Freescale Is On A Roll In Multiple Automotive Markets and Applications

Implications: The alliance of Freescale and Chery to develop MCU and chipset technology means tremendous potential for Freescale growth in Asia. Freescale's recent acquisition of SigmaTel could give Freescale an avenue to grow share of automotive multimedia and infotainment chipset applications. Freescale is well positioned to continue to be the dominant semiconductor supplier to the worldwide automotive market, driven by continued strong demand for chipsets for new applications, resulting in greater numbers of chipsets per vehicle, and strong vehicle unit sales in Asia and in Eastern Europe.

Analysis: Freescale does it again. With this alliance, Freescale is assuring that it's chipsets are well positioned to find their way into Chery automotive applications and into applications for other Chinese automotive manufacturers. This is a crucial move for Freescale,  opening up the door for specific chipset applications for hybrid technology, active safety, and infotainment multimedia.

Freescale is currently the dominant supplier of semiconductors to the automotive market, and has been in this position for 17 years running. This is significant in that the global automotive semiconductor business is worth $19 billion, and is growing by more than 10% per year. Freescale has 10% of the worldwide automotive chipset market and 21% of the North American automotive chipset market. With China positioned to surpass the United States as the single largest automotive market by 2015, this alliance with Chery makes even better sense.

Freescale has also developed a reputation as a pioneer in Flexray technology, and CAN and LIN flash memory technology. Flexray MCU applications are already present in the BMW X5, for example. And Freescale has already pioneered chipset applications for the mild hybrid technology co-developed by GM, BMW, and Daimler. Also, active safety applications are continuing to grow, and Freescale is well positioned to have semiconductor applications for these critical pre-collision and collision avoidance features such as airbag and seatbelt smart loading, lane departure applications, and pre-collision radar technology. It is no wonder that half of the chipset applications in many vehicles are Freescale semiconductors. And in some vehicles, such as luxury sedans, this can mean no fewer than 100 specifc ECU applications. In automotive semiconductors, a reputation as an innovative supplier is important.

Finally, Freescale has completed a recent acquisition that should better position the company for a niche that has previously been the stronger domain of semiconductor manufacturers SMSC, NXP, and Inova. The purchase of Sigmatel, with a core competence in semiconductor applications for portable media players (PMP), portable navigation devices (PND), and global positioning (GPS), puts Freescale in a prime position to have stronger offerings for the automotive telematics, infotainment, and multimedia ECU applications.

In my assessment, Freescale is making the right moves, on multiple fronts, to remain the dominant player in the burgeoning automotive semiconductor market.