(Image courtesy of Continental).
(Image courtesy of Continental).
(Image courtesy of Continental).
(Image courtesy of Continental).
(Image courtesy of Continental).

Infineon to Swipe Automotive Chip Lead from NXP Semiconductors

June 24, 2019
Infineon to Swipe Automotive Chip Lead from NXP Semiconductors

Infineon agreed to buy Cypress Semiconductor for $10 billion this month because it believes that the car of the future can sustain the semiconductor industry of the future. The average value of chips used in cars is projected to grow from between $300 and $1000 per car in 2018 to between $400 and $1500 in 2023, industry analysts say. And once the deal is done, Infineon could be taking the biggest bite of that total.

Infineon, which employs about 41,000 people, is the second largest supplier of automotive chips today, with sales to the segment totaling $4.2 billion in 2018, according to IHS Markit. Cypress, which has around 5,800 employees, ranks 14th with more than $800 million in automotive sales in 2018. But once the deal closes in the first half of 2020, Infineon is set to steal the automotive chip lead from NXP Semiconductors. 

The combined company would have held 11.8% market share in 2018 after accounting for overlapping products. NXP accounted for 10.8% market share last year, said Phil Amsrud, a senior automotive semiconductor analyst at IHS Markit. Cypress says its sales per car should double from $90 in 2018 to $180 in 2023, while sales to the automotive industry generally will grow between 8% and 12% on average annually. 

Cypress sells microcontrollers that can be used in dashboard displays, automotive clusters and controls for opening and closing windows. or locking and unlocking doors. Infineon sells chips that can control the car's acceleration, steering and braking. Infineon's Aurix microcontrollers are also used to make sense of data pooled from radar and other sensors and to manage the car's engine, transmission or electric power train.

Cypress also offers NOR flash memory with high bandwidth and high endurance for use in advanced driver assistance systems. “Cypress’s memory capabilities and products represent a major enhancement to Infineon’s automotive portfolio,” Amsrud said. Flash memory fits "Infineon’s strategy and reputation for offering products that make systems safe and secure.” Cypress, the No.4 player in automotive memory, also sells SRAM.

Infineon ranks eighth in the market for chips used in advanced driver assistance systems and dashboard displays. Cypress holds the sixth position. Once the deal is done, the combined company's sales to both types of systems will reach $1.2 billion, moving Infineon into fourth place, IHS Markit said. Cypress also sells Bluetooth and Wi-Fi chips that can be used in cars and Infineon can push to its existing customers.

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