now we are not." In part that was due to the start of manufacturing capacity increases, he said, although the results of capital spending taking place would be felt more in 2011.

"In some microcontroller and industrial applications we've been working to help distribution channels build some inventory. We like distributors to be on six-turns but they have been operating on ten or twelve turns," said Clemmer. Inventory turns is a measure of the number of times the stock changes over per year.

When asked if capital equipment spending in the first three quarters of 2010 would help expand manufacturing capacity in Q4 Clemmer said: "We will see a small increase in Q4. However, the ramp associated with NFC in smartphones and CFL [compact fluorescent tubes] driver ICs is something we expect in the spring of 2011.

However, the fourth quarter will see the closure of ICN5, a wafer fab in Nijmegen, The Netherlands, and with it the loss of some jobs in manufacturing, Clemmer said.