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Freescale Semiconductor Announces Third Quarter 2012 Results

Stocks in this article: FSL

Strategic Direction

Following the appointment of Gregg Lowe as president and CEO of Freescale, the company began a detailed review of its strategic direction with the overall objective of identifying opportunities that would accelerate revenue growth and improve profitability.

“We conducted a thorough and extensive review of all our businesses, markets and regions during my first three months,” said Lowe. “We gathered input from a number of internal and external sources with the objective of identifying our true differentiators and the markets where they would make us a leading force.”

“Our goal was to identify areas where we can reinforce our strengths to drive top line growth and margin expansion, then reallocate our R&D resources toward those areas of high-value and high-growth,” said Lowe.

Realigning Businesses. As a result of this analysis, the company is realigning its product groups as follows:

  • Microcontrollers include microcontrollers for the company’s Industrial and Multi-Market (IMM) and Metering, Medical and Connectivity (MMC) product groups as well as Multimedia Applications (MAD) processors. Microcontrollers will also be the primary platform driver for our overall microcontroller portfolio, creating products and platforms that will eventually be deployed to our automotive MCU product group. Geoff Lees will run Microcontrollers. Lees joined Freescale in 2011 from NXP Semiconductor and previously served as Freescale’s Vice President of the IMM product group.
  • Digital Networking includes networking processors previously part of our Networking Products and Wireless Access product groups. The team’s sharpened focus will include significant resource increases in both chip design and software resources for standard processors aimed at the networking and communications markets. Tom Deitrich will run Digital Networking. Deitrich has been with the company since 2006 and previously managed Networking and Multimedia Solutions.
  • Automotive MCU includes the company’s microcontrollers sold to the automotive market. Our focus will be to regain market share in automotive MCUs, capture new growth opportunities in Asia and Japan and expand our gross margin. Bob Conrad will run Automotive MCU. Conrad recently joined Freescale from Fairchild Semiconductor where he ran the company’s analog and low voltage discrete business along with technology development and strategy. Prior to that, he managed the Analog Devices DSP group and was the Automotive Microcontroller Manager at Texas Instruments.
  • Analog & Sensors includes automotive analog, mixed-signal analog and sensor products. The focus of Analog & Sensors will change from being primarily automotive focused to be more balanced between automotive and mixed signal analog, with an emphasis on developing analog products that complement our Microcontroller product group. We believe this will enable Analog & Sensors to both grow top line revenue and improve gross margins. James Bates will run Analog & Sensors. Bates recently joined the company, having previously held a similar position at Maxim Integrated Products.
  • RF will include the company’s RF power amplifiers. The focus of RF will be to utilize an increased resourcing pool to drive into new markets and accelerate top line growth. Ritu Favre will run RF. Favre joined Freescale as an engineer in 1988, and she has been the General Manager of RF since October 2010.

Manufacturing Operations. Along with these changes, we will be combining all of our manufacturing operations under a single leader to drive a sharper focus on execution, efficiency and reduced manufacturing costs. David Reed is joining Freescale as the head of Manufacturing Operations, which includes the company’s internal and external front-end and final manufacturing operations, planning, procurement, quality and technology organizations. Reed joins Freescale from GLOBALFOUNDRIES, where he spent the last two years leading Global’s 28nm production in Dresden, Germany. Prior to that, he spent more than 20 years at Texas Instruments managing fabrication facilities, assembly and test and other operations supporting the analog, digital and MEMS businesses.

Reallocating R&D. Moving forward, the company is shifting its research and development investment to reflect its strategic focus on the product groups highlighted above. Our focus on these product groups will drive the company’s investment and will account for nearly 90 percent of total research and development spending by 2015.

Redistributing Sales Resources. The company will begin shifting sales resources to align with industry growth in China and select opportunities in Korea, Taiwan and Japan. As a result, the company expects to increase the number of accounts covered and expand its presence in distribution.

“By reallocating our investments and focusing our efforts on high growth markets, we intend to expand on our leadership positions and accelerate our market share gain,” said Lowe. “Combine that with our talented team of dedicated professionals and I am confident we can grow Freescale to be a truly great company.”

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