How NXP Reshapes Chip Value Chain in AI Era

Chip Value Chain Restructuring:NXP’s 60% Business Comes from SoftwareRecently, NXP Semiconductors held an internal event for distributors in Suzhou, where they discussed the transformation and changes in the AI era, and how to respond to this transformation.

Author | Yaw Zhou

Image Source | NXP

Source | Tech Walker

The world is changing rapidly, and customer needs are also evolving.

“In the past, when customers needed a specific chip, they would usually first look at its parameters, then decide whether they needed that chip, and finally consider what software and applications to match. But now the situation is quite different; customers start from the application level and work their way down to the chip level, because what they really need is technical support, which involves information security, functional safety, AI, vision, audio, and other complex technologies.”

This insight comes from Rafael Sotomayor, Executive Vice President and General Manager of Secure Connected Edge Business at NXP. He further supported his point with data: 10 years ago, 70% of NXP’s business was hardware, and 30% was software; now that ratio has reversed, with 35% hardware and 65% software.

As a provider of embedded application secure connectivity solutions, NXP’s shift stems from AI-driven industry transformation. Previously, algorithms were generated and trained in the cloud; now, algorithms and models can be moved to the edge and to nodes without needing to connect to the cloud—this is undoubtedly a significant transformation for the embedded application field.

Recently, NXP Semiconductors held an internal event for distributors in Suzhou, where they discussed the transformation and changes in the AI era, and how to respond to this transformation.

How NXP Reshapes Chip Value Chain in AI Era

Brand Upgrade: Brighter Together

Facing the changes of the AI era, NXP is also undergoing transformation.

First, NXP has completely refreshed its overall image, not only updating its brand slogan—“Brighter Together,” but also enhancing the brightness of its brand logo.

How NXP Reshapes Chip Value Chain in AI Era

“Brighter Together implies a brighter, better meaning, and Brighter also has the connotation of being smarter and more intelligent.” Rafael Sotomayor, Executive Vice President and General Manager of Secure Connected Edge Business at NXP, explained, “This reflects NXP’s belief that we want to work hand-in-hand with customers, partners, and employees to make the world smarter.”

How NXP Reshapes Chip Value Chain in AI EraRafael Sotomayor, Executive Vice President and General Manager of Secure Connected Edge Business at NXP

Li Tingwei, Senior Vice President and Chairman of NXP Greater China, also emphasized that NXP’s new slogan not only reflects the company’s vision of creating a brighter future with numerous customers and partners in China but also demonstrates NXP’s determination to empower China’s ecological innovation and support the success of Chinese customers through technological innovation.

How NXP Reshapes Chip Value Chain in AI EraLi Tingwei, Senior Vice President and Chairman of NXP Greater China
How NXP Reshapes Chip Value Chain in AI Era

Product Upgrade: Integrating AI into All Products

Secondly, in addition to brand upgrades, NXP’s products and services are also more focused on AI.

Rafael Sotomayor emphasized on site: “NXP hopes to integrate AI technology into all of its products, and the key is to integrate the best and most advanced AI technology into our powerful processors.”

Specifically, to achieve artificial intelligence at the edge, there are three key elements:

  • First, a very powerful Neural Processing Unit (NPU) is needed to enable algorithms to run at the edge;

  • Second, strong connectivity is needed, as these algorithms continuously self-learn and adapt at the edge, requiring feedback to the cloud, and connectivity ensures that AI remains updated;

  • Third, strong security is required to protect the algorithms, especially when the algorithm models are proprietary to the customer, robust information security measures must be in place to ensure algorithm safety is fully guaranteed.

Rafael Sotomayor concluded: “Thus, in NXP’s vision, we aim to become the AI industry leader serving edge devices, covering low-end to high-end devices. We not only provide hardware to customers but also software and tools, as well as comprehensive algorithm support, the so-called ‘turnkey’ algorithms, to help customers create use cases.”

Of course, NXP also focuses on specific sub-industries, such as automated factories, healthcare, building and energy, smart homes, etc. From relatively low-end products, such as the $2-$3 MCX N; to $5-$6 cross-domain processors; to high-performance microprocessors priced around $20, NXP has broad capabilities within the price range it covers.

Tech Walker saw a snoring detection product on site: i.MX RT1060, which has a model size of 19KB and an inference time of 6ms on a 600Hz Cortex-M7.

How NXP Reshapes Chip Value Chain in AI EraNXP i.MX RT1060

According to staff, this product is mainly used for medical detection equipment, and its working principle is:

The system reads audio data in wav format with a sampling rate of 16kHz from the SD card, plays it back, and synchronously sends it to the data processing module; then, data preprocessing calculates the Mel spectrum on short audio segments and concatenates 64 time-adjacent Mel spectrums into a grayscale image, which is used as input for the deep neural network to classify sounds as snoring or not snoring, providing a detection report.

In addition to this product, NXP also showcased several other products on site, including a face-tracking fan, human detection, human-computer interaction, and fan inlet blockage assessment, all equipped with AI technology.

