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`Annual Report 2006
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`Forward-looking statements
`This document includes forward-looking statements. When
`used in this document, the words „anticipate,‰ „believe,‰
`„estimate,‰ „forecast,‰ „expect,‰ „intend,‰ „plan‰ and
`„project,‰ and similar expressions, as they relate to us, our
`management or third parties, identify forward-looking
`statements. Forward-looking statements include statements
`regarding our business strategy, financial condition, results of
`operations, and market data, as well as any other statements
`which are not historical facts. These statements reflect
`beliefs of our management as well as assumptions made by
`our management and information currently available to us.
`Although we believe that these beliefs and assumptions are
`reasonable, the statements are subject to numerous factors,
`risks and uncertainties that could cause actual outcomes and
`results to be materially different from those projected.
`These factors, risks and uncertainties expressly qualify all
`subsequent oral and written forward-looking statements
`attributable to us or persons acting on our behalf and
`include the following:
`market demand and semiconductor industry conditions, our
`ability to successfully introduce new technologies and
`products, the demand for the goods into which our
`products are incorporated, our ability to generate sufficient
`cash or raise sufficient capital to meet both our debt service
`and research and development and capital investment
`requirements, our ability to accurately estimate demand and
`match our production capacity accordingly or obtain
`supplies from third-party producers, our access to
`production from third-party outsourcing partners, and any
`events that might affect their business or our relationship
`with them, our ability to secure adequate and timely supply
`of equipment and materials from suppliers, our ability to
`avoid operational problems and product defects and, if such
`issues were to arise, to rectify them quickly, our ability to
`form strategic partnerships and joint ventures and
`successfully cooperate with our alliance partners, our ability
`to win competitive bid selection processes to develop
`products for use in our customersÊ equipment and products,
`our ability to successfully establish a brand identity, our
`ability to successfully hire and retain key management and
`senior product architects; and, our ability to maintain good
`relationships with our suppliers.
`
`Except for any ongoing obligation to disclosure material
`information as required by the United States federal
`securities laws, we do not have any intention or obligation
`to update forward-looking statements after we distribute
`this document. In addition, this document contains
`information concerning the semiconductor industry, our
`market segments and business units generally, which is
`
`[-01]
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`forward-looking in nature and is based on a variety of
`assumptions regarding the ways in which the semiconductor
`industry, our market segments and product areas will
`develop. We have based these assumptions on information
`currently available to us. If any one or more of these
`assumptions turn out to be incorrect, actual market results
`may differ from those predicted. While we do not know
`what impact any such differences may have on our business,
`if there are such differences, our future results of operations
`and financial condition, and the market price of the notes,
`could be materially adversely affected.
`
`Use of non-US GAAP information
`In presenting and discussing the NXP Semiconductors
`GroupÊs financial position, operating results and cash flows,
`management uses certain non-US GAAP financial measures.
`These non-US GAAP financial measures should not be
`viewed in isolation as alternatives to the equivalent US
`GAAP measure(s) and should be used in conjunction with
`the most directly comparable US GAAP measure(s).
`
`Use of fair value measurements
`In presenting the NXP Semiconductors GroupÊs financial
`position, fair values are used for the measurement of various
`items in accordance with the applicable accounting
`standards. These fair values are based on market prices,
`where available, and are obtained from sources that we
`consider to be reliable. Users are cautioned that these
`values are subject to changes over time. When a readily
`determinable market value does not exist, we estimate fair
`values using valuation models. These require management to
`make significant assumptions with respect to future
`developments which are inherently uncertain and may
`therefore deviate from actual developments. In certain cases
`independent valuations are obtained to support
`managementÊs determination of fair values.
