Clemmer: NXP debt under control, focusing on design wins

Auto, lighting markets shine

Smartphone and tablet customers can expect an NFC-based, security solution that includes its Cortex microcontroller technology for systems control by the end of the year.

NXP has three main smartphone/tablet customer design wins, each representing $200--$250 million in revenue over a three-year product life, according to Clemmer.  For these devices, NXP is supplying chips in the areas of interface, MCU and authentication, he added.  While Clemmer declined to name NXP’s customers, Apple, Nokia and Samsung are believed to be the key customers.

It’s no surprise then that second quarter identification chip sales grew 25.1 percent sequentially and 20.6 percent year-over-year to $234 million. “We continue to look forward to double-digit growth going forward,” Clemmer said. “We think cyber security is a significant opportunity that is going be a major factor.”

In fact, orders have been so robust that NXP is capacity constrained; lead times are between 20 and 26 weeks. To bolster supply of identification and microcontroller products, NXP has doubled 140-nm production at its Singapore-based Systems on Silicon Manufacturing Co. joint venture with Taiwan Semiconductor Manufacturing Co. NXP is the majority owner with a 69 percent stake. It has also tripled production at TSMC’s Fab 10 fabrication facility in Shanghai, China, facility, and is currently working with its foundry partners to secure additional capacity.

Collectively, NXP will spend approximately $260 million in capital expansion this year. “Our focus on high-performance mixed signal is to create solutions that either creates a performance advantage for our customers, a cost advantage for our customers or a time-to-market advantage for our customers,” Clemmer said.

Smart lighting is another area NXP is motivated to become the top dog. NXP offers several products in this sector, such as high-efficiency SSL drivers for LEDs and lamps based on its GreenChip technology that is combined with its ultra-low wireless capability.

At LFI 2012 in Las Vegas last May, NXP demonstrated two wireless smart lighting solutions based on IEEE 802.15.4 standards, including JenNet-IP network layer software and ZigBee software link.

Based on the open 6LoWPAN standard, JenNet-IP is IPv6-compliant, making it possible to extend secure connectivity, two-way communication and control to a network of up to 500 home devices. JenNet-IP is helping to drive down the cost of adding smart functionality into devices ranging from light bulbs to air conditioning systems – and enabling interoperability with other communication standards in the home. In other words, each LED bulb will be given a unique IP address so that users can remotely control lighting from their smart phones, tablets or other electronic devices.

“Smart energy has a real opportunity to have an impact on energy savings,” Clemmer said, adding that the company is in the early stages of a program with China to open-source release JenNet-IP to help the country build applications that will reduce energy consumption.

NXP is no stranger to China, which accounted for 36 percent of NXP’s sales in 2011, making it the largest contributor. NXP also has three joint ventures companies in China, including Jilin NXP Semiconductors, owning a 60 percent share; Suzhou ASEN Semiconductors, with 40 percent ownership; and Advanced Semiconductor Manufacturing, with a 27 percent share.  

Over the last six weeks, Clemmer said business from the region has abated, attributing the decline to lower exports to North America and Europe. Still, if NXP had to be dependent on one region, Clemmer said he’d “rather it be China than anyplace else.”  

NXP recorded record sales in North America and China in the automotive segment during the second quarter. Automotive sales reached $244 million, representing 22.3 percent of NXP’s revenue and its largest market segment.

To help continue to grow its automotive business, NXP recently acquired IP licensor Catena Holding and its subsidiaries for an undisclosed sum. NXP said it plans to put Catena's engineers to work on automotive applications.

“We hear a lot of chatter of weakness in the auto market, we haven’t seen that yet. We are a little leery about Q3 and the automotive space, but right now we haven’t seen any significant deterioration,” Clemmer said

NXP’s automotive chip line includes low-IF analog car radio tuners, voltage regulators, LED drivers, discrete components and sensors. NXP continues to consider expanding its sensor offerings beyond automotive applications. “It’s one that we continue to look at, one that we haven’t made a formal commitment to,” Clemmer said.

NXP also continues to make “good” progress on its gallium nitride (GaN) process technology, which may yield a universal transmitter that can be applied to multiple systems and frequencies, and eventually be used to produce power products.

Clemmer couldn’t say which foundry was its GaN process technology partner due to their non-disclosure agreement. He did, however, say that the roadmap calls for volume production of the universal transmitter in late 2014 (the technology is still in the design implementation phase). “The real key is to be able to prove the technology to customers so that they can design their systems around that,” he said.

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