The proposed merger of Freescale and NXP will result in a semiconductor company that challenges the giants.
That’s according to chief analyst Dale Ford at IHS, who said the merged entity will be in the top 10 semiconductor companies in the world, outranking other giants such as Broadcom and ST Microelectronics.
He said the strength of uniting Freescale and NXP will be shown in automotive applications particularly.
NXP, formerly the semiconductor division of Dutch giant Philips, used to compete in the same market, said Ford.
But the new top 10 will look fundamentally different. By revenues, Intel will remain number one with 14.14 percent, followed by Samsung, Qualcomm, SK Hynix, US DRAM firm Micron, Texas Instruments and Toshiba.
The merged company will be second place in the micro controller market, and it will also have significant share in the digital signal processing (DSP) market, much used in consumer applications.
IHS noted in its report that Freescale is practically an exclusive source for power architecture processors – and although its share in this market is tiny compared to ARM and X86 semiconductors, it has big wins in the military aerospace market.
Two chip companies have surprised the world by agreeing to merge.
While the tech press focused on Apple’s watch, and non-existent car, NXP Semiconductors, and Freescale Semiconductor hatched out a super-merger in comparative quiet.
TechCrunch’s excuse for its hacks not spotting the mega-merger was because “no-one has heard of the two companies anyway.”
In the interests of educating hacks – Freescale makes embedded chips, the Internet of Things, while NXP is best known for its chips headed for cars. They are both huge and were both expected to get bigger under the trend for mobile and automotive chips.
Under the deal the two companies announced a “definitive agreement” that will see Freescale shareholders pick up 0.3521 NXP shares and $6.26 in cash for each of their current shares.
Freescale made $1.10 billion in revenue, and $63 million in net profit last quarter. NXP is larger, recording $1.537 billion in revenue, and $149 million in net income in the quarter.
Either way, this deal is huge and could put the fear of god into companies that US tech hacks might have heard of, such as Intel and AMD who would really like to get their feet under the table of the embedded market.
Now they are now facing a rival who is not only comfortably been in the market for years, but now is big enough to play the sorts of games that they play in the x86 market.
It looks like the US tech press might have to make themselves a little more familiar with the new outfit – what ever it ends up being called.
Chip company Freescale said that people are facing “the most dire challenge” the internet of things (IoT) has faced so far – the lack of guidelines for security.
Freescale said that US agency DARPA had managed to hack into a car manufacturers braking system, while the US Federal Trade Commission raised concerns about the security of interconnected systems and devices.
So what is Freescale doing about it?
The company said that it teaming with an industry body called the Embedded Microprocessor Benchmarking Consortium (EEMBC) to help IoT manufacturers and system designers bring better security to transactions and endpoints for the IoT.
It also said that it was establishing a series of security labs worldwide to work on making more secure technologies from the cloud to the end point. Freescale said it will allocate up to 10 percent of its annual R&D budgets on the Internet of Things.
It is also starting a programme to educate startups on best practices on IoT security.
British chip company ARM said it is offering £10,000 in prizes in a contest to create smart devices based on its Cortex-M4 microprocessor.
The competition runs from March to June this year with the goal to create devices in the home automation, measurement, the internet of things or system control.
Registration for the contest starts today and finishes on March 31, 2015. Competitors will receive software development tools, a debug unit, hardware containing the M4 chip and peripheral components.
Competitors can choose from platforms provided by Freescale, Infineon, NXP or ST Microelectronics.
Final prototype designs need to be submitted by the 30th of June 2015, with winners announced in October 2015. There will be five prizes ranging from $500 to $5,000.
Reinhard Kell, director of micro controller tools at ARM said: “New technology invention was previously the domain of those with advanced processor knowledge and access to funding. That has changed now.”
Competitors get a complementary licence for the ARM Keil Microcontroller Development Kit, professional edition.
You can register for the competition by clicking here.
If anyone wants to buy a second hand chipmaker, Freescale has indicated that it might be selling itself off.
According to the New York Post, Freescale has hired investment bankers to explore a possible sale, and it has an unnamed buyer in mind.
It is pretty likely to be Samsung as this has been rumoured for a while. Freescale makes chips used in automobiles, consumer products, telecommunications infrastructure and industrial equipment and this is an area Samsung wants to expand into. Samsung Electronics has $63 billion in cash which could be spent on acquisitions,
Of course no one is saying anything at the moment and it is unlikely to be confirmed for a while.
Freescale went public in 2011 after being taken private in 2006 for $17.6 billion in a leveraged buyout by a group of private equity firms that included Blackstone, Carlyle and TPG Capital.
On January 27, the company reported strong results for the fourth quarter — with revenue up 11 percent and increased margins — as well as a forecast for the current quarter that exceeded Wall Street expectations. Since then, Freescale shares have jumped 32 percent.