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`Contents
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`3 Financial highlights
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`4 Letter from the CEO
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`9 Information on the NXP Semiconductors
` Group
`9 Structure
`9 Business Overview
`9 Strategy
`11 Business activities
`11 Business units
`15 Alliances and investments
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`16 NXPÊs leadership
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`18 Report of the Supervisory Board
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`20 Management discussion and analysis
`20 Basis of presentation
`21 Use of certain non-GAAP measures
`22 Effect of purchase accounting
`23 NXP Semiconductors Group performance 2006
` compared to 2005
`26 Performance by segment 2006 compared to 2005
`29 NXP Semiconductors Group performance 2005
` compared to 2004
`32 Performance by segment 2005 compared to 2004
`36 Employment
`36 Liquidity and capital resources
`40 Guarantees and contractual obligations
`41 Restructuring
`41 Acquisitions and divestments
`42 Risk management
`52 Critical accounting policies
`57 Reconciliation non-US GAAP information
`59 Subsequent events
`59 Outlook
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`60 Group financial statements
`60 Combined and Consolidated statements of operations
`61 Combined and Consolidated balance sheets
`63 Combined and Consolidated statements of cash flows
`64 Combined and Consolidated statements of changes in
` businessÊ and shareholderÊs equity and comprehensive
` income (loss)
`65 Notes to the combined and consolidated financial
` statements
`133 AuditorsÊ Reports
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` 135 IFRS information
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`135 Introduction
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`136 Management commentary
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`138 Consolidated statement of operations
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`139 Consolidated balance sheet
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`141 Consolidated statement of cash flows
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`142 Consolidated statement of changes in equity
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`143 Notes to the consolidated financial statements
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`178 AuditorÊs Report
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` 180 Company financial statements NXP B.V.
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`180 Balance sheet
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`181 Statement of operations
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`181 Statements of changes in equity
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`182 Accounting policies
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`182 Presentation
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`183 Notes to the company financial statements
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` 186 Other information
` 186 AuditorÊs Report
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`188 Statutory rules concerning appropriation of profit
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`188 Proposal appropriation of profit 2006
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`188 Special statutory voting rights
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` 189 Investor information
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`[-02]
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`Financial highlights
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`all amounts in millions of euros unless otherwise stated
`
`
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`
`
` Sales
`
` Income (loss) from operations (Earnings Before Interest and
` Tax - EBIT)
` as a % of sales
`
` Earnings before interest, tax and amortization (EBITA) 1)
` as a % of sales
`
` Earnings before interest, tax, depreciation and amortization
` (EBITDA) 1)
` as a % of sales
`
` Adjusted EBITDA 1)
` as a % of sales
`
` Net income (loss)
`
` Cash flows before financing activities 1)
`
` Business’ and Shareholder’s equity
`
` Net debt: group equity ratio 1)
`
` Employees at end of period
`
`
`
`PREDECESSOR
`
`
`
`SUCCESSOR
`
`
`
`COMBINED
`
`
`
`For the period
`
`For the period
`
`January 1,
`
`September 29,
`
`For the years ended
`
`2006 -
`
`2006 –
`
`For the year
`ended
`December 31,
`2006
`
`
`4,960
`
`
` )
`
`
`(640
`(12.9 )
`
`(34 )
`(0.7 )
`
`
`589
`11.9
`
`921
`18.6
`
`(611 )
`
`119
`
`3,685
`
`48:52
`
`37,468
`
`September 28,
`2006
`
`December 31,
`2006
`
`
`
`
`1,190
`
`
`
`(779
`(65.5 )
`
`(145 )
`(12.2 )
`
`
`26
`2.2
`
`214
`18.0
`
`(616 )
`
`108
`
`3,685
`
`48:52
`
`37,468
`
` )
`
`
`3,770
`
`
`139
`3.7
`
`111
`2.9
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`
`563
`14.9
`
`707
`18.8
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`5
`
`11
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`1,977
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`- 2)
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`38,144
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`December 31,
`2004
`
`
`4,823
`
`
`234
`4.9
`
`305
`6.3
`
`
`1,069
`22.2
`
`1,202
`24.9
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`14
`
`388
`
`1,458
`
`- 2)
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`32,580
`
`
`
`2005
`
`
`4,766
`
`
`102
`2.1
`
`132
`2.8
`
`
`881
`18.5
`
`1,030
`21.6
`
`(101)
`
`434
`
`1,126
`
`- 2)
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`35,637
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`1) For a reconciliation to the most directly comparable US GAAP measures, see chapter Reconciliation of non-US GAAP information under „Management
` discussion and analysis‰.
`2) Information on net debt and businessÊ equity of predecessor period is not meaningful.
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`[-03]
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`Letter from the CEO
`
`
`NXP Semiconductors, First Annual Report, 2006
`
`Dear Stakeholder,
`
` I
`
` am happy to present the first Annual Report of our company at the beginning of its
`new life as NXP Semiconductors. I like to say that NXP combines the vigor of a
`start-up enterprise with the heritage of over 50 years of experience as a strong
`semiconductor company within the Philips Group.
`
`It has been a momentous year for us.
