CELEX: 32015M7585
Language: en
Date: 2015-09-17 00:00:00
Title: Commission Decision of 17/09/2015 declaring a concentration to be compatible with the common market (Case No COMP/M.7585 - NXP SEMICONDUCTORS / FREESCALE SEMICONDUCTOR) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 17.9.2015
C(2015) 6502 final

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|                                                                             |To the notifying party:                                            |
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Dear Madam(s) and/or Sir(s),

Subject:    Case M.7585 - NXP Semiconductors/ Freescale Semiconductor
Commission decision pursuant to Article 6(1)(b) in conjunction with Article 6(2) of Council Regulation  No 139/2004[1]  and  Article  57  of  the
Agreement on the European Economic Area[2]

  1) On 31 July 2015, the European Commission received notification of a proposed concentration pursuant to Article 4 of the Merger Regulation by
     which the undertaking NXP Semiconductors N.V. (“NXP” or the “Notifying Party”, the Netherlands)  acquires  within  the  meaning  of  Article
     3(1)(b) of the Merger Regulation sole control of Freescale Semiconductor Ltd (“Freescale”, Bermuda), by  way  of  purchase  of  shares  (the
     “proposed transaction”).[3] NXP and Freescale are referred to together as the “Parties”.

       The Parties

  2) NXP is active in the manufacturing and sale of semiconductors, in particular integrated circuits  (“ICs”)  and  single  unit  semiconductors
     (“discretes”). NXP sells broadly two categories of products, standard products and high performance mixed signal (“HPMS”) devices.  Standard
     products are standard devices with limited functionality (discrete transistors, transceivers and diodes) that can be incorporated into  many
     different types of electronics equipment and that are typically  sold  to  a  wide  variety  of  customers.  NXP’s  HPMS  business  includes
     semiconductors for (i) secure identification solutions; (ii) secure connected devices; (iii) automotive (keyless entry, radio and other  car
     entertainment, in-vehicle networking and Car-2X communications); and (iv) secure interface  and  power  (interface  products,  power  analog
     products and radio frequency products).

  3) Freescale is a global semiconductor company and focuses  on  the  development,  manufacturing  and  sale  of  embedded  processors  such  as
     microcontrollers and digital networking processors. In addition, Freescale  manufactures  and  sells  analog,  sensor  and  radio  frequency
     devices. Freescale  is  organised  in  five  different  product  groups:  (i)  microcontrollers;  (ii)  radio  frequency;  (iii)  automotive
     microcontrollers; (iv) digital networking; and (v) analog and sensors for  use  in  embedded  processing  applications  in  the  automotive,
     industrial and consumer markets.

       The OperatIon

  4) The proposed transaction involves the acquisition of sole control by NXP over Freescale.

  5) On 1 March 2015, the Parties entered into a merger agreement following which NXP, by means of an indirect subsidiary, will  acquire  all  of
     the shares of Freescale and thus exercise sole control over Freescale.

  6) The proposed transaction therefore constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

       EU DIMENSION

  7) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR  5  000  million[4]   (NXP:  EUR  4  257  million;
     Freescale: EUR 3 488 million). Each of them has an EU-wide turnover in excess of EUR 250 million (NXP: EUR 804 million; Freescale:  EUR  779
     million), but they do not achieve more than two-thirds of their aggregate EU-wide turnover within one and the same Member State.

  8) The proposed transaction therefore has an EU dimension under Article 1(2) of the Merger Regulation.

       RELEVANT MARKETS

  9) The proposed transaction concerns the manufacturing and sale of semiconductor devices.

 10) Semiconductors are materials, such as silicon, which can act as an insulator, but are also capable of conducting electricity. Semiconductors
     are at the heart of devices such as diodes, transistors and other electronic components, and can be  found  in  virtually  every  electronic
     device today. The end-products that contain semiconductor devices range from base stations, mobile phones,  computers,  domestic  appliances
     and cars to medical equipment, identification systems, large-scale industry electronics and aerospace equipment.

 11) Semiconductor devices are rarely bought as end-products by consumers. They are mainly bought by equipment  manufacturers  in  virtually  all
     sectors within the electronic equipment industry.

