6 ms·

Chip Makers Will Merge in Deal Worth $11.8B

96 points by luu 12y ago

ausjke 12y ago
Again smaller player acquires larger ones,USA lost another used to be good company
- venomsnake 12y ago
  Tax evasion or?
- raverbashing 12y ago
  "Smaller player" I'm not sure who're your calling a smaller player, if NXP or Freescale, but it only shows your lack of knowledge about both
- lkjdfs 12y ago
  NXP has more employees, higher revenue and net income. this seems like a straight merger.
- NietTim 12y ago
  As a Dutch guy I'm happy it's the other way around for once.
- skrebbel 12y ago
  Why would Freescale become a "used to be good" company as a part of NXP? NXP is a pretty cool company IMO. They make lots of cool tech and they got out of the "split off from Philips and take all our debt with you" turd of a deal remarkably well. (For the interested, NXP used to be Philips Semiconductors. Philips wanted to cut them away because it was an unprofitable division so they sold it to some hedge funds, including a shit ton of debt. Afair, something like 20% of their annual expenses were interest only, putting a big damper on their freedom to innovate. So NXP in turn cut away its unprofitable subdivisions, and became or stayed remarkably competitive in the others. With an inheritance of relatively expensive R&D (no Chinese wages) and a Philips culture (= highly bureaucratic and hierachical), that is no small feat) To me, an uneducated observer, the fact that NXP now feels in shape to do big acquisitions is a pretty good signal. These guys are on the rise, and that may not be bad for Freescale at all.
  - PinguTS 12y ago
    But I think, this was regular Hedge Fund strategy of buying companies. Take a ton of money from the financial market. Buy off a company or subsidiary and pay with the borrowed money. Then put all that on dept to the bought company. That was the way it also worked when the Hedge Fonds bought it out of Philips.
- ausjke 12y ago
  Just checked the market capital and it's actually NXPI=2*FSL, NXP and FSL are both spin-offs, both got a lot of hedge-fund debt, but it seems NXP did better than FSL in the last few years.
ghubbard 12y ago
tldr; NXP Semiconductors is buying Freescale Semiconductor.
- huxley 12y ago
  And for historical context, Freescale Semiconductor is the spinoff of the original Motorola's Semiconductor Products Division, that was a transistor and semiconductor pioneer as well as building the 680x0 and several of the PowerPC processors for the Apple Macintosh back in the day.
mafuyu 12y ago
I hope Freescale's openness with their datasheets and sample policy survive the merger. It seems NXP is the one consuming Freescale, however.
- ctz 12y ago
  NXP is the most paranoid and ridiculous company I've ever had the displeasure of dealing with. Even after signing two separate NDAs with different parts of NXP, they still wouldn't give us complete sets of datasheets for parts we were considering. I don't know how they can sell anything at all; it's impossible to use their parts in a design.
  - olalonde 12y ago
    Genuine question: why do they do this? Is it to protect their customers from reverse engineers?
    - MichaelGG 12y ago
      I'd love to know, too! FBI agents were flipped for $100,000, just cause they needed the cash. Escaped detection for decades. CIA agents were turned, too. While I'd not be surprised to see corporate security better than the FBI's stuff[1], I find it hard to believe you can't just get agents on the inside for the amount of money involved. So secrecy seems so unlikely to be useful against the companies that can really benefit from that knowledge. It reminds me of Nikon not documenting their white balance settings in their RAW format. Just stupidity all around. 1: A long time ago, I saw Microsoft Internal Affairs in action. They were fast and setup a sting, complete with their own undercover agents/turned insiders, in a matter of weeks from first tip-off. I'd imagine companies like pharma or chips, would have even more severe response. Whereas in the FBI, one multi-decade mole was actually caught once or twice, but talked his way out. At one point, he even led the investigation against himself.
      - throwawayaway 12y ago
        The Police Chief didn't know he was double crossed by Internal Affairs all along! I would fucking love to see one of those type of Dirty Harry films done in a megacorporate setting. Here's another, Microsoft Internal Affairs more recently in action: http://www.nytimes.com/2014/03/21/technology/microsofts-software-leak-case-raises-privacy-issues.html?_r=0 http://www.nytimes.com/2014/03/21/technology/microsofts-soft...
gonzo 12y ago
Freeslide hits bottom, film @ 11.
Quequau 12y ago
Having worked at NXP for a short time, I agree with you but I have the impression that most of the unwillingness to be open (with those things it makes perfect sense to be open about) comes from laziness and fear of unintended consequences. The center of gravity of power is held by groups with security focuses and they're supposed to be professional paranoids... It's just unfortunate that the least effort, safest decision for many other folks is one which can be seen as consistent with what those groups would have made.
krampian 12y ago
>> Both companies soon began to struggle under new ownership, burdened by new and huge debt obligations and falling demand during the financial crisis. The debt obligations are the typical result of private equity intervention. It's basically financial engineering which benefits mostly the private equity people. For a good read about conglomerates and company architecting, I would suggest Warren Buffet's most recent shareholder letter from a few days ago, especially the part where he discusses the skepticism that should be shown towards bankers and financial people proposing company spinoffs to "unlock value".
- shawndumas 12y ago
  "Investment bankers, being paid as they are for action, constantly urge acquirers to pay 20% to 50% premiums over market price for publicly-held businesses. The bankers tell the buyer that the premium is justified for “control value” and for the wonderful things that are going to happen once the acquirer’s CEO takes charge. (What acquisition-hungry manager will challenge that assertion?) A few years later, bankers – bearing straight faces – again appear and just as earnestly urge spinning off the earlier acquisition in order to “unlock shareholder value.” Spin-offs, of course, strip the owning company of its purported “control value” without any compensating payment. The bankers explain that the spun-off company will flourish because its management will be more entrepreneurial, having been freed from the smothering bureaucracy of the parent company. (So much for that talented CEO we met earlier.) If the divesting company later wishes to reacquire the spun-off operation, it presumably would again be urged by its bankers to pay a hefty “control” premium for the privilege. (Mental “flexibility” of this sort by the banking fraternity has prompted the saying that fees too often lead to transactions rather than transactions leading to fees.)"
  - kchoudhu 12y ago
    And a counterpoint: http://epicureandealmaker.blogspot.com/2015/03/uncle-warren-explains-it-all-to-you.html http://epicureandealmaker.blogspot.com/2015/03/uncle-warren-... Accept no one's argument at face value, especially when it's coming from a man who has spent the last 50 years exploiting market inefficiencies.
zokier 12y ago
Bit sad to see another company with prestigious history to get swallowed like this. Another similar story not too long ago was when Infineon acquired IRF http://www.irf.com/press-room/press-releases/nr140820i http://www.irf.com/press-room/press-releases/nr140820i Are there new players enough to fight the ever-growing conglomerates?
- sitkack 12y ago
  Rip Burr-Brown, National Semiconductor, Zetex.
blumkvist 12y ago
Pf... that's half a whatsapp.

