NXP Semiconductors has been at the forefront of driving innovation in automotive semiconductors for over 50 years since first being founded by Philips. Based in Europe, NXP has about 29,000 employees across over 30 countries. With #1 leadership positions in a wide variety of automotive applications and #2 in a couple of other segments, NXP is focused on ensuring the motoring experience is safer and more eco-friendly, comfortable and enjoyable than ever.
NXP’s automotive business drives innovation across a wide range of applications including entertainment, in-vehicle networking, access and immobilisation, sensors and power. All major worldwide automotive manufacturers, other than two, use an NXP immobilizer. More than 2/3 of all mid and high-end radios use a NXP DSP solution at the core of their system. Every brand of car produced in the world that uses in-vehicle networking features NXP transceivers. One in three cars produced worldwide has an NXP sensor on board. NXP was the first company in production with FlexRay transceivers and continues to bring new solutions including smart car keys, digital radio and intelligent power management to the automotive market.
Automotive Industries met with Rick Clemmer, President and CEO of NXP to understand what’s next for NXP and the semiconductor developments that are set to drive future innovation in the automotive industry.
AI. During these challenging economic times, could you share with us what NXP’s vision and focus is for the coming years?
Clemmer. NXP is committed to driving customer-focused innovations in high performance mixed signal technology areas, while continuing to support our strong standard products business.
High performance mixed signal offers an incredible growth area and opportunity in the semiconductor industry. Customers’ products are rarely partitioned neatly into analog and digital areas and so designers want to be able to mix analog and digital circuitry to optimize their architecture and achieve the greatest precision, highest bandwidth or lowest power consumption.
NXP has the leading process technology, circuit design expertise and architectural insight to address this need. We have created mixed-signal solution innovations in areas including RF products, interface devices and automotive subsystems. We have also been successful in developing mixed-signal application-specific standard products for many customers and already around two-thirds of our revenue comes from products with some mixed-signal technology.
As we move forward, we intend to focus investment on driving growth in our leading positions in these segments. More specifically our strategy lies in prioritizing investment in Identification, Interface, Automotive Analog Mixed Signal, and Radio Frequency Front End, including Car Radio applications.
AI. What trends are driving automotive semiconductor R&D?
Clemmer. The overriding trends in society also have a direct influence on the automotive industry. Besides the impact of the economic crisis, which emphasizes the need for cost-effective transportation, trends like environmental sustainability, the desire for increased safety and comfort and easy communications drive innovations.
NXP focuses on developing automotive ICs and system solutions to make driving safer, cleaner, more comfortable and enjoyable. Our solutions for in-vehicle networking and sensor systems help save fuel and improve reliability and dynamics, while our keyless entry/go and connected key solutions add convenience and security. We deliver audio, connectivity, and multimedia solutions that rival the best in home entertainment, and we’re pioneering low-cost telematics, with the first dedicated solution for road pricing and eCall as well as intelligent traffic management.
AI. NXP has been steadily growing its market share in automotive according to some recent industry reports. What can this growth be attributed to?
Clemmer. Over the last several years NXP constantly managed to grow market share in the automotive semiconductor market. According to Semicast Research, NXP stepped up its ranking from #5 to #4 from 2007 to 2008. (Source: Semicast Research: Preliminary Market Share Estimates for Semiconductor Suppliers to the Automotive Sector, May 2009). The market share growth is a direct result of our focus on strengthening leadership positions in areas where our technology expertise delivers real customer value. We have clear number one positions in the markets including car entertainment products, in-vehicle networking, magnetic sensors and immobilizers and keyless entry.
Based on our core competency in these areas and the overall systems understanding of our engineers, we can help customers increase functionality and significantly reduce system cost for their products. This approach requires close customer contact and collaborative R&D, which allows us to establish strong long-term partner relationships with customers who see our R&D teams as a true extension of their business.
A good example in this context is the recent shipment of the 1st million FlexRay Transceivers in April, which not only reinforces our leadership, but proves that FlexRay, a technology which NXP helped to create, is now widely adopted in the industry.
AI. What innovations can manufacturers and partners expect from NXP over the next couple of years?