1 Overview of the semiconductor industry

 12) The Notifying Parry provided a classification of semiconductors based on various established industry reports (Gartner,  Strategy  Analytics
     and ABI Research). On the basis of these industry reports, the Notifying Party submits that semiconductors should be distinguished  in  ICs,
     discretes, optical semiconductors and sensors and actuators, and that within each of these categories further separate product  markets  and
     segments can be identified. These further distinctions are discussed below in sections IV.2 to IV.4.

 13) The results of the market investigation in the present case confirmed the general categorization of semiconductors outlined by the Notifying
     Party. Most customers and competitors responding to the market investigation agreed that semiconductor devices can be  classified  into  the
     four distinct categories of (i) ICs, (ii) discretes, (iii) optical semiconductors and (iv) sensors and actuators.[5]

 14) Therefore, the Commission considers that it is appropriate to distinguish semiconductors  within  the  categories  of  ICs,  discretes,  and
     sensors and actuators as the starting point of its assessment.

 15) The Parties have overlapping activities within each of these general categories, except for optical semiconductors, where Freescale  is  not
     active.[6] Therefore, for the purpose of this decision, optical semiconductors are not further discussed.

 16) In the following sections, the Commission will assess in more detail the possible relevant markets  within  each  of  the  above  identified
     semiconductor categories of ICs, discretes and sensors and actuators.

2 ICs

1 Product market definition

 17) An IC is a semiconductor device composed of diodes, transistors and other  electronic  components,  combined  with  conductive  interconnect
     material, which controls the current and voltage of electricity running  through  it.  While  the  first  ICs  consisted  of  a  handful  of
     components, over the years ICs have become increasingly compact and complicated. Current existing ICs used in electronic devices are  called
     “microchips” or “chips” and can contain several billion transistors along with diodes and other electronic components.

1 The Notifying Party’s view

 18) On the basis of the existing industry reports, the Notifying Party argues that a distinction should be drawn between digital and analog ICs.

 19) ICs can incorporate digital technology, analog technology or a combination of both technologies. In digital technology, the input and output
     signals of systems alternate between two voltage levels. This translates in values of "1"s and "0"s, which, when combined with other digital
     signal values, are used to process data. In analog technology, system input and output signals are not limited to "1"s  and  "0"s.  Instead,
     analog ICs deal with signals varying from zero to a voltage level that is even higher than the full power supply voltage.[7]

 20) The Notifying Party submits that semiconductor manufacturers generally classify ICs based on the IC's ratio of digital and  analog  content.
     If an IC contains solely digital or analog technology, it is labelled as a digital or analog IC, respectively. Additionally,  the  Notifying
     Party argues that both digital and analog ICs can be further segmented.

 21) More specifically, the Notifying Party explains that digital ICs can be segmented into three categories: (i)  microcomponents,  (ii)  memory
     ICs, and (iii) logic ICs. In turn, the microcomponents segment can be further subdivided into three sub-segments, which are  microprocessors
     (“MPUs”), microcontrollers (“MCUs”) and Digital Signal Processors (“DSPs”).

 22) As for analog ICs, according to the Notifying Party, these can be divided between general purpose analog ICs and application specific analog
     ICs.

    Digital ICs and further sub-segments

 23) With respect to the possible subdivisions within  digital  ICs,  the  Notifying  Party  refers  to  Case  M.5535  –  Renesas  Technology/NEC
     Electronics, where the Commission classified ICs into the three broad segments: of microcomponents,  memory  ICs  and  logic  ICs.[8]  These
     segments are also acknowledged in the relevant industry reports on which the Notifying Party relies.

 24) As regards these segments, the Notifying Party argues that it is not necessary to further determine the precise  product  market  definition
     with respect to memory ICs and logic ICs, because the proposed transaction does not raise concerns  in  this  regard,  irrespective  of  the
     precise product market definition.

