NXP China Business Localization: Invest In Start-Ups To Build Industry Ecosystem

At the media communication conference held in Beijing in October this year, Qian Zhijun, vice president of sales and marketing of NXP Greater China, took out a newly printed business card. He said, "contact the business card with Android's mobile phone, and contact information can be automatically added to the address book."

Although NXP's name is not familiar to ordinary consumers, it has penetrated into every aspect of daily life, such as mobile payment, traffic travel, intelligent access control, electronic credentials and so on.

For example, in the middle of the year, Xiaomi announced that users could take the bus in the 218 cities of the country, and the NFC module of the bracelet was provided by NXP.

In September this year, iPhone 11 became popular with UWB ultra wideband technology. NXP is also one of the world's leading suppliers in this field.

"We reorganized our business last year and explained our vision to shareholders, including the four core markets of automotive, industrial and Internet of things, mobile devices and communication infrastructure." Russell Taylor, vice president of global marketing and integrated marketing, NXP said.

Bid farewell to Qualcomm: force the four terminal market

In July 2018, after the termination of the transaction of NXP, NXP reorganized and planned the four terminal businesses of automobile, industry and Internet of things, mobile devices and communication infrastructure.

Earnings data showed that NXP's total revenue in 2018 was $9 billion 407 million, and its revenue in the first half of 2019 was US $4 billion 311 million. As of October 16th this year, NXP's share price has risen to $111.97, and its market value is more than $31 billion 200 million.

According to data from IHS Markit, the global semiconductor industry's revenue in 2019 will be nearly 13% lower than that of last year, but it is expected that 5G applications will drive market demand for semiconductor chips.

"This is consistent with our view." According to Qian Zhijun analysis, 5G innovation will drive the industry into a rising channel, and it is expected that the market will resume growth in 2020.

In May 29, 2019, NXP announced that it would buy Marvell's wireless connection business for $1 billion 760 million. The completion of the transaction will further enhance NXP's technical reserves in the WiFi field. It is reported that the investment is expected to be completed in the first quarter of next year.

Promoting the localization of China's business

NXP has been in China for more than 30 years. Its predecessor, PHILPS semiconductor business division, established its office in China in 1986 and launched its business.

By the end of 2018, NXP had more than 30 thousand employees worldwide, including 7000 employees in China. Judging from the revenue of regional markets, China is the largest market of NXP, and 36% of its $9 billion 407 million revenue in 2018 is from China.

The application of 5G technology in China market brings better development expectation to NXP's business in China. In June 6th of this year, the Ministry of industry and Commerce officially issued 5G commercial licenses to China Telecom, China Mobile, China Unicom and China Radio and television.

"Our products are also widely used in the field of intelligent industry, including system connection, safety control, fault detection and other links." Jin Yujie, marketing director of NXP's Greater China micro controller division, for example, supplements the product mix of the industrial Internet of things.

Turning to the impact of Sino US trade friction, Qian Zhijun said: "as a European company, we can provide support for Chinese enterprises in a compliance way, and the continued growth in China can still be expected."

He said that in addition to continuing to promote the localization of China's business, NXP will also support the internationalization of Chinese local enterprises and help them integrate with the international community.

Investing in building industry ecosystem

In addition to existing businesses in China, NXP is investing in the development of Chinese start-ups, and the first capital has been invested in vehicle millimeter wave radar research and development technology.

Falcon eye technology was founded in 2015. The company is based on the National Key Laboratory of millimeter wave, Southeast University, and the leader of zebra network CEO Shi Xuesong.

According to the cooperation agreement, the two sides will provide customers with reference design solutions and system level technical support and services based on NXP radar products, help China's local Tier 1 cope with the complex and varied technical challenges, and accelerate the vigorous development of China's automotive radar and automatic driving market.

In the four terminal business of NXP, automotive electronics contributes nearly half of the company's revenue. The investment based on Falcon eye technology has become one of the new strategies of NXP in building four ecosystems in the automotive industry.

"We hope to help more Chinese enterprises in this way and continue to invest more in the ecosystem." Liu Fang, general manager of NXP automotive electronics business in Greater China, told the twenty-first Century business reporter.

Past data show that NXP has invested in the world's auto driven vehicle technology developers Cohda Wireless, touch technology company Senseg and Internet start-ups MMB Networks and other start-ups.

Kurt Sievers, managing director of NXP semiconductor and managing director of NXP Limited by Share Ltd, visited China in September this year, and revealed that NXP will not only support the growth of Chinese start-ups through investment, but will also cooperate with emerging industries in some industries in China.