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NXP: Business as usual in Asia

Formerly known as Philips Semiconductors, NXP will centralize the region's sales functions in Singapore.
Written by Aaron Tan, Contributor

SINGAPORE--Newly-formed semiconductor company NXP says it is business as usual in Asia, the region from where most of its customers hail.

Scott Marquardt, regional manager of sales and marketing operations at NXP Semiconductors, said the company's Asian customers currently contribute two-thirds of the company's business. Formerly known as Philips Semiconductors, the vendor has some 37,000 employees worldwide, 15,000 of whom are based in 10 countries across the Asia-Pacific region.

"We've chosen a name and brand identity that gives us an opportunity to establish ourselves in a way that reflects our history," Marquardt said, during a media event here to unveil NXP's new corporate entity.

As the top five semiconductor companies in the region, Marquardt said NXP remains committed to its Asian customers.

"In the new company, we will see new regional functions [set up] here in Singapore," he said, adding the company presently has a "dispersed headquarters" with various sales and marketing offices across the region.

NXP is now in a transitional phase after its new corporate entity was announced last week by Philips Semiconductor CEO Frans van Houten in Berlin, Germany. NXP was formed from Netherlands-based Philips' semiconductor business, after a group of private equity investors paid US$4.4 billion for 80.1 percent of the company.

"The [semiconductor] industry is getting big and pervasive," Marquardt said. "The number of semiconductors [needed in the market] goes up every year, from credit cards to passports."

"In this very diverse industry, we've placed ourselves in a sweet spot…what we call vibrant media technologies," he said, adding that the company will focus on technologies that allow images and sound to be part of the end-user experience.

Although former parent Philips has relinquished management control over NXP, the Dutch electronics giant still holds the remaining, roughly 20 percent, shares of NXP. Marquardt said NXP has also acquired 25,000 patents used in products that improve the "sensory experience" of end-users.

According to Derrick Heng, a sales engineer from a Singapore-based semiconductor distributor company, Philips and others such as Sony have been facing some heat from Chinese semiconductor makers in the OEM (original equipment manufacturer) market. Heng declined to name his company.

"In the past, Philips had specialized products used in radars and satellite systems. But today, the Chinese can produce similar products at a lower cost," he said. "Unless our customers ask specifically for Philips semiconductors, we usually offer Chinese-made ones that can equally fit their requirements."

Once a top-five Philips semiconductor distributor in Singapore, Heng's company has since terminated its distribution deal with Philips.

Marquardt, however, maintained that NXP now has a "more focused" distribution channels than Philips Semiconductor had five years ago. "We've very strong distribution partners, both local and regional," he said.

According to analyst company Gartner, worldwide semiconductor revenue is expected to reach US$257.7 billion this year, a 9.5 percent increase from 2005. However, growth is expected to slow down to 7 percent next year.

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