`
`In December 2005, Royal Philips announced it had decided to separate its
`Semiconductors division from the rest of its business and consider all options for its
`future. In August 2006, a consortium of private equity investors comprised of
`Kohlberg Kravis Roberts & Co, Bain Capital, Silver Lake Partners, Apax Partners
`and Alpinvest agreed to acquire a controlling interest in Philips Semiconductors. As
`management, we are delighted with this move. Subsequently, on September 1, 2006
`we officially launched our new company under the name NXP Semiconductors and
`completed our separation from Philips later that month. The launch and the new
`company name and identity generated a lot of excitement with our employees,
`customers, analysts and the media.
`
`The spin-out of NXP, which is effected as per September 29, 2006 is supported by
`our confidence in our innovative capabilities, our people and customers, as well as
`by the NXP core values. These four values – Insightful, Inventive, Engaging,
`Excellence – are more than just a set of business principles; they reflect a culture
`shift in our company. They are also the foundation for developing a talented,
`motivated and committed workforce.
`
`As a stand-alone company, NXP has every opportunity to realize its full potential.
`With the support of our investors, we will continue to innovate, providing our
`customers with leading-edge solutions and products that drive profitable growth.
`
`We are proud of our achievements as a dynamic and global team that has already
`made great strides forward through hard work, consistently clear focus, and an
`increasingly manifest mindset of excellence. All in all, we made significant progress
`towards achieving our ambitions to be a leading semiconductor company in our
`focus markets: Mobile & Personal, Home, Automotive, Identification and
`MultiMarket Semiconductors.
`
`Our vision and strategy
`
`Our vision is of a world where everyone can always connect to information,
`entertainment and services: the world of the Âconnected consumerÊ. Our mission is
`to become the leader in vibrant media technologies that help engineers and designers
`develop products that deliver better sensory experiences for these consumers. In
`short, we like to think of NXP as ÂCreating the Next ExperienceÊ. Our businesses
`target applications in the home electronics, mobile communications, personal
`entertainment, automotive and identification markets.
`
`[-04]
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`Letter from the CEO
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`We address these through three distinct Business Units: Mobile & Personal, Home
`and Automotive & Identification. Our fourth Business Unit, MultiMarket
`Semiconductors provides standard products and application specific standard
`products for broad market applications.
`
`We aspire to be industry leader in each of these markets, while continuing to grow
`revenue, profitability and cash flow. To achieve this, we see three fundamental value
`creation drivers at work:
`1.
`active portfolio management targeting #1 and #2 leadership positions in focus
`areas
`above-GDP semiconductor market growth and market share growth
`2.
`3. operational excellence through Business Renewal.
`
`To meet these goals, we have adopted our business renewal strategy
`
`We launched our Business Renewal Program in 2005, stating our winning ambitions
`as a company and defining the roadmap to get us there. The Business Renewal
`Program emphasizes focus and performance, executed by a simplified, flexible
`organization. Its driving thrust is to achieve sales growth, enhance margins, lower
`operating costs, and reduce volatility, resulting in a more predictable, stable EBITA
`of between 5% and 15% throughout the semiconductor cycle. It should be noted
`that while we were a division of Philips, this target was originally formulated as
`percentage of EBIT.
`
`The main steps includes:
`
`• Build on our market leadership positions
`We continue to invest significantly in our product portfolio, with a focus on
`innovations in our more profitable and faster growing segments. We will exploit our
`strengths in Âconnected consumerÊ markets, particularly in home and personal
`entertainment, mobile communications, identification and the automotive
`applications. We aim to extend our competitive advantage by offering differentiated
`system solutions that leverage our broad range of competencies. We believe that
`industry consolidation will take place in the forthcoming years. We intend to play an
`active role in this process using strict criteria for return on investment and financial
`discipline.
`
`• Deepen our relationships with our key customers
`We will maintain the focus on our top 50 customers, which represent about 70% of
`our sales. We have installed dedicated account teams that work across regions in
`order to better match our customersÊ geographical diversity. We aim to further
`deepen our customer relationships by providing high value system solutions and by
`increasing the amount of collaborative design work that we conduct with our
`customers.
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`[-05]
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`• Improve operational excellence
`As part of the Business Renewal Program, we look to reduce costs in manufacturing,
`selling, general and administrative activities, increase the effectiveness of research and
`development, manufacturing and supply chain performance, time-to-market of new
`products and product quality and customer service.
`
` •
`
` Extend our asset-light manufacturing strategy
`We believe that our asset-light strategy will further reduce the fixed component of
`our cost structure, increase our return on invested capital and improve our
`operational flexibility throughout the industry cycle. Over the next several years, we
`expect to significantly increase the proportion of our semiconductor wafer
`production that is outsourced. At the same time it will also ensure our continued
`access to world-class manufacturing capacity and leading-edge process technology.
