The Zhitong Finance App learned that NXP Semiconductor (NXPI.US), an automotive chip leader headquartered in the Netherlands, said on Tuesday local time that it has agreed to buy Austria's TTTech Auto, which focuses on automotive software technology, for 0.625 billion dollars to significantly strengthen its automotive business, especially the NXP automotive software and hardware ecosystem.

NXP is the world's largest automotive chip manufacturer, and TTtech Auto focuses on producing “middleware” (middleware) focused on security software — an intermediary software that helps fully integrate automotive hardware platforms, car operating systems, and applications, and helps launch major software updates while ensuring that key functions are not affected.

Following the announcement of NXP's acquisition of TTTech Auto, there are market opinions that through the acquisition of TTTech Auto, NXP has not only strengthened its capabilities in the field of automotive software, but also accelerated the strategic layout of NXP automotive software and hardware integration. This move aims to respond to the upcoming recovery trend in automotive chip demand and future trends in “electric vehicles+AI autonomous driving” and software-defined vehicles, and enhance its competitiveness in the global automotive chip and automotive software-hardware integration market.

“This acquisition combines NXP's automotive hardware product portfolio with a leading global provider of security software solutions,” NXP executive Jens Sinrichsen said in an official statement.

NXP's statement also shows that the acquisition is aimed at strengthening its product portfolio, as key customers such as global automakers are increasingly inclined to view the perfect integration of software and hardware ecosystems (rather than simple hardware products) as a key factor in determining vehicle design and overall performance.

Cynrichsen, NXP's general manager for automotive embedded systems, said the acquisition will help the company become a “leading global supplier of intelligent automotive edge systems” for automobiles.

TTtech Auto excels at integrating “key software middleware focused on security types” with real-time operating systems. For NXP Semiconductors, it is possible to create a more complete automotive domain controller system or central computing platform solution by combining its own automotive-grade core processor, MCU, automotive-grade analog chip, etc.

Combining NXP's automotive chip hardware advantages with TTtech Auto's intermediary software solutions, NXP will be able to take a better position in the field of intelligent edge systems, compete with strong competitors in the automotive chip field such as ST, Nvidia, and Qualcomm, and provide more integrated and intelligent software-hardware-integrated automotive solutions.

If this all-cash deal is formally approved by European regulators, Vienna-based TTTech, its management and 1,100 employees will collectively join NXP's automotive business unit.

According to the latest forecast from World Semiconductor Trade Statistics (WSTS), global automotive chips, where demand has continued to be weak since 2022, will usher in a “recovery moment” that the market has been waiting for for a long time in 2025. In the latest fall forecast, WSTS significantly raised its forecast data for the semiconductor market size for 2024 and 2025 compared to the spring forecast. WSTS expects the global semiconductor market to grow 19.0% year on year to 627 billion US dollars in 2024. WSTS expects the semiconductor market to grow by another 11.2% in 2024, which means that the global semiconductor market is expected to grow by about 11.2% on top of the already strong recovery trend in 2024, and the global market size is expected to reach about 697 billion US dollars.

WSTS anticipates that the semiconductor market size growth in 2025 will be mainly driven by the memory chip category and the artificial intelligence logic chip category. At the same time, it is also expected that the growth rate of all other chip segments such as discrete devices, optoelectronics, sensors, MCUs, and analog chips will reach single-digit growth rates.

According to WSTS expectations, analog chips, which account for an important share of the chips required for automobiles, especially electric vehicles (EVs), are expected to slowly enter a recovery cycle in 2025 after two consecutive years of sluggish demand. Demand for MCU, another important chip category required for electric vehicles, is expected to recover at a stronger pace based on the slow recovery in 2024. Analog chips play an essential role in various key functional modules and systems of electric vehicles, including power management, battery management, sensor interface, audio and video processing, and motor core control systems.