NXP Semiconductors sells power assets to China’s JAC Capital

The divesture of the business, which has been approved by the Committee on Foreign Investment in the United States (CFIUS), is a condition for NXP's proposed takeover of US rival Freescale Semiconductor, NXP said in a statement.

In March, NXP intended to buy Freescale for $11.8 billion in cash and stocks, with a view to expanding its market share in chips used in the automobile industry. The US Federal Trade Commission (FTC) charged that the proposed merger has violated the anticompetitive standards.

The FTC said that the deal would substantially lessen competition in the worldwide market for RF power amplifiers, with Freescale and NXP supplying more than 60% of the market, resulting in higher prices and reduced innovation. The FTC's proposed consent order preserves competition by requiring NXP to divest all of its assets used for the manufacturing, R&D of RF power amplifiers to JAC Capital.

As part of the deal, JAC will acquire assets including a manufacturing building in the Philippines, a laboratory in the Netherlands, along with all the patents and technologies related to the power business. The divestment also includes all of NXP's RF power amplifier employees and managers.

"The divestiture package provides Jianguang Asset Management with the assets it needs to compete effectively in the RF power amplifier market and successfully replace the competition that otherwise would have been lost through the proposed acquisition," the FTC said.

NXP formed a Chinese joint venture with JAC in February. The JV will make use of NXP's bipolar power technology and JAC's connections with Chinese manufacturing and distribution channels to reduce costs and boost profit margin for high-end electronic products in China. It is also intended to meet China's growing demand for electronic products in the consumer, automotive, smart manufacturing and medical equipment sectors.

Beijing-based JAC Capital focuses on investing in the country's high-tech industry, including integrated circuits and semiconductors, IT and networking, data service, cloud computing and telecom, in order to support the industrial transformation strategy in China.

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