19 Segments and Geographical Information

NXP is organized into three reportable segments including two market-oriented business segments, High Performance Mixed Signal (“HPMS”) and Standard Products (“SP”) and one other reportable segment, Manufacturing Operations. Corporate and Other represents the remaining portion to reconcile to the Consolidated Financial Statements along with the Divested Home activities, which were divested in 2010.

Our Chief Executive Officer, who is our Chief Operating Decision Maker, or CODM, regularly reviews financial information at the reporting segment level in order to make decisions about resources to be allocated to the segments and to assess their performance. Segment results that are reported to the CODM include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, head office expenses and deferred income tax assets and liabilities.

Our HPMS business segment delivers High Performance Mixed Signal solutions to our customers to satisfy their system and sub-systems needs across eight application areas: automotive, identification, mobile, consumer, computing, wireless infrastructure, lighting and industrial.

Our SP business segment offers standard products for use across many application markets, as well as application-specific standard products predominantly used in application areas such as mobile handsets, computing, consumer and automotive.

Our manufacturing operations are conducted through a combination of wholly owned manufacturing facilities, manufacturing facilities operated jointly with other semiconductor companies and third-party foundries and assembly and test subcontractors, which together form our Manufacturing Operations segment. While the main function of our Manufacturing Operations segment is to supply products to our HPMS and SP segments, revenue and costs in this segment are to a large extent derived from revenue of wafer foundry and packaging services to our divested businesses in order to support their separation and, on a limited basis, their ongoing operations. As these divested businesses develop or acquire their own foundry and packaging capabilities, our revenue from these sources is declining.

Corporate and Other includes unallocated research expenses not related to any specific business segment, corporate restructuring charges and other expenses, as well as operations not included in our two business segments, such as manufacturing, marketing and selling of can tuners through our joint venture NuTune Singapore Pte. Ltd. (“NuTune”), which was sold on December 14, 2010, and software solutions for mobile phones “NXP Software” business. Revenue recorded in Corporate and Other is primarily generated by the NXP Software business.

On February 8, 2010, our wholly-owned subsidiary, NXP B.V., divested a major portion of our former Home segment to Trident Microsystems, Inc. (“Trident”). For the periods up to divestment on February 8, 2010, the results of the divested operations are presented in our consolidated accounts separately under “Divested Home Activities”. The continuing business of the former Home segment not divested has been regrouped into High Performance Mixed Signal and Corporate and Other. All previous periods have been restated accordingly.

Detailed information by segment for the years 2012, 2011 and 2010 is presented in the following tables.


Segments	Revenue		Research and development		Operating income (loss)			Operating income (loss) as a % of revenue			Results relating to equity-accounted investees
2012
HPMS		3,282		539		527			16.1			—
SP		832		43		37			4.4			—
Manufacturing Operations		211		1		(36	)		(17.1	)		—
Corporate and Other ⁽¹⁾		33		45		(116	)		N.M.			(27	)

		4,358		628		412			9.5			(27	)
2011
HPMS		2,906		554		339			11.7			—
SP		925		37		141			15.2			—
Manufacturing Operations		316		—		(60	)		(19.0	)		—
Corporate and Other ⁽¹⁾		47		44		(63	)		N.M.			(77	)

		4,194		635		357			8.5			(77	)
2010
HPMS		2,846		454		387			13.6			—
SP		848		32		91			10.7			—
Manufacturing Operations		525		18		(57	)		(10.9	)		—
Corporate and Other ⁽¹⁾		136		48		(117	)		N.M.			(86	)
Divested Home activities		47		16		(31	)		(66.0	)		—

		4,402		568		273			6.2			(86	)

⁽¹⁾	Corporate and Other is not a segment under ASC 280 “Segment Reporting”.

N.M. Not meaningful

Certain assets of the Company have been used jointly or managed at Corporate level. Arithmetical allocation of these assets to the various businesses is not deemed to be meaningful and as such total assets by segment has been omitted. Instead, inventories by segment are included.


