N X P Semiconductors

1. NXPSemiconductors By: Melissa Loisel

2. History of NXP Semiconductors • Based in the Netherlands • Formerly owned by Philips • Started in 1890’s • First research lab was made in 1914 • Was one of the largest producers in Europe • Produced radios in 1927 • 1963 introduced the audio cassette • In 2006 KKR and Bain Capital, which are private equity groups, bought the semiconductor part of Philips and it was named “NXP Semiconductors”

3. What is a Semiconductor Company? • Designs and produces micro chips • Micro chips are used in different kinds of every day products and applications • A micro chip consists of 2 parts, or processes: • a piece of silicon which is cut from a larger wafer which is produced in a “Wafer Fab” • and taking the piece of silicon and assembling, packaging, and testing it so it can be mounted on to an electronic circuit board

4. NXP-The CompanyA Semiconductor Innovator in… High Performance Applications Automotive Identification Infrastructure Industrial Lighting Computing Consumer Portable

5. Applications ExplainedWhere NXP micro chips can be found • Lighting • LED light bulbs • Computing • Laptops • Email servers • Consumer • Internet modems • WiFi routers • Cable TV set-top boxes • Portable • Cellphones, tablets • GPS locators • Automotive • Cars, Sirius XM radio, radar detectors • Identification • Student ID cards • Passports • Infrastructure • Cellular phone towers • Cable TV cabling • Industrial • Home electric meters • Airport radars

6. NXP-The CompanyBy The Numbers $4.2B $4.2 Billionin Revenue $550 Millionin Annual R&D Operations in25 locations Engineering Designin 22 Locations 60 Billion Micro ChipsShipped per Year 30,000+ Customers 14,000+ Issued &Pending Patents 6,800+ Different types of Micro Chips 23,700 Employees around the world 60B 14K+

7. Expansion • NXP expanded into Asia • Asia is where most electronic consumer goods are manufactured, especially China and Taiwan • Think of Apple: iPhone, iPod, iPad. All made in Taiwan. • Labor is cheaper. • These manufacturers are NXP’s customers. • Therefore, in order to be closer to customers, NXP built up local Sales offices in China and Taiwan. • Native language speakers • Better customer service • Better relationships = more Sales => higher stock price • They make chips in China, Taiwan, Philippines, Thailand, Malaysia, and Singapore

8. Expansion (cont’d) • NXP now makes micro chips in China, Hong Kong, Taiwan, Philippines, Thailand, Malaysia, and Singapore. • Expansion included adding Wafer Fab and Assembly plants in Asia. • Pros • Labor is cheaper • Local governments support technology growth, financial incentives • Cons • Initially, the number of skilled workers was limited, so training was required to increase skilled labor pool • Competition fights for same labor pool, starts to drive wages higher • One can argue that it is easier for a European company, like NXP, to expand into Asia, compared to a US company expanding into Asia. • Europe and Asia are geographically connected by land. • European-Asian trade routes go far back in history (e.g. Marco Polo).

9. Financial Issues There was a huge debt left from Philips then NXP assumed when it was spun off, approximately $6 billion dollars They had to sell unprofitable semiconductor business segments and move a lot of production to Asia to save costs In August 2010 they issued stock to raise capital which is also known as an Initial Public Offering (IPO) They joined the NASDAQ at this time when they issued their stock

10. Going international good or bad? Overall, expanding into Asia was good. Allowed NXP to save production costs and reduce huge debt. Customers recognize NXP’s large presence in Asia. NXP is recognized as one of the global leaders in semiconductors. Without having a major presence in Asia, this would not be possible. NXP had the advantage that they are a European based company from the start, so they had a foothold in Europe by default.