 25) With reference to the microcomponents segment within digital ICs, and the possible sub-segments thereof, the  Notifying  Party  argues  that
     MPUs should be distinguished from the other types of microcomponents. MPUs consist of a large amount of transistors and are  specialised  in
     the processing of very large amounts of data. Typically,  MPUs  are  multipurpose,  programmable  logic-based  devices  containing  all  the
     functions for a computer's central processing unit (CPU). The Notifying Party refers to the Commission’s findings in case M.5535  –  Renesas
     Technology / NEC Electronics, where the market investigation indicated that MPUs are sophisticated general purposes ICs, which would not  be
     suitable to perform effectively the same functions of other microcomponents. The Notifying Party  argues  that  in  any  event,  it  is  not
     necessary to reach a definitive view on whether MPUs belong to a different product market, given that the Parties’ activities do not overlap
     in this category.

 26) With regard to MCUs, the Notifying Party explains that a MCU is a stand-alone  device  that  performs  a  dedicated  or  embedded  computing
     function within an electronic system without the need of other support circuits. A MCU is principally a controlling device, which  processes
     or manipulates data received in real time. This differentiates MCUs from MPUs, which are more powerful processing device. The  objective  of
     MCUs is to interface with the “real world” (such as processing measurements from  sensors)  or  to  supervise  and  control  certain  system
     functions (such as power management, battery charging, actuators or interface to peripherals). MCUs are in general less expensive  and  less
     power-consuming than MPUs.

 27) The Notifying Party explains that MCUs can be further distinguished between general purpose MCUs and application specific MCUs, and  on  the
     basis of the number of bits (8-, 16- and 32-bit size) they contain.

 28) By reference to the Commission’s findings in Case M.5535 – Renesas Technology / NEC Electronics, the Notifying Party argues  that  MCUs  can
     generally be distinguished by application, and that  there  is  limited  demand-side  and  supply-side  substitutability  between  different
     application specific MCUs. The Notifying Party thus argues that a distinction should be made between on the one hand  general  purpose  MCUs
     and on the other hand application specific MCUs, and that application specific MCUs should be distinguished from one  another  according  to
     their field of application. However, the Notifying Party concludes that the exact product  market  definition  can  be  left  open,  as  the
     proposed transaction does not raise concerns in relation to MCUs irrespective of the market definition.

 29) Finally, with reference to DSPs, the Notifying Party explains that DSPs have a modified  MPU  architecture  and  consist  of  many  parallel
     channels that allow for a large simultaneous flow of data. DSPs have a high processing capacity and are used in many  industries,  the  main
     one being wireless communications.

 30) The Notifying Party submits that DSPs can be classified in a manner similar to MCUs. A distinction should be made between on  the  one  hand
     general purpose DSPs and on the other hand application specific DSPs, which are tailored for specific functions. Application  specific  DSPs
     can be further distinguished between Application Specific Standard Integrated Circuits (“ASICs”) and Application specific standard  products
     (“ASSPs”) for sectors such, for instance, as automotive, wired communications, wireless communications. The Notifying Party argues that  all
     application specific DSPs should be distinguished from one another as well. However, the Notifying  Party  submits  that  the  exact  market
     definition may ultimately be left open, as the proposed transaction does not raise concerns in  this  respect  under  any  possible  product
     market definition.

    Analog ICs and further sub-segments

 31) Within analog ICs, the Notifying Party argues that a distinction should be drawn between general purpose analog ICs and application specific
     analog ICs.

 32) With respect to general purpose analog ICs, the Notifying Party submits that the precise product market definition can be left open, as  the
     proposed transaction does not raise concerns.

 33) As regards application specific analog ICs, the Notifying Party explained that these are products tailored to serve dedicated  functions  in
     specific devices. In general, application specific analog ICs are split by  the  end  markets  they  serve,  such  as  consumer,  computing,
     communication/wireless, industrial and automotive.

 34) Within application specific analog ICs for the automotive sector,  the  Notifying  Party  submits  that  is  important  to  make  a  further
     distinction between on the one hand power analog devices and on the other hand non-power analog  devices.  Power  devices  are  designed  to
     monitor and manage the electric power supply of other electric components. Power analog devices include power  regulators  and  alternators,
     switches and power transistors. Non-power analog devices consist of a combination of general purpose ICs such amplifiers and data converters
     as well as non-power analog application specific ICs. The Notifying Party submits that power and non-power analog devices for the automotive
     sector constitute two separate product markets, as there is no demand-side or supply side substitutability.