96 points by luu 12y ago

ausjke 12y ago

Again smaller player acquires larger ones,USA lost another used to be good company

venomsnake 12y ago
Tax evasion or?
raverbashing 12y ago
"Smaller player" I'm not sure who're your calling a smaller player, if NXP or Freescale, but it only shows your lack of knowledge about both
lkjdfs 12y ago
NXP has more employees, higher revenue and net income. this seems like a straight merger.
NietTim 12y ago
As a Dutch guy I'm happy it's the other way around for once.
skrebbel 12y ago
Why would Freescale become a "used to be good" company as a part of NXP? NXP is a pretty cool company IMO. They make lots of cool tech and they got out of the "split off from Philips and take all our debt with you" turd of a deal remarkably well. (For the interested, NXP used to be Philips Semiconductors. Philips wanted to cut them away because it was an unprofitable division so they sold it to some hedge funds, including a shit ton of debt. Afair, something like 20% of their annual expenses were interest only, putting a big damper on their freedom to innovate. So NXP in turn cut away its unprofitable subdivisions, and became or stayed remarkably competitive in the others. With an inheritance of relatively expensive R&D (no Chinese wages) and a Philips culture (= highly bureaucratic and hierachical), that is no small feat) To me, an uneducated observer, the fact that NXP now feels in shape to do big acquisitions is a pretty good signal. These guys are on the rise, and that may not be bad for Freescale at all.
- PinguTS 12y ago
  But I think, this was regular Hedge Fund strategy of buying companies. Take a ton of money from the financial market. Buy off a company or subsidiary and pay with the borrowed money. Then put all that on dept to the bought company. That was the way it also worked when the Hedge Fonds bought it out of Philips.
ausjke 12y ago
Just checked the market capital and it's actually NXPI=2*FSL, NXP and FSL are both spin-offs, both got a lot of hedge-fund debt, but it seems NXP did better than FSL in the last few years.

ghubbard 12y ago

tldr; NXP Semiconductors is buying Freescale Semiconductor.

huxley 12y ago
And for historical context, Freescale Semiconductor is the spinoff of the original Motorola's Semiconductor Products Division, that was a transistor and semiconductor pioneer as well as building the 680x0 and several of the PowerPC processors for the Apple Macintosh back in the day.

