NXP Boasts of Design Wins for 90 NFC Devices, but Declines to Project Shipments
NXP Semiconductors has announced it has design wins for more than 90 mobile phone models and tablets, a substantial increase from last quarter.
CEO Richard Clemmer, speaking during a conference call today following the release of NXP’s third quarter results, indicated revenue from NFC was up strongly, as the chip maker “continued to see positive traction” from its NFC chips and related products. The company did not release a breakdown of NFC revenue, however.
“We are currently designed into over 90 unique devices,” he said. “This is a significant increase from the last quarter.”
Clemmer was referring to the 60 to 62 design wins for NFC phones that NXP announced three months ago. The Q3 figure of 90 design wins, which is a cumulative total, is close to a 50% increase from a quarter ago, Clemmer noted.
NXP in September had said it had design wins for more than 70 phone and 10 tablet computers. The Netherlands-based chip maker has enjoyed a nearly exclusive share of NFC phones supporting the Android operating system, thanks in part to its deal with Google to supply NFC middleware for Android. NXP also is believed to be the only supplier of NFC chips so far to Nokia, which has introduced six Symbian phone models, along with a MeeGo device.
Figures showing the number of design wins that NFC chip suppliers have captured from handset–and, now, tablet–manufacturers are closely watched by NFC industry observers, since they provide a good indication of the variety of models that could hit store shelves.
But not every design win automatically translates into a new product on the market. And unlike previous earnings calls, this time Clemmer declined to update the company's 2011 projection for NFC-enabled handset shipments.
The CEO perhaps has been chastened by earlier projections that have failed to pan out.
During the first half of this year, the company had predicted the number of NFC phone shipments this year, incorporating its own chips and those of competitors, would hit around 70 million units–with Clemmer suggesting last spring the figure could climb as high as 100 million, based on enthusiastic Android NFC phone shipments from Google. But, as the year progressed, NXP was forced to revise that projection downward. At the end of July, Clemmer placed the NFC phone forecast at 40 million or fewer NFC-enabled units.
“We’re trying to get out of the business of actually doing forecast projections for ourselves as well as the industry, which you can extrapolate by some of our numbers,” Clemmer said. “But it will increase substantially in Q4 based on the orders that we have from our customers and run-rights associated with it.”
Speaking to NFC Times last week, Charlie Walton, chief operating officer for Inside Secure, at present NXP’s main NFC chip rival, acknowledged even the 40 million scaled-down projection might be too optimistic. His comments seemed to be in line with what key industry observers had told NFC Times a few weeks earlier, when they anticipated 2011 to end with between 20 million and 30 million NFC phones. Walton added NFC chip shipments were already accelerating in the fourth quarter.
Clemmer also said NXP maintains a positive outlook for the rest of the year for NFC, more positive than some of the other business segments the chip maker serves. “Clearly, our Q4 projection assumes a continued, significant ramp-up associated with NFC,” he said.
ID Unit Sales Fall
During the third quarter NXP’s Identification business unit experienced its first sales drop in nine consecutive quarters, falling by 17.5% to $160 million compared with sales of $194 million during the second quarter of the year. The unit includes shipments of chips for NFC, Mifare cards, passports and dual-interface banking cards. It was the first drop since the second quarter of 2009.
“We experienced a significant decline in revenue from eGovernment, banking and tags and labels, all of which performed below the overall group performance,” Clemmer explained. “Revenue from the automatic-fare collection and infrastructure products was relatively better than overall group performance but still showed a decline on a sequential basis.”
The NXP CEO blamed the disappointing ID unit results in particular on “a combination of delays in rollouts of eGovernment and banking contracts, primarily in Asia.” But he added that the sales dip would only be a “short-term pause” in growth of the ID unit.
Total NXP Semiconductors revenue for the third quarter was $1.06 billion, a drop of 5.4% from the previous year. Net profit was also down year-on-year, from $369 million to $301 million. NFC makes up only a small percentage of revenue for NXP. And, overall, investors were not so keen on the results or Clemmer’s comments, sending NXP shares down by 6.3% on the Nasdaq exchange today.
NXP Claims 85% Market Share
But NXP is still claiming a dominant position among NFC chip makers, asserting that it owns an 85% market share. This likely relates to the number of smartphones and other devices NXP is supplying with chips, including closely related models in the same family of devices.
That market share estimate appears to challenge a contention made last week by Inside Secure’s Walton that Inside could be at “parity” in terms of total NFC chips shipments with NXP by the end of the year.
Last week, Inside announced it had shipped 10 million NFC chips this year through Oct. 15. Nearly all the shipments have gone to Research in Motion for certain NFC-enabled BlackBerry Bold and Curve models.
The BlackBerrys only began shipping in the fall. The only NFC-enabled smartphones that have been shipping from the beginning of 2011 have been Google’s Nexus S 3G and 4G models, made for it by Samsung, and Nokia’s Symbian-based C7. Nokia only enabled NFC on the C7 in most places a few months ago, with a Symbian update, however. Both the Nexus S and C7 use NFC chips from NXP.
2012 is expected see more introductions of phone models and other devices. Not only NXP and Inside will be shipping NFC chips for the devices, but even larger silicon suppliers are expected to be in volume production, including Samsung Semiconductor, STMicroelectronics and Broadcom.