The merged NXP and Freescale will make cars smarter from bumper to bumper

The US$40 billion NXP-Freescale merger creates one supplier of all the chips needed for cars as they evolve toward driving themselves, executives of the two companies say.

The two big silicon vendors, Freescale Semiconductor and NXP Semiconductors, closed their merger on Monday. It’s the latest big deal between chip makers as an industry that thrives on scale and integration seeks further consolidation. The combined company will have NXP’s name and global headquarters in Eindhoven, Netherlands.

The new NXP is a dominant maker of many kinds of embedded processors, with No. 1 positions in making chips for payment cards and cars. Just last week, Freescale announced a chip as thin as a blade of grass for cards and other uses.

The automotive field, along with the broader Internet of Things in homes and enterprises, is expected to grow dramatically in the next few years.

Thanks to better on-board sensors, computers and networks, cars are making more decisions for drivers and in some cases can already drive themselves, though bringing that capability to the streets in a major way presents some daunting challenges.

The combined company says it will lead in making chips for all three jobs required of intelligent cars: Sensing their surroundings and communicating with other vehicles, making decisions based on those inputs, and carrying out those decisions. This includes features like traffic signal recognition, lane departure warnings, automatic emergency breaking to prevent collisions, blind-spot detection and parking assistance.

NXP also makes chips for in-car entertainment, security features such as keyless entry, and the networks that link a car’s components, including emerging on-board Ethernet.

The company is also taking aim at digital security, especially in the Internet of Things, where many devices at the edges of networks, like home devices, aren’t yet secure, said Ruediger Stroh, executive vice president and general manager of connectivity and security, on a conference call.

The combined company has about 45,000 employees and largely complementary product lines, so it won’t cut engineering and research staff and will maintain major development centers in Munich; Austin, Texas; Silicon Valley, Japan and other sites around the world, said Kurt Sievers, executive vice president and general manager of the automotive business.