NXP Semiconductor has merged with Freescale Semiconductor, in a $11.8 billion deal that creates a $40 billion firm focused on ADAS automotive and IoT apps.

Freescale, which is one of the largest semiconductor firms serving the embedded Linux market along with Texas Instruments, is being acquired by Dutch chipmaker NXP in a $40 billion merger that values Freescale’s equity value at about $11.8 billion. Freescale shareholders will maintain 32 percent of the stock of the new company, which will be headed by NXP CEO Richard Clemmer when the deal closes in the second half of calendar 2015.

The new company’s offerings will range from NXP’s microcontrollers and ICs to Freescale’s application processors, sensors, and radios. Overall, NXP is ranked as the 14th largest chip vendor while Freescale is 18th, but the merged company will rank fourth after Intel, Qualcomm, and Texas Instruments.

The new company will focus primarily on the booming market for automotive advanced driver assist systems (ADAS), but other Internet of Things markets beckon as well. The merged entity will address “the accelerating demand for security, connectivity and processing,” according to the announcement. Freescale’s Kinetis microcontrollers will add to NXP’s extensive MCU product line, making the new company the “market leader in general purpose microcontroller (MCU) products.”

If you search for Freescale on LinuxGizmos, you’d never know the company was in financial trouble. Its Cortex-A9 based i.MX6 system-on-chip, which was recently spun into an automotive-focused SoloX version with a built-in MCU, has dominated the ARM side of the general embedded Linux market in recent years. The Linux- and Android-ready i.MX6 has been hugely popular among commercial embedded board developers, and it has appeared in numerous community-backed SBCsincluding the HummingBoard, LinkSprite Acadia, RIoTboard, Udoo Quad, WandBoard, and Warpboard.

i.MX 6SoloX block diagram
(click image to enlarge)

Yet, the recession hit the Austin, Texas based chipmaker hard, with the company scraping bottom at about the time the i.MX6 was launched back in 2011. At the same time, the company was dealing with the decline in its PowerPC-based PowerQUICC and QorIQ networking processors. Freescale has more recently revived the Linux-friendly QorIQ brand with an ARM foundation in its QorIQ LS1 product line.

 
Patience pays off for Freescale investors

Freescale has only recently returned to financial health, in part by focusing more on automotive processors. According to a Forbes analysis, Freescale’s private equity owners, which acquired the company in a poorly timed, $17.6 billion leveraged buyout in 2006, were finally rewarded for their patience. They stuck with Freescale through the recession, and paid down much of its substantial debt, shaping the chipmaker for sale in a more favorable market.

Freescale has moved steadily into automotive processors, including its various i.MX SoCs, as well as MCUs, sensors, and radio chips. During the same period, Freescale has backed away from the cut-throat mobile device market. At one point, it was dominant in e-readers, although it was only a relatively minor player in other tablets, and its chips were rarely seen in phones. Freescale’s escape from the mobile world was not as drastic as that of fellow Texan chipmaker TI, but the trend has been clear.

NXP Semiconductor has offered some Linux-ready processors in the past, such as the ARM9-based LPC3000 and NXP Nexperia 7210 SoCs, but it has primarily appeared in the periphery of our coverage. It usually pops up when microcontrollers enter the mix, as with NXP’s uClinux-compatible LPC1788 Cortex-M3 MCU.

In 2008, NXP joined with STMicroelectronics to launch a jointly held mobile processor company called ST-NXP Wireless. However, after a similar mobile joint venture arose between STM and Ericsson, NXP was bought out, and the unit was called ST-Ericsson.

NXP is currently a leader in MCUs and other chips for in-car entertainment and keyless ignition, says Forbes. The publication identifies Freescale’s strengths as digital networking, sensors, and radio frequency devices. All this should dovetail nicely in next-generation ADAS systems. Stockholders seem to agree, as the values of both companies have jumped since the Mar. 2 merger announcement.

“Longer term, the merged company is superbly positioned to become the thought leader in the merging areas of secure cars and Advanced Driver Assistance Systems to facilitate smarter driving,” NXP said on a Monday investor call, according to Forbes.

NXP wireless charging pad in a Rinspeed concept car
(click image to enlarge)

NXP and Freescale timed their announcement for Mobile World Congress where in other news, NXP showed off a semi-autonomous, “secure connected” concept car from Rinspeed that uses NXP technologies. These include a RoadLink chipset for V2X communications (vehicle-to-vehicle plus vehicle-to-infrastructure), as well as an NXP Smart Key module, that securely identifies drivers as they approach the car. An NXP wireless charging pad on the Rinspeed uses NFC technology (see image above).

Freescale, meanwhile, announced a LTE base station design win with ZTE for its older QorIQ Qonverge B4860, one of its PowerPC-based versions of the QorIQ. Although no OS support was listed for the deal, the base stations very likely run on Linux, which has been the default OS offered on QorIQ and in networking SoCs in general.

Also at MWC, Freescale announced an S32V automotive vision microprocessor, which integrates four ARM Cortex-A53 cores with a CogniVue APEX-642 core image processor. The S32V is said to provide the requisite reliability, safety, and security measures to automate and co-pilot a self-aware car. The only announced OS support, however, is for Green Hills’ Integrity RTOS.