Clemmer. We are enhancing our product portfolio to help customers capture the trends mentioned earlier, specifically around green driving, digital broadcasting, intelligent traffic management, and system cost reduction.
With energy-saving innovations like Partial Networking for CAN we support our customers in achieving challenging CO2 emission reduction targets. This feature in our IVN products allows the selective switching on or off single ECUs or total sub bus systems enabling a significant reduction of the power consumption in the car, such as at traffic lights. Many NXP products, such as our System Basis Chips (SBC), offer this feature already today. The SBCs family integrates analog mixed signal transceivers with functionality like voltage regulators and watchdogs to reduce power consumption and overall system costs.
Another innovation supporting the trend of reducing car weight and costs is FlexRay. NXP was one of the founding members of the FlexRay consortium and we were the first in production with our FlexRay transceivers. As the next generation in in-vehicle networking, FlexRay has much higher bandwidth than existing CAN and is expected to be the communications backbone for Drive-by-Wire applications, which will help reduce car weight and energy consumption and allow for better active safety systems.
There is a clear trend of electrification of the car to achieve the environmental goals set by various governments. Our Magnetic Resistant (MR) Sensors support this trend. For example, our Angular MR Sensors can be used in systems like eGas, Throttle Control and Power Steering.
Another trend is digital broadcast. Digital Radio is penetrating the worldwide market massively (in co-existence with AM/FM mid term) and Digital TV is starting to do so as well. Already today NXP offers solutions around the Cayman Chip that complement our Dirana DSP family towards Software Defined Radio and Digital Broadcasting. We continue to innovate in this area and will further enhance this portfolio towards multi-standard reception in future.
We are taking Car Entertainment to the next level with our automotive Multimedia Processors. Reusing industry proven technologies from NXP’s home consumer technology business, we currently offer two product families to support the fast-growing market for media processing in cars. Our Vicaro family offers dual-streaming capabilities while our MuVi family is the first fully integrated HD system in the automotive market. MuVi is an open global audio/ video platform supporting all relevant video formats. Multiple TV broadcasting standards are supported with incorporated security and conditional access features. Both multimedia product families are highly cost competitive due to their high integration levels.
Our Automotive Telematics Onboard-Unit Platform (ATOP) is revolutionary in telematics. ATOP offers significant cost reductions for systems that enable intelligent traffic management, road pricing and fleet management and is a key component for the European emergency alert system, eCall. We are closely working with customers, partners and car manufacturers to create joint prototypes and to gather direct feedback from field trials, as well as discussing potential implementation schemes directly with governments and industry bodies.
AI. Is green driving still just a nice concept or is it any closer to being a mainstream reality? What obstacles still need to be overcome and how are semiconductors making this transformation possible?
Clemmer. Green driving is already here, and with consumers, manufacturers and governments all on one side, it is revolutionizing our industry.
We’re currently seeing big momentum towards greener driving with the strong trend from standard combustion engines to energy optimized vehicles. Various hybrid models are entering the market with the potential to drive significant volumes within the next decade. Figures from Deutsche Bank and Goldman Sachs forecast that 30 to 50% of total car demand in 2020 will be hybrids and electric cars, and on top of that, the markets for electric motorbikes and scooters are also booming in other developing countries. We are also seeing increased demand for the innovations I already mentioned in sensors, in-vehicle networking, and telematics.
AI. Is recent demand for low cost cars simply consumer response to the economic troubles, or a longer-term growth area?
Clemmer. Part of the recent spur in low cost vehicle growth can be put down to the global financial climate, but the main momentum is part of a longer term trend. We’re particularly seeing strong demand in emerging countries such as China and India where, for the first time, many people are finding themselves in a position to buy a car, or are upgrading scooters to low cost vehicles. The shift towards smaller cars (and therefore also low cost cars) is also benefiting from increased environmental awareness and part of the broader green driving trend. We see consumers increasingly evaluating the carbon footprint of their own travel and reducing their engine size to vehicles more practically suited to their driving habits.
AI. Are certain markets better suited to these vehicles, or is there some consistency globally?