mafuyu 12y ago

I hope Freescale's openness with their datasheets and sample policy survive the merger. It seems NXP is the one consuming Freescale, however.

ctz 12y ago
NXP is the most paranoid and ridiculous company I've ever had the displeasure of dealing with. Even after signing two separate NDAs with different parts of NXP, they still wouldn't give us complete sets of datasheets for parts we were considering. I don't know how they can sell anything at all; it's impossible to use their parts in a design.
- olalonde 12y ago
  Genuine question: why do they do this? Is it to protect their customers from reverse engineers?
  - MichaelGG 12y ago
    I'd love to know, too! FBI agents were flipped for $100,000, just cause they needed the cash. Escaped detection for decades. CIA agents were turned, too. While I'd not be surprised to see corporate security better than the FBI's stuff[1], I find it hard to believe you can't just get agents on the inside for the amount of money involved. So secrecy seems so unlikely to be useful against the companies that can really benefit from that knowledge. It reminds me of Nikon not documenting their white balance settings in their RAW format. Just stupidity all around. 1: A long time ago, I saw Microsoft Internal Affairs in action. They were fast and setup a sting, complete with their own undercover agents/turned insiders, in a matter of weeks from first tip-off. I'd imagine companies like pharma or chips, would have even more severe response. Whereas in the FBI, one multi-decade mole was actually caught once or twice, but talked his way out. At one point, he even led the investigation against himself.
    - throwawayaway 12y ago
      The Police Chief didn't know he was double crossed by Internal Affairs all along! I would fucking love to see one of those type of Dirty Harry films done in a megacorporate setting. Here's another, Microsoft Internal Affairs more recently in action: http://www.nytimes.com/2014/03/21/technology/microsofts-software-leak-case-raises-privacy-issues.html?_r=0 http://www.nytimes.com/2014/03/21/technology/microsofts-soft...

gonzo 12y ago

Freeslide hits bottom, film @ 11.

Quequau 12y ago

Having worked at NXP for a short time, I agree with you but I have the impression that most of the unwillingness to be open (with those things it makes perfect sense to be open about) comes from laziness and fear of unintended consequences. The center of gravity of power is held by groups with security focuses and they're supposed to be professional paranoids... It's just unfortunate that the least effort, safest decision for many other folks is one which can be seen as consistent with what those groups would have made.

krampian 12y ago

>> Both companies soon began to struggle under new ownership, burdened by new and huge debt obligations and falling demand during the financial crisis. The debt obligations are the typical result of private equity intervention. It's basically financial engineering which benefits mostly the private equity people. For a good read about conglomerates and company architecting, I would suggest Warren Buffet's most recent shareholder letter from a few days ago, especially the part where he discusses the skepticism that should be shown towards bankers and financial people proposing company spinoffs to "unlock value".

shawndumas 12y ago
"Investment bankers, being paid as they are for action, constantly urge acquirers to pay 20% to 50% premiums over market price for publicly-held businesses. The bankers tell the buyer that the premium is justified for “control value” and for the wonderful things that are going to happen once the acquirer’s CEO takes charge. (What acquisition-hungry manager will challenge that assertion?) A few years later, bankers – bearing straight faces – again appear and just as earnestly urge spinning off the earlier acquisition in order to “unlock shareholder value.” Spin-offs, of course, strip the owning company of its purported “control value” without any compensating payment. The bankers explain that the spun-off company will flourish because its management will be more entrepreneurial, having been freed from the smothering bureaucracy of the parent company. (So much for that talented CEO we met earlier.) If the divesting company later wishes to reacquire the spun-off operation, it presumably would again be urged by its bankers to pay a hefty “control” premium for the privilege. (Mental “flexibility” of this sort by the banking fraternity has prompted the saying that fees too often lead to transactions rather than transactions leading to fees.)"
- kchoudhu 12y ago
  And a counterpoint: http://epicureandealmaker.blogspot.com/2015/03/uncle-warren-explains-it-all-to-you.html http://epicureandealmaker.blogspot.com/2015/03/uncle-warren-... Accept no one's argument at face value, especially when it's coming from a man who has spent the last 50 years exploiting market inefficiencies.

zokier 12y ago

Bit sad to see another company with prestigious history to get swallowed like this. Another similar story not too long ago was when Infineon acquired IRF http://www.irf.com/press-room/press-releases/nr140820i http://www.irf.com/press-room/press-releases/nr140820i Are there new players enough to fight the ever-growing conglomerates?

sitkack 12y ago
Rip Burr-Brown, National Semiconductor, Zetex.

blumkvist 12y ago

Pf... that's half a whatsapp.