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NXP plans big move to foundry

NXP Semiconductors will move more than a third of its chip production to foundry within three years, according to company CEO, Rick Clemmer.

“We will use foundries for 35% of production by 2015 as more of our products move to 40nm processes,” Clemmer told Electronics Weekly.

Currently NXP only uses foundry for 15% of chip production. “We are using foundry for 90nm and 40nm processes,” said Clemmer.

NXP’s own fabs include Nijmegen and Manchester. It also has joint ventures with Silicon Manufacturing Company (SMC), Advanced Semiconductor Manufacturing Co and TSMC.
NXP saw Q3 revenues increase by 10% year-on-year to $1.17bn. But profits were under pressure and net income fell to $115m.

Clemmer said he was “comfortable” with the company’s revenues performance but believes the company needs to improve gross margins. 

“We may look at SGA (selling, general and administration) costs and we may need to be more selective on RD programmes,” said Clemmer.  

Clemmer continues to be wary of prospects for the market. “I don’t see anything improving near-term,” said Clemmer.

He expects Q4 to be slightly down “perhaps 3-5%”, said Clemmer.

NXP does over a third of its business in China and Clemmer is still watching for signs of a rebound in that market.

The company still battles to pay off debt incurred when it was bought from Philips by private equity investors in 2006.

Net debt reduced $76m year-on-year to $2,880m during the quarter.

During Q3 NXP’s business sector it calls ‘indentification’ which includes smartcard ICs and RFID chips overtook its automotive business in revenues.


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