NXP Semiconductors NV has announced it plans to form a Chinese semiconductor joint-venture company with state-owned investment company Beijing JianGuang Asset Management Co. Ltd. (JAC Capital).
The joint-venture is intended to make use of NXP's bipolar power technology and JAC Capital's connections in Chinese manufacturing and distribution to lower the manufacturing cost of electronic products in China, NXP (Eindhoven, The Netherlands) said. NXP did not indicate whether the joint-venture would be fabless and take chips from NXP or would became a chip manufacturer using licensed technology. The deal is expected to close later this year.
Technology transfers to Asia by way of joint ventures have been a long-standing part of NXP's business model and even date back to NXP's forerunner Philips Semiconductors and the creation of Taiwan Semiconductor Manufacturing Co. Ltd. in 1987 based on the use of CMOS manufacturing process technology provided by Philips.
The latest JV, as yet unnamed, is being set up to meet China's growing demand for power semiconductors for electronic products in the consumer, automotive, smart manufacturing and medical equipment sectors, NXP said. Teaming with JAC Capital will ensure multiple rounds of capital investment to support R&D and market expansion in China and globally, NXP said. The agreement is for JAC Capital to own 51 percent of the JV and NXP taking the remaining 49 percent.
Similarities to previous deal
The deal has similarities to one announced in 2013 when NXP formed a joint venture with state-owned Datang Telecom Technology Co. Ltd. (Beijing, China) to supply automotive ICs to China. Datang NXP Semiconductors Co. Ltd., was set up to be 51 percent owned by Datang and 49 percent owned by NXP. Headquartered in Nantong, near Shanghai, the fabless chip company focuses on the development and sale of chips for the Chinese hybrid and electric car market.
NXP manufactures power semiconductors at Hazel Grove near Manchester, England, and in May 2013 it was announced it would receive a £2 million (about $3 million) grant support from the UK government at the site for research into the development of gallium nitride (GaN) power semiconductors. The investment was expected to safeguard 400 existing jobs at the site and create up to 100 additional jobs.
"We will greatly benefit from JAC Capital's government and industry network in China, and we will be able to gain further market reach as a genuine Chinese business, allowing us to provide the best possible customer support to our global customer base and offer the greatest competitive advantages," said Frans Scheper, general manager of the standard products business at NXP, in a statement.
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