Published: December 08, 2015 | Eindhoven
NXP has completed its nearly $12 billion deal to buy Freescale, doubling the proportion of auto-related revenue to 40 percent to create the world’s top maker of automotive electronics, it said on Monday. Faltering demand in computer and phone markets, once semiconductor industry mainstays, have fueled a year-long merger wave as firms look to formerly unappealing areas like auto electronics for sales growth.
NXP automotive unit chief executive Kurt Sievers said in an interview that the combination will allow the company to assemble a range of discreet automotive applications into more complete systems running on top of Freescale processors. It propels NXP into new application areas in cars including powertrain, safety and body electronics, Sievers said, building on its existing leading positions in audio infotainment, security and vehicle networks. It also aims to build security into critical car systems to guard against hacker threats.
Now with $10 billion in annual revenue, NXP has told investors it aims to grow 50 percent faster than the overall automotive chip market in the next few years, a modest goal given that NXP grew two to three times the market recently.
NXP’s merger bolsters its position not just in cars, but other fast-growing chip markets, including home automation, wearable devices and health monitors, while also capitalizing on the company’s strength in security and payment chips.
The cash and stock deal, excluding debt, valued Freescale at $11.86 billion, based NXP’s closing price on Friday. Freescale shareholders will own about one-third of the combined company.