By Greg Gao
NXP Semiconductors, the leading global Dutch semiconductor company, recently posted a better-than-expected third-quarter financial report. The weight of China’s share of its global revenue is becoming more and more critical due to the country’s flourishing electric vehicle industry, according to Li Tingwei, chairman of NXP Greater China.
In an interview with JW Insights, Li said that through more than 30 years of in-depth business development in China, NXP has an end-to-end R&D system and technical support team, and continues to invest and expand cooperation. To better serve local customers in China and help customers succeed is the cornerstone of NXP’s long-term sustainable development and the key to its healthy growth.
NXP’s total Q3 revenue was $3.445 billion, a year-on-year increase of 20%; its net profit was $738 million, a year-on-year increase of more than 40%, showed its financial report.
NXP’s four major business segments achieved double-digit growth. Its automotive business revenue was $1.804 billion, up 24% year-on-year; industrial and IoT business revenue was $713 million, up 17% year-on-year; mobile device business revenue was $410 million, up 19% year-on-year; Its communications infrastructure and other business revenue was $518 million, up 14% year-over-year.
The automotive business is NXP’s robust engine, and its revenue share has accounted for half of the total revenue. Now that the software-defined electric vehicle trends in China are in full swing, NXP, which is in the upstream of the industry chain, is expected to benefit greatly.
China’s new energy vehicles are flourishing, with a penetration of more than 20% in 2022, compared with less than 1% a decade ago. Moreover, the demand for chips has increased exponentially under the trend of automobile electrification. These developments are bringing significant changes to the country's auto industry ecosystem. In the past, auto companies were mainly joint ventures, but now more and more local Chinese brands are mushrooming, Li Tingwei noted.
Meanwhile, “software-defined cars” is being embraced in China, creating new requirements for the electrical architecture of the car; It also brings about a revolution in the automotive supply chain.
Chinese auto companies are gradually becoming the backbone of the global development of electric vehicles.
“As the auto supply chain has changed from the original vertical structure to a network structure, more and more car manufacturers have cooperated directly with battery makers or chip vendors, which has gradually shortened the R&D cycle.” "We should improve responsive speed and supply resilience,” Li added.
Facing the differentiated needs of automobile manufacturers, NXP, as the underlying technical architecture supplier, tries to constantly match the needs of Chinese customers by providing excellent products like S32 automotive processor platform, 4D imaging radar, and battery management system, Li said.
NXP has built a local R&D and testing team in China through long-term efforts in cultivating its Chinese market. It operates R&D centers in Beijing, Tianjin, Shanghai, Suzhou, Chongqing, and Shenzhen to facilitate localized development. It also cooperated with many Chinese universities to establish joint laboratories and an artificial intelligence application innovation center in Tianjin.
The company works closely with many major Chinese auto industry players, such as SAIC, Horizon Robotics, GAC Research Institute.
It recently cooperated with Great Wall Motors, and will set up a joint innovation laboratory to focus on a new generation of auto electrical architecture.
It also has developed 4D imaging radar with CAIC(China Automotive Innovation Corporation). It will support Chinese EV startups NIO and Xpeng Motors in auto electrification as well.
NXP’s battery management chips have been widely used by Xpeng Motors. The company’s latest generation of high-precision 18-series ASIL-D battery management analog front-end ICs will be applied in Xpeng Motors’ new model and achieve mass production in 2023.
In cooperation with NIO, NXP supports NIO’s high-end models with its high integration, high energy efficiency, and ASIL-D safety advantages, helping NIO realize the transition and upgrade from IGBT to silicon carbide.
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