Throngs of Chinese travelers use contactless transit cards as they scurry through turnstiles in subway and commuter rail stations across the country.

NXP Semiconductors' (NASDAQ:NXPI) chips help enable the rapid flow of commuters, and CEO Rick Clemmer sees China as a land of opportunity. It's where NXP's technology is increasingly used for, among other things, mobile wallets, EMV cards, keyless entry and infotainment in cars.

The Netherlands-based chipmaker is working to strengthen ties with Chinese partners, customers and policymakers through a joint venture announced Thursday, an acquisition completed Monday and other strategies.

Beijing Railway Station can get busy, but mobile payments and smart card payments would speed the lines. "China continues to be extremely important for our future," Clemmer told IBD. "We're continuing to evolve in the way we do business there and try different alternatives."

NXP, along with Sony (NYSE:SNE), invented near field communication technology in 2002. NFC chips can enable secure contactless transactions, so consumers can use smartphones or "smart cards" to pay for items, including EMV — EuroPay, MasterCard, Visa — chip-payment cards. The use of contactless bank cards in China is far ahead of Europe and the U.S., Clemmer said.

Jeff Miles, NXP vice president of the mobile transactions product line, says nearly half of new smartphones include NFC as a standard technology. Along with mobile payments, that opens a wide range of potential uses, such as mobile advertising, keyless entry and transit ticketing across China and the world.

On Monday, NXP completed its acquisition of Quintic's wearable and Bluetooth low-energy businesses, which have significant operations in China. The deal adds Bluetooth low-energy technology to NXP's existing portfolio of ultra-low power, radio-frequency chips.

As part of the deal, about 65 Quintic engineers in Beijing, Shenzhen and Shanghai will become part of NXP to design chips for applications in health and fitness wearables, mobile transactions, smart homes and automotive use.

"The acquisition is focused on addressing the Internet of Things, or what we call the 'smarter world,' that includes the IoT, wearables, smarter driving," Clemmer said. "We're trying to take our leadership position in security and drive that to be able to provide secure connections for the smarter world. It's about facilitating the applications that provide ease of use and safety."

The joint venture NXP announced Thursday is with China state-owned investment company JianGuang Asset Management. Once it is approved by regulators, JianGuang will own a 51% stake in the joint venture and provide financial and industrial support for the venture's chip production.

Clemmer says the JV will give NXP connections in the Chinese manufacturing network and distribution channels. He hopes that will lower manufacturing costs and boost profit margins of high-end electronic products in China.

By: DocMemory
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