Freescale cashes in its chips as NXP creates ‘industry powerhouse’

2 Mar 2015

Chip maker NXP Semiconductors has bought out Texan company Freescale Semiconductor Ltd, merging both into a major player in the chip-making world.

Following in the footsteps of Applied Materials and Qualcomm in recent years, NXP’s move gives it a stronger hand to play with when dealing with customers who want to streamline their order process.

With combined revenues of more than US$10bn, NXP claims the acquisition will also create a market leader in automotive semiconductor solutions and in general purpose microcontroller products.

Freescale has enjoyed a boom in business recently, following some crushing years around the time of the financial crash. It was part of Motorola until investors bought it out back in 2006 for US$17.6bn, and things quickly fell apart from there.

The crash saw it lose value, sales and its main customers – its previous owner, Motorola – and mass business restructuring was required.

‘Industry powerhouse’

NXP has had a good recent history, as reported by The New York Times, with the company’s fortunes improving following a surge in demand for NFC technology that smartphones – “notably the iPhone 6” – use for certain wireless interactions (such as Apple Pay).

“The combination of NXP and Freescale creates an industry powerhouse focused on the high growth opportunities in the ‘smarter world’,” said NXP’s CEO Richard Clemmer, who will stay on as president and CEO of the new, merged company.

“We fully expect to continue to significantly out grow the overall market, drive world-class profitability and generate even more cash, which taken together will maximise value for both Freescale and NXP shareholders.”

“Our combined scale, size and global reach will position our new company to deliver sustainable above market growth,” said Gregg Lowe, Freescale semiconductor president and CEO.

“It will also serve to accelerate the strategic plans both companies have invested in, enabling us to deliver more complete solutions to customers.”

Semiconductor image via Shutterstock

Gordon Hunt was a journalist with Silicon Republic