NXP CEO sees no chipmaker consolidation mid-term
Dutch chip maker NXP ruled out any consolidation in the semiconductor industry in the mid-term because major players are focused on organic growth as they emerge from the global recession.
"Five years from now you'll see some consolidation," NXP Chief Executive Rick Clemmer told Reuters in an interview on the sidelines of an industry event in Munich on Tuesday.
Two years ago, NXP and German rival Infineon, which recently sold its wireless operations to Intel, were rumored to be in merger talks that never came to bear fruit.
After struggling through an industry downturn amid the global financial crisis, chipmakers were now more focused on organic growth than major mergers, Clemmer said.
However, NXP would look for tuck-in acquisitions, Clemmer said, adding NXP had recently bought Jennic, a semiconductor start-up that for example turns low voltage from the impulse of a finger into a signal.
Asked if he would consider buying Infineon's former fixed-line unit Lantiq, which is currently owned by private equity firm Golden Gate, Clemmer said he had no interest at all.
Clemmer declined to say what kind of a budget he would have at his disposal for acquisitions but said: "It's not like we have a fixed budget, we could spend a few hundred millions, ($) 300 million every other year."
NXP, whose customers include Apple Inc, Bosch and Huawei Technologies Co Ltd, was created by a leveraged buy-out in 2006 as Dutch electronics group Philips divested the businesses that made parts for its radios, television and other equipment for over 50 years.
Texas-born Clemmer was installed as CEO by KKR in 2009 as the company struggled under the weight of debt taken on before and after its leveraged buyout.
The net debt was reduced by $555 million so far in 2010 to $3.687 billion.
"We will reduce it a bit more this year and next year will be similar," Clemmer said, adding the plan was to lower debt while raising operating profit.
Clemmer said he sees the overall semiconductor market growing 6-8 percent next year and said its high performance mixed signal chips unit -- used in mobile phones, base stations or auto electronics -- would grow 2.5-3 percentage points faster than the market.
NXP's high performance mixed signal chips make up about 70 percent of its product revenues, Clemmer said.
"That market had a volume of about 28 billion in 2009," he added.
Clemmer said in February NXP was looking at an annual 15-19 percent sales growth in 2010 and said on Tuesday NXP had exceeded that target, without giving details.
NXP floated in August at $14 per share, below its intended range of $18-$21, and fell to as low at $10.23 on August 5. It has since regained some ground and traded at $13.70 on Tuesday.
Philips sold its 17 percent stake in NXP in September.
Private equity firms KKR, Bain, SilverLake, Apax and AlpInvest own a combined 69 percent and there is a free float of 14 percent.
Credit: Reuters
Dutch chip maker NXP ruled out any consolidation in the semiconductor industry in the mid-term because major players are focused on organic growth as they emerge from the global recession.
"Five years from now you'll see some consolidation," NXP Chief Executive Rick Clemmer told Reuters in an interview on the sidelines of an industry event in Munich on Tuesday.
Two years ago, NXP and German rival Infineon, which recently sold its wireless operations to Intel, were rumored to be in merger talks that never came to bear fruit.
After struggling through an industry downturn amid the global financial crisis, chipmakers were now more focused on organic growth than major mergers, Clemmer said.
However, NXP would look for tuck-in acquisitions, Clemmer said, adding NXP had recently bought Jennic, a semiconductor start-up that for example turns low voltage from the impulse of a finger into a signal.
Asked if he would consider buying Infineon's former fixed-line unit Lantiq, which is currently owned by private equity firm Golden Gate, Clemmer said he had no interest at all.
Clemmer declined to say what kind of a budget he would have at his disposal for acquisitions but said: "It's not like we have a fixed budget, we could spend a few hundred millions, ($) 300 million every other year."
NXP, whose customers include Apple Inc, Bosch and Huawei Technologies Co Ltd, was created by a leveraged buy-out in 2006 as Dutch electronics group Philips divested the businesses that made parts for its radios, television and other equipment for over 50 years.
Texas-born Clemmer was installed as CEO by KKR in 2009 as the company struggled under the weight of debt taken on before and after its leveraged buyout.
The net debt was reduced by $555 million so far in 2010 to $3.687 billion.
"We will reduce it a bit more this year and next year will be similar," Clemmer said, adding the plan was to lower debt while raising operating profit.
Clemmer said he sees the overall semiconductor market growing 6-8 percent next year and said its high performance mixed signal chips unit -- used in mobile phones, base stations or auto electronics -- would grow 2.5-3 percentage points faster than the market.
NXP's high performance mixed signal chips make up about 70 percent of its product revenues, Clemmer said.
"That market had a volume of about 28 billion in 2009," he added.
Clemmer said in February NXP was looking at an annual 15-19 percent sales growth in 2010 and said on Tuesday NXP had exceeded that target, without giving details.
NXP floated in August at $14 per share, below its intended range of $18-$21, and fell to as low at $10.23 on August 5. It has since regained some ground and traded at $13.70 on Tuesday.
Philips sold its 17 percent stake in NXP in September.
Private equity firms KKR, Bain, SilverLake, Apax and AlpInvest own a combined 69 percent and there is a free float of 14 percent.
Credit: Reuters
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