NXP CEO: Competitors are trying to Block the Merger With Qualcomm
23 July, 2017
Rick Clemmer: "Qualcomm’s leading position in 5G, along with our leading position in connectivity and secured connectivity, will make us the World's leader of the Connected Devices”
The merger agreement between NXP Semiconductors and Qualcomm is a defining moment for the semiconductor’s industry. It’s not only about the huge size of $39 billion, but also the large scope of the combined company, its leading position in key markets such as mobile and automotive, and the combination of vertical semiconductor’s company with a fabless company.
During a private visit to Israel last week, Richard Clemmer, President and CEO of NXP Semiconductors, met Techtime and revealed some of the strategic issues behind this gigantic deal. “The car industry is changing and soon the car makers will be more transportation oriented companies the car manufacturers. Today, NXP is 50% bigger than its closer competitor in the Automotive Industry, and our connectivity solutions are prominent. But in five years the Automotive connectivity will be defined by 5G. We began talking with partners and costumers about this transition, and this is how we reached Qualcomm.”
Clemmer does not see any problem with The European Commission decision to open an in-depth investigation to assess acquisition of NXP by Qualcomm. “We have received approvals in many places, including the U.S. antitrust regulators.” Clemmer says that competitors in Europe are trying to convince the authorities that the merger is problematic, “but they have no case. Qualcomm and NXP business areas do not overlap each other. The competitors are concerned with the merger of two market leaders in two different markets. Qualcomm’s leading position in 5G, along with our leading position in connectivity and secured connectivity, will make us the World’s leader of the Connected Devices.”
What will be profile of Qualcomm?
“The combined Qualcomm will be different. It will have a wide range of products beyond mobile. It will be a solution company including software, and not a pure semiconductors company. Even today, at NXP, we have more Software designers than Hardware designers. Software is going to be even more important in the future.”
According to Clemmer, the combined company (to be called Qualcomm) will employ a fabless model and a vertical model as well. “Building advanced CMOS processes fabs is too expensive for companies like us. The foundries are very effective, but in some cases we will continue building our own semiconductors. Automotive devices, for example, need a very specialized expertise that we maintain in house. You need to adopt the best process for each product. At NXP, we have a very busy 140 nano-meter production line with backlog order for 5 years ahead.”
If you could, would you have bought Mobileye?
“Yes, but not for the price that Intel will pay. Mobileye is a solution company, and is doing a good job in vision, but you need more technologies and more sensors to answer the market’s needs.
“There is a strong need for Radar, LiDAR, V2V and V2X communications, Signal Processing inside the vehicle, in-car Secured Connectivity solutions and the ability to control the car systems with micro-controllers. We have the potential to leads all these segments, and the 5G which we believe will be the basis for the connected car.”