`
`Where we are today
`
`The individual steps of the roadmap have been translated into specific actions that
`formed the backbone of our management agenda in 2006 and culminated in our
`successful spin-out last fall. These actions have already returned measurable results
`as we have exceeded our annual cost reduction target of EUR(cid:31)250 million by the
`end of 2006, compared to the 2004 levels we use as a benchmark. Furthermore
`customer ratings have improved and our portfolio is now more focused. We believe
`that we will continue to realize significant benefits from the ongoing implementation
`of this program.
`
`The positive trend in our financial performance that started in 2005, continued in
`2006. This, together with satisfactory results from our Business Renewal Program,
`was clearly reflected in faster-than-market growth (excluding discontinued activities)
`for the first time in several years.
`
`Sales in 2006 totaled approximately EUR(cid:31)5 billion, up 5% as compared to 2005 on a
`currency comparable basis and 9% comparable growth in continued businesses. The
`comparable market growth was 8%. At the end of the year the industry slowed
`down as a result of an inventory correction. Excluding the purchase accounting
`effects, EBIT was EUR 150 million in 2006 compared to EUR 102 million in 2005.
`
`While we already have leadership positions in about 60% of our product lines, we
`still have work to do in strengthening some of our businesses. Notably we are not
`yet satisfied with the progress in our Home business where we see a delay in
`reaching profitable operations.
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`[-06]
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`
`
`Letter from the CEO
`
`Where we are heading – Management agenda 2007
`
`Despite the more challenging environment for the semiconductor industry from the
`fourth quarter of 2006 onwards, we are pleased with the overall progress we have
`made in 2006, and in particular the completion of our move towards being a stand-
`alone company. The Business Renewal Program will be continued throughout 2007
`with added focus and acceleration.
`
`The main elements of the program to achieve our objectives in 2007 are:
`
`1.
`
`2.
`3.
`
`4.
`
`6.
`
`the development of a high-performance organization, staffed by inspired talented
`people
`further lower our operating cost and manufacturing break-even point.
`continue to strive for greater operational excellence through our zero defect,
`time to market and high yield programs.
`achieve even more effective use of our assets, lowering depreciation and capital
`expenditure.
`5. outperform market growth, in our key focus areas through strong engagement
`with our customers.
`strengthen our business portfolio management and create stronger, more
`insightful value propositions.
`
`
`We are making rapid progress with the execution of our programs.
`
`We are taking swift action to execute on our strategy. We sent out a clear signal of
`this in February 2007, when we announced that we had agreed to acquire Silicon
`LaboratoriesÊ Cellular Communications Business, strengthening NXPÊs mobile solutions
`offering.
`
`Further on our operational excellence and asset light strategy we are also making
`substantial progress. We have announced that we will pursue a new path in our future
`development of advanced CMOS process technology together with TSMC and end our
`involvement with the Crolles Alliance as per the end of 2007. We expect this to result
`in significant process R&D savings, capital expenditure reductions and cash flow from
`the sale of equipment. In addition, this will allow us to benefit from scale advantages
`with TSMC in the future.
`We also announced in February 2007 that NXP will team up with Advanced
`Semiconductor Engineering of Taiwan to form a joint venture for IC testing and
`packaging in Suzhou, China.
`
`Other strategic decisions taken in early 2007 also point to how seriously we are
`pursuing the need for continued speed and excellence in the execution of our Business
`Renewal Program.
`
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`[-07]
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`We have made sizeable investments in our Dongguan Assembly plant and will continue
`to invest to increase manufacturing output of our MultiMarket Semiconductors
`business unit.
`
`We also took significant measures to improve our cost base in Europe including, among
`others, the closure of our Böblingen operation in Germany, reorganizing our back-end
`operations in the Philippines and the reorganization of our Nijmegen- and Eindhoven-
`based operating subsidiaries in the Netherlands. We have also taken measures to
`strengthen our sales operations through the transformation of the European sales set
`up and through various new leadership appointments, notably in Asia.
`
`And finally we are stepping up our efforts in R&D, and R&D effectiveness, in order to
`create insightful and innovative roadmaps of great propositions to our customers.
`We see that this is rewarded with several important design wins.
`
`At the heart of all of these changes is our focus on strengthening our business to
`become more competitive for the future.
`
` vibrant future
`
` A
`
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`We look forward with enthusiasm and confidence to the opportunities of the
`coming years. We believe we have the talent and tools to meet the challenges we
`will face and to do what we know how to do best.
