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NXP strengthening ties with local IC suppliers

NXP Semiconductors, formerly a unit of Royal Philips Electronics NV, yesterday said it would further strengthen its partnership with contract chipmakers including Taiwan Semiconductor Manufac-turing Co (TSMC, 台積電) to reduce investment risk.

NXP said about 80 percent of the chips it sold were made at its own factories.

However, "the [required] investment in wafer facilities is huge ... [but by subcontracting chip manufacturing] NXP does not have to make every single chip by itself," Lu Hsueh-cheng (呂學正), vice president of NXP's IC manufacturing operation, said on the sideline of a press conference in Taipei yesterday.

The conference was held to announce the company's name change following its spinoff from Philips Semiconductors in June and acquisition by a private equity fund.

Last Friday, NXP chief executive Frans van Houten announced in Berlin that a private equity fund group had bought about 80 percent of the company's shares for 8.3 billion euros (US$10.6 billion) from Royal Philips last month.

Lu said NXP, which stands for "Next Experience," would further strengthen its relationship with partners including the world's biggest contract chipmaker TSMC to maintain NXP's policy of keeping its assets "light."

"TSMC is a good partner. We will continue to source a certain percentage of wafers from the company," Lu said.

The Eindhoven-based NXP may farm out more production to TSMC in accordance with the company's business growth, Lu said.

NXP aims to boost its annual revenue to 8 billion euros by 2009 from 4.9 billion euros projected for this year after shifting its manufacturing focus from PC to consumer chips, according to Lu.

NXP, Europe's second-largest chipmaker, owns 10 wafer factories and eight chip testing plants around the world, including one in Kaohsiung. Lu said there would be no major changes at NXP's Taiwanese operations even after the spinoff.
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