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Is ST and NXP lacking its own identity?

Posted: 02 Jul 2008     Print Version  Bookmark and Share

Keywords:ST-NXP Wireless  semiconductor company  IC manufacturer 

A new corporation shouldn't start life nursing an identity crisis but that precisely is what STMicroelectronics NV and NXP BV handed their joint venture semiconductor company by naming it ST-NXP Wireless.

First proposed in April, the new wireless semiconductor company -formed through the union of divisions from Geneva-based ST and the Netherlands' NXP—starts out a strong No. 3 vendor in the wireless IC market with several billions of dollars in annual revenue and an enviable roster of major OEM customers.

What ST-NXP lacks right now is its own identity, an unambiguous nomenclature that while recognising the new joint venture's roots within ST and NXP gives it a separate and easily marketable profile that won't be confused with those of the parents.

This is especially important because of the almost weekly speculation within the industry that Europe's biggest semiconductor companies, including Infineon Technologies AG, NXP and ST, could be headed for a merger that would create one of the industry's most formidable IC manufacturers.

While the companies have denied or declined to comment on these merger speculations, the reports continue to flare up regularly as investors and analysts weigh in on how the corporations can raise their competitiveness globally.

In this environment, both ST and NXP need to keep their brands clearly distinct and calling their wireless joint venture ST-NXP does not advance this goal.

To this writer, ST-NXP sounds like a silly compromise between an unwed couple called Mark Smith and Sarah Jones who named their son Mark-Sarah because they couldn't agree on a better nomenclature.

A casual observer who hears the name ST-NXP for the first time might be forgiven for assuming ST and NXP had combined their entire operations instead of portions of their businesses. The new name also dilutes the identity of the parents, violating a core principle of corporate branding.

A customer in some distant part of the globe might also be left wondering whether a visiting sales executive from ST-NXP was also representing ST and NXP.

Even if this hypothetical situation appears far-fetched, the name ST-NXP creates the impression of a lack of imagination on the part of the two partners. The continent gave the semiconductor industry names like Infineon, Micronas, NXP, STMicroelectronics and Qimonda. It can do better than ST-NXP.

Of course, the name might soon be replaced by a more unique moniker. There is some evidence in history to back this up. At its creation in 1987, STMicroelectronics was initially called SGS-Thomson, taking its name from parents SGS Microelettronica of Italy and France's Thomson Semiconducteurs. One year later the name was changed to STMicroelectronics after Thomson sold its interest in the company.

ST, which owns 80 per cent of ST-NXP Wireless versus 20 per cent for NXP, has an option to buy out its minority partner in the joint venture. If this happens, ST would probably pick a different name for the company. Hopefully, it won't be ST-Junior.

- Bolaji Ojo
EE Times

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