 35) The Notifying Party explains that non-power analog ICs and power analog ICs are products with a  completely  different  function.  Non-power
     analog ICs consume as little power as possible and serve  functions  such  as  data  conversion,  filtering,  low-noise  amplification,  and
     oscillators. On the other hand, power analog ICs serve a very different purpose. They are intended to handle high power, such  as  in  DC-DC
     conversion functions,[9] power switches and drivers for power actuation, battery management.  Therefore,  in  the  Notifying  Party’s  view,
     customers cannot substitute one product for the other, as they serve different uses in different systems.

 36) The Notifying Party further submits that given these different functions, power and non-power analog ICs rely on different technologies. Non-
     power devices require technologies that use lower voltages to reduce power consumption to a minimum. The development and innovation of these
     technologies is thus focused on energy reduction with every next product generation. Conversely, the technology for power devices  use  high
     voltages to generate the high power required. Therefore, from a supply-side perspective manufacturers cannot substitute  production  of  one
     product for the other without accruing significant costs and delays.

 37) As regards the other types of application specific analog ICs, the Notifying Party submits that the product market definition  can  be  left
     open, as the proposed transaction does not raise concerns.

2 The results of the market investigation and the Commission's assessment

 38) The majority of respondents to the Commission’s market investigation confirmed the relevance of the distinction within ICs  between  digital
     ICs and analog ICs.[10] This classification reflects the structure of customer purchasing categories  and  is  in  line  with  the  standard
     definition provided by World Semiconductor Trade Statistics (WSTS). Semiconductor manufacturers generally classify ICs  based  on  the  IC's
     ratio of digital and analog content. If an IC contains solely digital or analog technology, it is  labelled  as  a  digital  or  analog  IC,
     respectively.

    Digital ICs and further sub-segments

 39) Within digital ICs, the results of the market investigation also confirmed that  digital  ICs  can  be  further  segmented  into  the  three
     categories of microcomponents ICs, memory ICs and logic ICs.[11] For instance, one respondent among the  competitors  submitted  that  those
     products are difficult to substitute, from the demand side, due to their different functionalities, and from the supply  side,  because  the
     underlying technologies in both the design and production process are different.

 40) As regards the further distinctions within the microcomponents segment of digital ICs,  the  majority  of  the  respondents  to  the  market
     investigation also confirmed that it is relevant to distinguish the three sub-segments of MPUs, MCUs and DSPs.[12]

 41) For example, one respondent explained that, from a technical perspective, MCUs and MPUs differ since the first have non-volatile memory that
     requires different production technology, which results in the two being used for different purposes. This respondent  explained  that  MCUs
     are typically used as controllers to handle relatively small-scale and marginal-performance required applications, while MPUs  are  used  as
     processors to handle large-scale and higher-performance required applications, such as PCs and servers.

 42) These findings are in line with previous Commission decisions, where the Commission considered that MPUs might represent a separate  product
     market.[13] In Intel / McAfee, the Commission considered x86 CPUs as a separate product market, in  this  way  acknowledging  a  distinction
     between MPUs on one hand and MCUs and DSPs on the other hand.[14]

 43) In relation to a further sub-segmentation of MCUs, the market investigation showed that a distinction  based  on  technical  parameters  and
     intended use would also be relevant. The majority of both customers and competitors confirmed that MCUs can be distinguished on the basis of
     the number of bits (8-bit, 16-bit, 32-bit), as this distinction relates to both their performance and cost.[15]

 44) Market respondents also confirmed that a distinction should be made between general purpose  MCUs  and  application  specific  MCUs.[16]  In
     particular, the majority of the respondents to the market investigation submitted  that  application  specific  MCUs  can  be  distinguished
     depending on their category of application and that application specific MCUs of one category are not substitutable with  those  of  another
     category, both from a demand side and supply side perspective.[17] One customer highlighted that a substantial amount of time and effort  on
     the design and qualification of a particular device is required in order to switch from one application to another.

