NXP Semiconductors has been rearranging its resources as well as team in order to give a valid direction to its merger with Freescale. The company announced in a statement that its product business is being sold to a Chinese investment company for a price if $2.75 billion. With this move, the company will be transferring a workforce of approx. 11, 000 people in a new firm. Empirically, these 11, 000 employees constitute 25 percent of its workforce. The new company will be named as Nexperia and will operate under the will of investors. It will be led by Frans Scheper, the general manager of the company and executive team of the unit. Its base, however, will continue to remain in Netherlands.
The deal sets a new benchmark for the growing interest in Internet of Things. NXP’s is betting its resources and capital on this concept which will combine wireless chips with embedded computers in regular objects like domestic devices and cars. The Dutch chipmaker is focusing all its energies in becoming a major automotive chip maker. Its intentions are confirmed with the introduction of new sensor fusion chips and radar in markets. The deal also defines the confidence of the company that is ready to move ahead leaving behind one-fifth of its business. As Rick Clemmer, the Chief Executive of the company, commented, “This transaction is a positive accomplishment for all parties involved. It enables NXP to continue to focus on its high-performance Mixed Signal Business.”
The usual product business wasn’t compatible with the way company wishes to evolve in future. It is indulged in production of power transistors, logic semiconductors, and discrete semiconductor devices which is too different from the embedded and automotive chips business NXP plans for coming years. One setback that this deal will have is the loss of contracts that company had with electronics producers. NXP has been a supplier of regular chips for major smartphones makers including Samsung, Huawei, and Apple.
In last few years, its usual product manufacturing unit lagged behind in terms of sales. The mixed-signal chip business moved ahead of it in leaps and bounds. Nexperia will be controlled by China based JAC Capital and Wide Road Capital. It is being rumored JAC Capital showed keen interest in acquiring this business at the beginning of this year while NXP was looking to sell it for a price of $2billion. The investment firm now plans to enroot this business further in automotive markets. As Michael Zhang, the managing partner of Wise Road Capital likes to add, “Although servicing a variety of markets, Nexperia will be especially increasing focus on automotive applications and providing their required high-level of quality solutions.”