SWKS in iWatch .... and Q on NXPI


Not sure if this has already been posted, but following is the teardown of the Apple iWatch

Look for “Skyworks Wi-Fi LNA + switch and PA” in the iWatch.

On another note, Saul, is NXPI (NXP Semiconductors) something interesting to explore as an investment. It has already had a significant runup.
However there is a lot of talk about NXP’s NFC controller being used for mobile payments:
It’s in the iWatch too.

This is supposed to be a huge growth area.
However other things to consider:

competition - http://telematicswire.net/nxp-ranks-1st-in-abi-researchs-nfc…
do we want to add another asic company to our investment basket?
High PE 47.33



While I’m invested in NXPI, I’m not sure that would be one that Saul would be comfortable investing in.

The original NXPI has a really strong presence in various markets related to sensors, data transmission and such where some of their chips also have low power processors. This segment is doing very well and will probably benefit from NFC.

However, NXPI has recently acquired Freescale Semiconductors. I’m less thrilled about this prospect. While Freescale has a vast array of products, some of which overlap, some of which will make NXPI a powerhouse in the automotive market, a big aspect of Freescale is the sale of high-end processor chips (PowerPC architecture) for large scale signal processing and high-end networking equipment. Also, the traditional PowerPC markets are feeling pressure from Intel at the high-end, and ARM at the low-end (in fact, Freescale recognized this and has a large number of lower-end ARM based designs).

NXP has little experience in that aspect, and merging two sales organizations is always…interesting. I know, I’ve been there. Takes about 2 or 3 years for everything to work itself out.

So the danger I see with NXP is management’s focus and integration pain. Not to mention that while the market likes the merger (hence the pop), execution better be perfect.



I kinda agree with your analysis.

AVGO looked into acquiring Freescale, but passed on them due to Freescale’s valuation.

It’s kind of interesting that both AVGO and NXPI who play in the mobile market looked at Freescale. I wonder if there is some synergy they want to exploit.


One example of synergy is in the automotive sector. NXPI really has a huge array of sensors and various other bits throughout the car.

An example (just related to transmissions) is on their website at http://www.nxp.com/applications/automotive/automatic-transmi…

That is a huge number of sensors around an automatic transmission.

Freescale is REALLY dominant in the Control Units (engine, transmission, ABS) when it comes to processor. In the above diagram, that would represent the microcontroller.

Clearly, NXPI now becomes a one-stop shop for many automotive applications and there could be synergies by having one team addressing all aspects of automotive designs.

I remember reading about some huge expected cost savings annually (500M?).

It remains to be seen how well they can execute.


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The PE is 19.84 if you go by the non GAAP earnings.( price today is 102 and TTE 5.14)

2013 2014 2015

0.72 0.98 1.35
0.71 1.09
0.85 1.35
0.99 1.35

3.27 4.77

TTE growth is 45%
PEG is 0.42



But what about the Freescale business? This backward facing look at NXPI doesn’t account for the acquisition which will definitely change things.

I guess looking at the numbers for NXPI + Freescale would be more appropriate.