 45) Most respondents to the market investigation also confirmed that application specific MCUs can be further segmented in the following product
     categories: (i) automotive; (ii) ID and smart card; (iii) consumer; (iv) computers and peripherals; (v)  wireless  communication;  and  (vi)
     wired communications.[18]

 46) Therefore, in light of the findings of the market investigation, the Commission considers that digital ICs can likely be  differentiated  in
     microcomponents, memory ICs and logic ICs, given that these products have different functions and features and do not appear to  be  readily
     substitutable with each other, and that within microcomponents there may be separate product markets for each of MCUs, MPUs and DSPs for the
     same considerations. The results of the market investigation also suggest that MCUs can be further sub-segmented depending on the number  of
     bits and their application, between general purpose MCUs and application specific MCUs. As for DSPs, the Commission considers that it may be
     appropriate to distinguish general purpose DSPs from application specific DSPs, and that the latter could be further  distinguished  between
     ASICs and ASSPs, although the market investigation was not conclusive with respect to DSPs.

 47) In any event, for the purpose of this decision the precise product market definition can be left open, as the proposed transaction does  not
     raise serious doubts as to its compatibility with the internal market with regard to ICs, and any relevant sub-segments therein,  under  any
     alternative product market definition.

    Analog ICs and further sub-segments

 48) The results of the market investigation confirmed that analog ICs should be distinguished between general purpose analog ICs and application
     specific analog ICs, which are tailored to specific functions on specific devices.[19] For instance, one  customer  explained  that  general
     purpose analog ICs are normally usable in a variety of applications or functions,  while  application  specific  analog  ICs  often  contain
     application specific circuitry or even digital circuitry that make them specifically suitable to certain applications only. For this reason,
     general purpose and application specific ICs are usually not substitutable without significant expenditure of time and money on  design  and
     qualification.

 49) The majority of respondents to the market investigation also confirmed that application specific analog ICs can be further segmented in  the
     following product categories: (i) consumer; (ii) data processing (including computing and storage  functions);  (iii)  communications  (sub-
     divided into wired communications and wireless communications); (iv)  automotive;  (v)  industrial;  and  (vi)  military/aerospace.[20]  One
     respondent explained that products belonging to each of these categories are not substitutable between each other, as they are each based on
     highly specialized technology and have many specific features, which prevent them from being used in other applications.

 50) Moreover, when commenting upon analog ICs for the automotive industry, all customers and the  majority  of  competitors  responding  to  the
     market investigation agreed that a distinction between power and non-power analog devices is relevant.[21]

 51) Therefore, in light of the findings of the market investigation, it appears that analog ICs can be distinguished between general purpose and
     application specific, and that within application specific analog ICs for the automotive industry a further distinction may be drawn between
     power and non-power analog ICs.

 52) In any event, for the purpose of this decision the precise product market definition can be left open, as the proposed transaction does  not
     raise serious doubts as to its compatibility with the internal market with regard to ICs, and any relevant sub-segments therein,  under  any
     alternative product market definition.

2 Geographic market definition

1 The Notifying Party's views

 53) The Notifying Party submits that the relevant geographic market for semiconductors is worldwide  in  scope,  irrespective  of  any  possible
     relevant categories or sub-segmentations considered, for the same reasons:  (i)  manufacturing  is  performed  on  a  worldwide  basis  with
     manufacturing facilities spread around the globe; (ii) competition between suppliers is at worldwide level both for  existing  products  and
     new pipeline products; (iii) there are no regulatory barriers; (iv) transportation costs are low and account for less than 1% of the product-
     value; and (v) price differences among regions are small.

 54) Therefore, the Notifying Party takes the view that the geographic market for ICs, both digital and analog, and their possible  sub-segments,
     is also worldwide in scope.

2 The results of the market investigation and the Commission's assessment

 55) With respect to the geographic scope of the market for semiconductors, in previous cases the Commission considered that the geographic scope
     of semiconductor markets may be at least EEA-wide, if not worldwide, although the precise scope of the geographic market was ultimately left
     open.[22]

 56) In Intel / McAfee, the Commission concluded that the markets for x86 CPUs are worldwide.[23] This conclusion was supported by the fact  that
     the main suppliers compete globally, CPU architectures are the same around the world, the main customers (in particular the OEMs) operate on
     a worldwide basis, and the cost of shipping CPUs around the world is low compared to their cost of manufacture.

