According to IHS Inc. (NYSE: IHS), a global source of critical information and insight, the recent agreement to merge NXP Semiconductor and Freescale Semiconductor creates a company that would have reached $4 billion in automotive semiconductor revenues in 2014. The merged company would, therefore, become the leading supplier of semiconductors to the automotive market, with at least $1 billion more revenue than the next-largest supplier, Renesas.
“The merger brings together two companies with complementary semiconductor portfolios in several automotive segments, as well as overlapping areas,” said Luca DeAmbroggi, principal analyst of automotive semiconductors for IHS. “The merged company’s broader portfolio will consequently strengthen its position in the automotive semiconductor market, even though functional overlaps could create some internal hurdles. But most of all, buyers in the electronics industry now have fewer choices.”
“NXP and Freescale both have a strong automotive tradition, and both companies are focused on making high reliability, quality components,” DeAmbroggi continued. “The announced merger between Freescale and NXP gives birth to a company that is strongly positioned in the automotive sector and can serve complete semiconductor solutions to all high-growth segments, including infotainment, advanced driver assistance systems, and connectivity, as well as new frontiers represented by in-vehicle security and hybrid and electric vehicles.”
In the past NXP led the automotive infotainment segment, thanks to application-specific standard products (ASSPs), such as AM/FM tuner and audio processing, audio amplifier, and digital radio, as well as networking and discrete components; while Freescale supplies the brain of the automotive infotainment system — specifically, microprocessing units (MCUs) and the company’s successful i.MX6 family of microprocessors used in infotainment solutions.
By making use of Freescale’s integrated circuits (ICs), the merged company could rapidly target autonomous driving systems, including automatic emergency braking and adaptive cruise control. Freescale also delivers its strong market position in radar chipsets, automotive image system-on-chip (SoC) solutions, radar-signal and data-fusion processing components, and ASIL-compliant MCUs for active-control functions.
Freescale contributes its strong position in products for hybrid-electric vehicles, thanks to the company’s portfolio of broad-based MCU solutions. NXP-Freescale will also become a dominant supplier for vehicular wireless communications (V2X), using Freescale’s secure processor solutions and NXP’s dedicated short-range communication (DSRC) wireless chipsets.
According to the IHS ADAS Semiconductor Market Tracker, the merged company could potentially target about 80 percent of the $3 billion advanced driver assistance systems (ADAS) semiconductor market by 2020. Freescale’s diverse portfolio of processors, MCUs, digital systems processors (DSPs) and sensors, fused with NXP’s strong profile in networking ASSPs, will allow the merged company to address the safety application market, including lane departure warning (LDW) and pedestrian detection (PD). The company will also address automatic emergency braking (AEB), adaptive cruise control (ACC), and other solutions for autonomous driving systems.
Freescale recently announced an ASIL-compliant automotive image SoC (i.e., S32V) with sensor fusion capabilities. So far Renesas, Texas Instruments and Mobileye have similar SoCs for the fast growing ADAS market, including R-Car from Renesas, TDA from Texas Instruments and EyeQ from Mobileye. “The addition of S32V to this list will allow NXP to address the front-view camera processor market, which is currently being led by EyeQ processors,” DeAmbroggi said.
According to IHS ADAS semiconductor research, the revenue for MCUs, DSPs, processors and SoCs used for data fusion, front-view camera functions and radar-sensor functions is set to grow fourfold, reaching $600 million by 2020. Freescale is also one of the major suppliers for silicon-germanium (SiGe) 77GHz-based radar chipsets used in long-range and mid-range ADAS applications. Radar technology is primarily found in collision warning and AEB applications, which are a part of the car safety guidelines from EuroNCAP, NHTSA and other regional bodies. The radar sensor market will double by 2020, and NXP can get on board with other radar sensor suppliers.
Vehicle-to-vehicle communications (V2V) will be an important milestone in the evolution of self-driving functions, according to IHS. “NXP could leverage Freescale’s expertise in secure processors and combine their DSRC based wireless chipset technology to create a strong portfolio for the V2V communication market, which set to soar after 2020,” DeAmbroggi said.
NXP could also target the automotive night-vision market, with Freescale’s microbolometers. Currently night vision is a niche market, as it is an expensive comfort application found in luxury segments; however, automotive night vision could be one of the technologies used to implement sophisticated self-driving functions.