`
`In conclusion, we would like to thank all of our employees for the achievements we
`made in 2006. We would also like to thank our private equity investors and holders
`of our bonds who, by funding our company and through their supportive
`engagement, show confidence in the future of NXP. In particular I would also like to
`thank our customers, for their continued trust, and for their openness and
`willingness to engage with us in our process of renewal and rebirth. We will have a
`vibrant future!
`
`Frans van Houten
`President and CEO NXP Semiconductors
`
`
`[-08]
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`
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`
`
`Information on the NXP Group
`
`
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`Structure
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`NXP B.V. (the ÂCompanyÊ or ÂNXPÊ) is the parent company of the NXP Group (the ÂNXP GroupÊ or
`the ÂGroupÊ). The NXP Group in its current form was established on September 29, 2006, when
`Koninklijke Philips Electronics N.V. („Philips‰) sold 80.1% of its semiconductors businesses to a
`consortium of private equity investors in a multi-step transaction. In order to carry out this
`transaction, Philips transferred these businesses to NXP on September 28, 2006. All of our issued
`and outstanding shares were then acquired September 29, 2006 by KASLION Acquisition B.V.
`which was formed as an acquisition vehicle by the private equity consortium and Philips.
`
`The management of the Company is entrusted to the Board of Management under the supervision
`of the Supervisory Board. Under the chairmanship of the CEO, the Board of Management has
`overall operational responsibility for the management of the Company, the deployment of its
`strategy and policies, and the achievement of its objectives and results. The Board of Management
`is accountable for its performance to our Supervisory Board and our shareholders. The Executive
`Management Team, which consists of the members of the Board of Management as well as eight
`senior executives of the Company, is responsible for ensuring business issues and practices are
`shared across our business. This Annual Report contains:
`
`1. The consolidated financial statements of NXP B.V. based on US GAAP
`2. The consolidated financial statements of NXP B.V. based on IFRS as endorsed by the E.U.,
`
`and
`3. The statutory financial statements of NXP B.V., using IFRS accounting principles as
`
`endorsed by the E.U. in accordance with Part 9 of Book 2 of the Netherlands Civil Code.
`
`Business overview
`
`The NXP Group is one of the worldÊs largest semiconductor companies. With total sales of
`approximately EUR 5 billion in 2006, it ranks among the worldÊs top ten semiconductor
`providers and among the top three suppliers of application-specific semiconductors in terms of
`total sales. With over 50 years of operating history, we are also one of the longest-established
`companies in our industry. Our business targets the home electronics, mobile communications,
`personal entertainment, automotive and identification application markets. Within these
`markets, we provide a diversified range of application-specific semiconductors, including system
`solutions, and semiconductor components. We also have a strong MultiMarket products
`business, which provides our customers with general purpose semiconductor components,
`including transistors and diodes, general purpose logic and power discretes as well as an array of
`application specific standard products.
`
`Strategy
`
`Our vision is to be a leading semiconductor supplier in a world where consumers connect to
`information, entertainment and services through electronic devices containing our system solutions.
`We aspire to be industry leaders in the markets for our Mobile & Personal, Home, Automotive &
`Identification and MultiMarket Semiconductors business units, and to continue to grow revenue,
`profitability and cash flow. In order to meet these goals, we have adopted the strategies described
`below:
`
`[-09]
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`

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`• Build on our market leadership positions.
`We believe that our market leadership positions, extensive intellectual property and strong
`research and development organization provide us with a strong foundation from which to gain
`additional market share in our targeted markets. We intend to build on this foundation by
`continuing to invest in our product portfolio, with a focus on innovations in our more profitable and
`faster growing segments. We look to exploit our strengths in connected consumer markets,
`particularly in home and personal entertainment mobile communications, identification and the
`automotive applications. We aim to extend our competitive advantage by offering differentiated
`system solutions that leverage our broad range of competencies. We believe that industry
`consolidation will take place in forthcoming years. We intend to play an active role in this process
`using strict criteria for return on investment and financial discipline. For example, on February 8,
`2007, we announced the anticipated acquisition of the Cellular Communications Business of Silicon
`Laboratories Inc, which we believe will strengthen our position in the key mobile phone business.
`The assets we will acquire include RF CMOS technology-based transceivers for cellular phones, as
`well as monolithic cellular systems chips.
`
` •
`
` Deepen our relationships with our key customers.