How NXP Reshapes Chip Value Chain in AI Era

The next question is: how to bring NXP’s technology to customers? Rafael Sotomayor revealed that it only takes two steps:

  • The first step is that NXP provides some cost-effective products, such as the development board for the aforementioned product, which costs about $15. Customers can purchase these boards for application development and rapid prototyping, using a hardware-based modular architecture for quick development.

  • The second step is that customers buy these basic circuit boards and then add other circuit boards and required functions, such as CNC, sensors, etc., like building with Lego blocks, so that the entire system is modular.

“NXP hopes to bring AI technology to every customer through highly cost-effective circuit boards, easy-to-use software, and a complete set of solutions (including microprocessors, analog, wireless connectivity technologies, information security support, etc.),” Rafael Sotomayor said:

“No matter how small the enterprise is, we will provide easy-to-use products and solutions, which is also why we need the synergy of analog and digital businesses to integrate software and hardware products at prices affordable for customers and deliver them faster. Whoever can do this better will become the winner. NXP also hopes to be that winner.”

How NXP Reshapes Chip Value Chain in AI Era

Digital Business in the Left Hand, Analog Business in the Right Hand

As we know, the core of any electronic control unit system is the processor. However, to make the entire system operate, all related analog components, such as power supply, interfaces, signal modulation, etc., need to be provided around the processor.

In addition to offering digital business, NXP also has a mature analog business, combining both to provide customers with truly system-level solutions. This year alone, NXP has launched 32 new analog devices, covering analog front ends, gate drivers, PMICs, power conversion devices, Ethernet, and transceiver interface devices.

Although analog components do not receive as much attention as digital chips, their design and manufacturing barriers are not low at all. For example, in the case of PMIC (Power Management Integrated Circuit), high-end PMICs around SoC are still in their infancy in China.

Regarding the technical content, Jens Hinrichsen, Executive Vice President and General Manager of Analog Business at NXP, stated:

“First, it is essential to acquire high-end, high-performance analog process technology; NXP’s proprietary technology has robust reliability and performance, overall capabilities that exceed existing standard technologies.”

“Second, it is necessary to understand the principles of SoC system chips and their relationship with PMIC in terms of power, so as to derive the optimal PMIC solution. We may be able to produce any PMIC separately, but to achieve the best performance and highest efficiency, it is indeed necessary to design both SoC and PMIC simultaneously. Within NXP, there is even a concept of overall functional safety, integrating SoC and PMIC, monitoring SoC performance in design. Only by considering both can integrated functional safety be achieved.”

How NXP Reshapes Chip Value Chain in AI EraJens Hinrichsen, Executive Vice President and General Manager of Analog Business at NXP

How NXP Reshapes Chip Value Chain in AI Era
Bringing Technology to China and Local Innovations to the World

For decades, NXP has continuously deepened its roots in the Chinese market, thus accumulating a vast local resource system.

Currently, NXP Greater China has 9,000 employees, 1,600 R&D engineers, 6 R&D centers, and over 200 products defined, designed, and developed in China, and is continuously strengthening industry-academia-research cooperation.NXP has a large R&D team in Suzhou and a top-notch packaging and testing plant in Tianjin, with an annual export value of over $2 billion for the IC products produced.

In addition, NXP has also established multiple laboratories in China, covering areas such as IoT, electrification, and artificial intelligence. In 2021, NXP launched the first phase of the AI Innovation Center, the “AI Application Demonstration Base.” In 2023, the second phase project—the AI Innovation Practice Platform—was launched. In April of this year, NXP also officially operated its first fully online laboratory—the AI Innovation Practice Platform Cloud Laboratory—in Suzhou.

Focusing on the Chinese market, NXP primarily concentrates on three application directions in industrial and industrial IoT: smart factories, home and building, and electrification. Jens Hinrichsen revealed, “Industrial and IoT have a vast growth potential for NXP’s business, given the numerous small and medium-sized enterprise customers in China.”

For instance, the smart glasses jointly developed by Meta and Ray-Ban have become a popular star product on global social networks, with Zuckerberg frequently endorsing it in interviews. A high-performance, low-power chip from NXP, designed and produced by NXP’s Suzhou R&D team, is used in this product; additionally, a smartwatch that monitors data during running or cycling, with a battery life of 10 days, also uses a chip from the Suzhou team. Rafael Sotomayor pointed out, “NXP’s Suzhou R&D team is an expert in high-performance and low-power chips.”

In addition to industrial and industrial IoT products, in the automotive sector, NXP has also been collaborating with Chinese automakers to produce battery management solutions and launch them in the global market. For example, the UWB ultra-wideband car key case—installing the UWB app in the phone allows for freely opening or closing the car door, and this technology is being promoted globally.

Guided by the vision of “Brighter Together,” NXP not only serves the needs of customers in the Chinese market but also serves global customers based on this. “We cannot accomplish this alone; we need to achieve these goals through extensive cooperation with partners.” Jens Hinrichsen emphasized:

“NXP’s large-scale distributor event held in Suzhou aims to strengthen cooperation with important distributor partners to better present our solutions to the market, which is one of NXP’s core strategies. NXP’s second strategy is to build an entire ecosystem around the focused areas, promoting standardization and interoperability.”

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