News & Analysis
CEO Clemmer carving out NXP 2.0 strategy
Junko Yoshida
10/26/2012 11:42 AM EDT
Targeting niches
Said Clemmer, once a senior advisor to KKR and handpicked by the firm to turn NXP around: “They’ve given us focus and regeneration,” adding, “The jury is still out on Freescale, but there are a plenty of examples where private equity firms were beneficial to chip companies … like Fairchild or Intersil.”
While Freescale is still in the process of narrowing its focus in terms of product and market segments, NXP has adopted far more drastic measures to streamline its operations. So far, Clemmer and his lieutenants have shown an uncanny ability to spot market niches it can dominate.
For example, the Dutch chip maker leads in auto markets segments like passive, key-less entry and in-vehicle networking. Clemmer added that NXP chips are used in nearly all of mid- to high-end car radios. These moves reflect its discipline not to take on Freescale, Renesas or STMicroelectronics across the breadth of general auto electronics market.
While NXP continues to pursue only narrow slices of the auto electronics market, those it does pursue amount to a $2.5 billion market that offers it a path to future growth. Hence, the company is positioning itself to lead in specific categories rather than locking horns for overall leadership of the auto market. So far, Clemmer's strategy is working.
“I realized that this was a company with a lot of great technologies," Clemmer said. "But the company didn’t have structures or resources to take those technologies to market," adding that it also lacked "competitive manufacturing capacity or processes.”
When Clemmer arrived, NXP was still focused on SoCs for products like TVs and basebands. “There were just too many things to focus on,” he said. By narrowing the focus, “You get to do more R&D, you get better margins and you solidify [your business].”
The highlight of NXP's third quarter results was identification technology. “We ship security in a semiconductor format,” Clemmer explained. The former Philips Semiconductors was an industry leader in near-field communications development. “We built it but customers didn’t come for the first 10 years,” said Clemmer. NXP is finally profiting from NFC technology, which is used in applications ranging from passports, ID cards and mobile transaction to banking cards and toys.
NXP is expecting 100 million smart phones to be shipped in 2012 equipped with NFC and security features. Most are made by Samsung, with some by Nokia. Of the 200 handsets and tablets developed worldwide, “Our chips are in almost all of them," claimed Clemmer. "There are only six to seven models we are not in."
Asked about meeting demand for NFC chips, Clemmer acknowledged that NXP is "constrained by capacity.” Production of chip destined for credit cards and IDs requires a secure manufacturing facility. The company's NFC chips are made in a walled-off section of Systems on Silicon Manufacturing Co. (SSMC), a Singapore-based joint venture between NXP and Taiwan Semiconductor Manufacturing Inc.
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Said Clemmer, once a senior advisor to KKR and handpicked by the firm to turn NXP around: “They’ve given us focus and regeneration,” adding, “The jury is still out on Freescale, but there are a plenty of examples where private equity firms were beneficial to chip companies … like Fairchild or Intersil.”
While Freescale is still in the process of narrowing its focus in terms of product and market segments, NXP has adopted far more drastic measures to streamline its operations. So far, Clemmer and his lieutenants have shown an uncanny ability to spot market niches it can dominate.
For example, the Dutch chip maker leads in auto markets segments like passive, key-less entry and in-vehicle networking. Clemmer added that NXP chips are used in nearly all of mid- to high-end car radios. These moves reflect its discipline not to take on Freescale, Renesas or STMicroelectronics across the breadth of general auto electronics market.
While NXP continues to pursue only narrow slices of the auto electronics market, those it does pursue amount to a $2.5 billion market that offers it a path to future growth. Hence, the company is positioning itself to lead in specific categories rather than locking horns for overall leadership of the auto market. So far, Clemmer's strategy is working.
(Source: NXP)
“I realized that this was a company with a lot of great technologies," Clemmer said. "But the company didn’t have structures or resources to take those technologies to market," adding that it also lacked "competitive manufacturing capacity or processes.”
When Clemmer arrived, NXP was still focused on SoCs for products like TVs and basebands. “There were just too many things to focus on,” he said. By narrowing the focus, “You get to do more R&D, you get better margins and you solidify [your business].”
The highlight of NXP's third quarter results was identification technology. “We ship security in a semiconductor format,” Clemmer explained. The former Philips Semiconductors was an industry leader in near-field communications development. “We built it but customers didn’t come for the first 10 years,” said Clemmer. NXP is finally profiting from NFC technology, which is used in applications ranging from passports, ID cards and mobile transaction to banking cards and toys.
NXP is expecting 100 million smart phones to be shipped in 2012 equipped with NFC and security features. Most are made by Samsung, with some by Nokia. Of the 200 handsets and tablets developed worldwide, “Our chips are in almost all of them," claimed Clemmer. "There are only six to seven models we are not in."
Asked about meeting demand for NFC chips, Clemmer acknowledged that NXP is "constrained by capacity.” Production of chip destined for credit cards and IDs requires a secure manufacturing facility. The company's NFC chips are made in a walled-off section of Systems on Silicon Manufacturing Co. (SSMC), a Singapore-based joint venture between NXP and Taiwan Semiconductor Manufacturing Inc.
Related stories:
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kjdsfkjdshfkdshfvc
10/27/2012 9:23 AM EDT
Is it me or does this dude look like Peter Boyle?
http://bit.ly/IC4m9t
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GREAT-Terry
10/28/2012 10:02 PM EDT
It is good to see NXP is now more focus and wont' waste energy in non-core technologies. NFC is a good example that NXP has made use of its strength and be able to keep competitions out. Automotive bus interface is also a good business for NXP and they're doing very well. Hope one day when people talk about NXP, they can immediately say "Oh NXP, the leader in bababa....." rather than say "Oh NXP, the supermarket of semiconductor and you can buy all kind of junk out there!"
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junko.yoshida
10/30/2012 10:47 AM EDT
Exactly. The compan is showing a great example of focus, focus and focus, by picking winning segments for themselves.
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