As the dollar value of the chips going inside of the average car rises year after year, NXP Semiconductors (NXPI) has a lot of ways to profit.
NXP is the world’s biggest automotive chipmaker, selling chips used within everything from ADAS and infotainment systems to body electronics and electric vehicle battery management systems (BMS).
The Dutch chipmaker’s product line also includes sensors, analog and power management chips, Wi-Fi/Bluetooth combo chips, RF chips and processors for base stations, NFC and Ultra Wideband (UWB) chips for smartphones and other devices, and microcontrollers (MCUs) for payment cards, ID cards and a variety of embedded/IoT devices.
That spells quite a lot of products for Lars Reger, NXP’s CTO, to oversee. I previously talked with Reger in January and caught up with him again this week, as NXP formally opened a manufacturing plant in Chandler, AZ that will make gallium nitride (GaN) power transistors and amplifiers for 5G base stations.
Here are some of the notable things Reger shared during our talk.
The 5G GaN Opportunity
Since GaN transistors have much higher power densities than the LDMOS transistors often used in 4G base stations, they’re often a popular choice for addressing the demanding RF needs of 5G base stations. And Reger asserted that the Chandler fab, which produces 6-inch GaN-on-silicon wafers (large for RF chips) and is expected to reach full capacity by year’s end, will help NXP address a large portion of the market.
Reger: “We didn’t have any capacity in-house…and we think that we can go to…a quarter to 40% of the market. So a quarter very soon, and then in the coming quarters, higher.”
Competing Against GaN-on-SiC RF Transistors
GaN-on-silicon carbide (SiC) transistors, which are offered by Cree (CREE) and a handful of other firms, can achieve even higher power densities than GaN-on-silicon transistors. And that has led them to gain some traction within the 5G base station market as well, particularly within base stations that need to support higher frequency bands.
When asked about competition from GaN-on-SiC transistors, Reger argued that GaN-on-silicon will maintain a meaningful pricing edge, due to both GaN-on-SiC’s raw material costs and its manufacturing challenges.
Reger: “The raw material [for] silicon carbide is much more expensive, much more difficult to handle….It is less the physical issues that I see there, but the mass-market efficiency issues…that are hampering [the] silicon carbide market. Because in a lot of physical areas, silicon carbide would be superior to GaN, but [it’s] not as good [in terms of price/performance].”
UWB Opportunities and Competitive Strengths
NXP is the early leader in the UWB chip market, racking up design wins with the likes of Volkswagen and Samsung (though not Apple (AAPL) , which uses its proprietary U1 UWB chip). Reger predicted the chips will become a common sight within car key fobs thanks to the security advantages UWB provides over other short-range radio technologies, and that in addition to smartphones, they’ll often go into smart home devices that a phone might interact with (lighting fixtures, smart speakers, etc.), thanks to their ability to figure out a smartphone user’s precise location.
When asked about what NXP sees as its main strengths in the UWB chip market going forward, Reger said it was NXP’s ability to pair UWB with various other radio technologies. This integration could take the form of adding UWB to a Wi-Fi/Bluetooth combo chip or (as was the case for Samsung’s Galaxy Note20 Ultra) integrating it with an NFC radio, while providing a common secure element for both.
Electric Vehicle Battery Management Chips
NXP expects big things from its electric vehicle BMS business, which competes against the likes of Texas Instruments (TXN) , Infineon and Analog Devices (ADI) . The company recently forecast the business would grow at about a 60% compound annual rate from 2020 to 2023, or roughly twice the growth rate expected for the overall market.
Reger suggested NXP’s BMS offerings are differentiated by their ability to fine-tune the management of each individual battery cell (so as to optimize power efficiency), as well as their functional safety features and the modularity of its solution, which gives automakers more flexibility in terms of how they design and scale battery systems.
Automotive Radar Chips
NXP is the top player in the automotive radar market, which is seeing strong growth as penetration rates rise for ADAS systems containing radar and the number of radars used per system also rises. Reger indicated NXP is seeing particularly strong design win momentum for mid-range CMOS radar chips that have a range of 70 to 150 meters and target rear-impact, side-impact and corner radar sensing applications (it’s seeing relatively less traction for far-range radar chips placed at the front of a car).
He also mentioned NXP is in the qualification process with customers for solutions that place an antenna on top of a radar chip package, while indicating that such offerings are a good fit for side-impact applications.
Other Auto Opportunities
When asked about where NXP sees growth opportunities in automotive outside of ADAS and BMS, Reger brought up UWB, noting that future cars could have several UWB radios inside of them. He also mentioned opportunities in body electronics (e.g., heating, water pumping, lighting), as mechanical solutions are replaced with electronic ones, and for in-vehicle networking and gateways (central data-processing hubs).
Also mentioned: NXP’s ability to supply secure processors that can simultaneously power everything from a car’s infotainment system and rear-seat displays to its heads-up displays (HUDs) and digital instrument clusters. By isolating the code used by each system and having separate hardware partitions for each, such offerings can guarantee the reliability of mission-critical systems such as instrument clusters in the event that, say, an infotainment system crashes.
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