Clemmer. The described trends towards green driving, smaller and low cost cars are global, but we do see particular scenarios that are creating market momentum on a local scale. In general the worldwide economic crisis pushes people towards buying cheaper and smaller cars. Economic stimulus packages in many European countries and North America allow consumers to get a credit when they replace older, less fuel-efficient, less secure cars with a new models. This seems to work especially well for small and low cost cars. In emerging countries like China, India and Russia, we see a growing demand for low cost cars, as many people are able to buy a car for the first time now or are able to step up from two-wheelers to cars.
AI. Is there still demand from manufacturers for improving in-car infotainment, or does this lie in contrast with the growth of low cost cars?
Clemmer. The trend towards low cost cars does not mean that less car radios / infotainment systems are sold. Outside of a few markets like India, every car is sold with some kind of car infotainment system. However, in the low cost cars, we believe that there will be an increasing demand for self-install solutions. This means the demand for aftermarket solutions increases and as NXP has a strong traction with the main aftermarket suppliers, we are well positioned for this change.
Furthermore, the trend for seamless and easy-to-handle connectivity has not changed in the last years. There is significant demand from consumers and the industry for improving the passenger experience and therefore the requirement for further innovations in the in-car infotainment market including the ability to bring in external content in the form of iPods, MP3 players or other portable devices.
Also, the shift to digital broadcasting continues to gather pace, which brings its own complexities in creating products suited to individual countries or regions with their own set of broadcasting standards.
At NXP we have developed the first multi-standard radio IC dedicated to in-car digital reception. The NXP SAF3560 single-chip solution supports HD radio technology, DAB, DAB+, DRM and T-DMB radio reception standards, reducing manufacturers’ development costs and delivering better quality in analog and digital radio performance. We will enhance this portfolio towards digital TV reception, broader software defined radio applications and therefore towards high performance multi-standard reception.
While digital broadcasting does dictate a much higher semiconductor value, we’re working hard to ensure this does not need to translate to a higher price for the overall infotainment system through tightly integrated platforms. This ensures customers can enjoy better entertainment and manufacturers can deliver an improved experience without incurring higher costs.
AI. What exciting trials or technologies is NXP working on around the world?
Clemmer. One of the areas particularly close to my heart is the telematics trial I touched on earlier. The traffic management project we are working on with the city of Eindhoven and IBM is truly revolutionary in addressing the challenge of road congestion in the Netherlands. The project gives the green light for the first practical test of road user charging in the Netherlands and will help ensure smoother mobility, reduced congestion and a reduced environmental impact from vehicles. Road pricing systems are becoming a strong focus all around the world, changing the taxation models for cars and helping to tackle mobility and eco-driving challenges, and we’re delighted to be at the heart of such an important trial. This is particularly interesting in some areas where toll-ways may cross many governmental bodies, and current implementations create increased traffic congestion due to required stops as travelers cross over each boundary. NXP’s ATOP platform can also support some of the trends highlighted earlier, such as increased safety. To give an example, the system is able to automatically call the ambulance to the right location, in case of an accident and thus reduce the rate of road fatalities. ATOP is compliant to the US and European emergency call concepts. On the whole ATOP increases our opportunity to meet market demand for a whole host of innovative applications now and in the future.
Regarding Partial Networking we have started several concept studies with our tier1 and CarOEM customers. NXP is committed to push the adoption of these systems in the industry. And by actively engaging with partners such as BMW, NXP is innovating products to make driving more comfortable and convenient. The ´key of the future´ will allow you to use your key as one device, in much the same ways you would today use separate things like your phone, car key and wallet. The ´key of the future´ is a prototype technology currently in development using RFID (Radio Frequency Identification), NFC (Near Field Communication), and GPS (Global Positioning Systems). The key fob or smartcard enables authorized users to automatically unlock their car door within a short range of the vehicle, start the ignition with a push of a button, control music or other digital content from nearby devices (e.g. other passengers’ MP3 players) or upload maps.
All of these innovations are great examples which demonstrate NXP’s overall business strategy: identifying key macro-level societal and technological trends and aligning them with our unique high-performance analog and mixed signal capability to deliver compelling value-added solutions to all the different automotive stakeholders — in particular the drivers and passengers themselves.