Segments	Inventories		Long-lived assets ¹⁾		Total liabilities excl. debt		Gross capital expenditures property, plant and equipment		Depreciation property, plant and equipment ⁽²⁾
2012
HPMS		388		2,248		300		12		12
SP		182		706		102		11		26
Manufacturing Operations		145		1,041		666		200		163
Corporate and Other ⁽³⁾		—		317		595		28		46

		715		4,312		1,663		251		247
2011
HPMS		340		2,390		258		14		13
SP		161		760		152		17		41
Manufacturing Operations		117		1,014		489		162		179
Corporate and Other ⁽³⁾		—		301		557		28		57

		618		4,465		1,456		221		290
2010
HPMS		240		2,670		313		15		13
SP		136		828		127		15		35
Manufacturing Operations		137		1,055		748		209		220
Corporate and Other ⁽³⁾		—		396		599		19		91
Divested Home activities		—		—		—		—		—

		513		4,949		1,787		258		359
Discontinued operations						80

						1,867

(1)	Long-lived assets include property, plant and equipment, goodwill and identified intangible fixed assets.

(2)	Excluding additional write down of property classified as held for sale (2010: $30 million).

(3)	Corporate and Other is not a segment under ASC 280 “Segment Reporting”.


Goodwill assigned to segments	Cost at January 1, 2012		Acquisitions		Divestments			Translation differences and other changes		Cost at December 31, 2012
HPMS		1,785		11		(7	)		32		1,821
SP		305		—		—			6		311
Manufacturing Operations		316		—					5		321
Corporate and Other ⁽¹⁾		48		—		(1	)		2		49

		2,454		11		(8	)		45		2,502


	Accumulated impairment at January 1, 2012			Divestments		Impairment		Translation differences and other changes			Accumulated impairment at December 31, 2012
HPMS		(175	)		2		—		(3	)		(176	)
SP		—			—		—		—			—
Manufacturing Operations		—			—		—		—			—
Corporate and Other ⁽¹⁾		(48	)		—		—		(1	)		(49	)

		(223	)		2		—		(4	)		(225	)

⁽¹⁾	Corporate and Other is not a segment under ASC 280 “Segment Reporting”.

Geographical Information


Main countries	Total revenue		Property, plant and equipment		Gross capital expenditures property, plant and equipment		Depreciation property, plant and equipment
2012
China		1,699		131		43		31
Netherlands		94		180		22		43
Taiwan		112		80		32		23
United States		303		8		2		3
Singapore		436		226		58		47
Germany		447		88		17		26
South Korea		238		—		—		—
Other countries		1,029		357		77		74

		4,358		1,070		251		247
2011
China		1,514		120		40		32
Netherlands		123		187		23		60
Taiwan		80		70		18		25
United States		329		9		2		3
Singapore		383		229		64		45
Germany		508		96		17		41
South Korea		216		—		—		—
Other countries		1,041		352		57		84

		4,194		1,063		221		290
2010
China		1,496		112		33		31
Netherlands		126		232		12		98
Taiwan		115		81		29		25
United States		337		34		4		6
Singapore		480		210		62		53
Germany		434		109		19		30
South Korea		202		—		—		—
Other countries		1,212		386		99		116

		4,402		1,164		258		359

Concentration of risk

A substantial portion of our revenue is derived from our top OEM customers, some of whom are supplied through distributors, in the automotive, identification, wireless infrastructure, lighting, industrial, mobile, consumer and computing markets. No end customer accounted for greater than 10% of the Company‘s revenues for the years presented. However, sales to one of our distributors, WPG, in 2012, 2011 and 2010 represented 12%, 12% and 11%, respectively, of revenue.

Furthermore, the Company is using outside suppliers or foundries for a portion of its manufacturing capacity.

We have operations in Europe and Asia subject to collective bargaining agreements which could pose a risk to the Company in the near term but we do not expect that our operations will be disrupted if such is the case.