NXP bullish on growth prospects in nation

NXP Semiconductors, the world's top chip manufacturer for the auto industry, remains confident about its prospects in the China market, after the company reported a growth in most of its local businesses since the beginning of the second quarter this year.

Kurt Sievers, who was promoted as CEO of NXP in late May, said since the start of the second quarter, many industries are recovering quickly in China.

NXP's industrial internet of things businesses have benefited the most from China's reviving economic activities and are set to post continuous growth from the first quarter into the second quarter, Sievers said.

According to the senior executive, the company's chip testing and packaging facility in Tianjin, which has about 4,000 employees, has been running without any interruptions. All the Chinese employees of the Dutch company have come back to the office for work since May.

When it comes to automotive business, which accounts for about 50 percent of NXP's revenue, Sievers said "the Chinese car market has started to show the first signs of growth."

Chinese auto sales rebounded for second straight month in May, with a total of 2.19 million vehicles sold last month, up 14.5 percent on a yearly basis, according to statistics from the China Association of Automobile Manufacturers.

Chen Shihua, deputy secretary-general of the association, said the growth in May sales was largely the result of pent-up demand in recent months. "Companies are resuming operations and the government is rolling out favorable measures, so customers' confidence has been further boosted," Chen said.

Sievers said: "There is a trend for the China automobile market to post a year-on-year growth in the second quarter, which, after a number of quarterly sales declines, is very encouraging and indeed very good."

According to him, the revival of car sales in China is markedly different from that in Europe, Japan and the United States where the full negative impact of the COVID-19 outbreak became evident in the second quarter.

"I continue believing that without a legacy of combustion engines, China will be at the forefront of electrification of the car," Sievers said. "The number of electronics per car, for instance, the use of radar technologies, is growing rapidly. China is going to see strong growth (in this aspect) in the next few years."

As part of its broader push to capitalize on this trend, NXP has invested in Chinese startup Hawkeye to popularize 77 Ghz radar technology in the country.

NXP's data from 2019 show that China's automotive radar sensor market was growing at around 40 percent year-on-year, nearly twice the rate globally.

Amid worries that the global semiconductor supply chain risks suffering from fragmentation amid trade tensions between China and the US, Sievers admitted that trade tensions are very stressful elements for the semiconductor industry.

"As a European company, we are in a comparatively good position to work with Chinese partners. But it is not black and white. We also have a plant in the US, which asks us to comply with US export restrictions," Sievers said.

According to him, the company is working hard to develop more intellectual properties and is dedicated to localizing its businesses in China, so as to reduce negative impacts from trade disputes.