`We intend to increase our share of the semiconductors purchased by our customers, with a
`particular focus on our top 50 customers. To realize this objective, we have redeployed our sales
`and marketing resources to target these top customers more effectively. We have created
`dedicated account teams that work across regions in order to better accommodate our customersÊ
`increasing geographical diversity. We seek to deepen our customer relationships by continuing to
`provide high value systems solutions and by increasing the amount of collaborative design work that
`we conduct with our customers.
`
` •
`
`
`Improve operational excellence.
`In 2005, we launched our Business Renewal Program, a comprehensive multi-year performance
`improvement program intended to drive revenue growth and increase profitability. As part of this
`program, we look to reduce costs in manufacturing, selling, general and administrative activities,
`increase our effectiveness in research and development, and improve our organizational efficiency,
`manufacturing and supply chain performance, time-to-market of new products, product quality,
`customer service and attain market leadership positions in our product portfolio.
`
` •
`
` Extend our asset-light manufacturing strategy.
`We will continue to pursue our asset-light manufacturing strategy. Over the next years, we expect
`to significantly increase the proportion of our semiconductor wafer production that is outsourced.
`In particular, we plan to utilize third party foundries for a substantial part of the future growth in
`our manufacturing requirements. For assembly and test processes, we expect to maintain current
`outsourcing levels, as we believe that our in-house facilities are highly competitive in terms of quality
`and cost. We believe that our asset-light strategy will further reduce the fixed component of our
`cost structure, increase our return on invested capital and improve our operational flexibility
`throughout the industry cycle, while also ensuring our continued access to world-class
`manufacturing capacity and leading-edge process technology.
`
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`
`
`Information on the NXP Group
`
`Business activities
`
`The products sold by our four business units fall into two categories. The first category consists of
`highly differentiated application-specific semiconductors and system solutions. Our Mobile &
`Personal, Home and Automotive & Identification business units primarily sell products in this
`category. The profitability of these products depends to a significant degree on our ability to
`innovate and develop new technologies and customer solutions.
`
`The second of our product categories comprises of standard products, which are devices that can
`be incorporated in many different types of electronic equipment and which are typically sold to a
`wide variety of customers, both directly and through distributors. Our MultiMarket Semiconductors
`business unit carries a large number of standard products, in addition to application specific standard
`products. The profitability of standard products tends to be driven by manufacturing cost, supply
`chain efficiency and continuous improvement of manufacturing processes.
`
`Across all four of our business units, we leverage both our knowledge of the consumer and our
`particular technical expertise in the areas of audio, video, radio frequency communications, power
`management and security technologies to create and deliver semiconductor solutions for the
`connected consumer.
`
`Business Units
`
`Mobile & Personal
`
`Our Mobile & Personal business unit provides application-specific semiconductors, selected
`components and complete system solutions for use in mobile and portable devices, such as cellular
`handsets, portable media players and cordless phones. The convergence of cellular handsets and
`portable entertainment devices is creating demand for solutions enabling the delivery of multimedia
`content over wireless networks. As a result, multimedia handsets are incorporating increasing
`functionality, including application processing, video processing, wireless connectivity, and other
`personal entertainment technologies. The increasing prevalence and complexity of semiconductors
`within a given handset device, especially those which enable multimedia connectivity, is driving
`growth in this sector. Our television-on-mobile, FM radio and mobile USB products are part of our
`strategic focus on the devices and technologies that we expect to gain increasing importance as
`voice and multimedia capabilities converge in the mobile market. Our key customers in Mobile &
`Personal include Apple, Nokia, VTech, Samsung and Sony Ericsson.
`
`Home
`
`Our Home business unit provides system solutions for the analog and Digital TV (DTV), STB and
`PC-TV application markets, as well as related semiconductor components. Our products are well
`positioned to meet the demands of the connected consumer for multimedia access in the home.
`We hold leading positions in the DTV, set-top box and PC-TV application markets, which in large
`part have grown because of our leadership in the analog television market, where NXP is one of the
`top suppliers of semiconductors globally. Part of the growth in these markets is driven by
`government mandates requiring the inclusion of a digital tuner in every new television, increasing
`broadband penetration and the increasing availability of high definition content. The DTV
`semiconductor market in particular is expected to grow at a rapid rate as a result of increasing
`product complexity and increasing unit sales.
`
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`As DTV technology becomes more complex, we expect that traditional DTV OEMs will look to
`semiconductor vendors who can provide a competitive total system solution. Our total system
`solution for the DTV application market positions us well to benefit from this growth. In addition,
`as the consumer market becomes more digitized and as the mobile device market becomes