 57) The market investigation in the present case indicated that the geographic scope of the semiconductor markets is likely to be  worldwide  in
     scope, as competition between suppliers is worldwide, transport  costs  are  very  low  and  price  differences  among  regions  are  small.
     Respondents did not indicate that such geographic scope should be different for ICs, and any of their possible segments or sub-segments.[24]

 58) Based on the results of the market investigation, the Commission notes that there are strong indications that the various possible  segments
     for ICs are likely to be worldwide in scope. However, the precise scope of  the  geographic  market  can  be  left  open,  as  the  proposed
     transaction does not raise serious doubts as to its compatibility with the internal market with regard to ICs irrespective  of  the  precise
     geographic market definition.

3 Discretes and RF Power transistors

1 Product market definition

 59) Discretes are physically standalone packaged semiconductors specified to perform an elementary electronic function.

1 The Notifying Party’s view

 60) On the basis of the relevant industry reports, the Notifying Party submits that discretes can be divided into  four  segments:  (i)  RF  and
     microwave, (ii) power transistors and thyristors, (iii) rectifiers and power diodes, and (iv) small signal and other discretes.

 61) In turn, within the RF and microwave segment, a further distinction can be made between RF power transistors, RF  small  signal  transistors
     (“RF SST”), and RF diodes.

 62) The Notifying Party argues that ultimately it is not necessary to reach a final conclusion on the definition of the relevant product  market
     with regard to discretes, given that the Parties’ activities do not overlap in this category of semiconductors or in any of its possible sub-
     segmentations, with the exception of the RF power transistors market within RF power and microwave.

 63) RF and microwave technology is the basis for wireless communication and connectivity. This technology uses radio waves, which are a type  of
     electromagnetic radiation with wavelength ranging from 100 km to 1 mm and covering the frequencies from 3 kHz to 300 GHz (the so called  the
     radio frequency spectrum) to transfer information through space. RF and microwave technology is used among others  in  cellular  phones  and
     other mobile wireless devices, radio and television broadcasting, space and satellite communication, military communication, two-way radios,
     radars, medical equipment (such as MRI scanners), industrial applications and many other applications.

 64) Within RF and microwave, the Notifying Party argues that RF power transistors should be distinguished from RF SSTs and RF diodes.

 65) The Notifying Party explains that, from a technical viewpoint, RF power transistors are typically high power (>1 watt average  output  power
     up to more than 1 kW) devices, whereas RF SST and RF diodes are low power RF devices  with  average  output  power  of  less  than  1  watt.
     Additionally, there is also a significant price difference, as the price of RF power amplifier modules  amounts  to  approximately  USD  25,
     whereas RF SSTs for mobile handsets and RF SSTs for infrastructure are typically sold for USD 10-20 cents and 30-120 cents respectively.

 66) In order to deliver the desired high output power, RF power transistors currently rely on two main process technologies: (i)  silicon  based
     laterally-diffused metal oxide semiconductor (“LDMOS”) and (ii) gallium nitride on silicon carbide substrate (“GaN”).  The  Notifying  Party
     submits that LDMOS is the most used technology, while GaN is less used today, but is poised to grow in the next years.

 67) The Notifying Party argues that LDMOS and GaN  devices  can  be  considered  as  constituting  separate  product  markets  within  RF  power
     transistors.

 68) RF power transistors are used in six major applications: (i) wireless infrastructure; (ii)  military;  (iii)  commercial  avionics  and  air
     traffic control; (iv) industrial/scientific/medical (“ISM”); (v) broadcast; and (vi) non-cellular communications.

 69) The majority of RF power devices are used for wireless infrastructure, which accounts for [60-70] %  of  the  total  RF  power  market.  The
     Notifying Party explains that, within the wireless segment, RF power  transistors  are  predominantly  used  in  base  stations  for  mobile
     telecommunications (3G, 4G, LTE).[25] The major customers in this market segment are the providers  of  RAN  equipment  for  mobile  telecom
     operators, such as Huawei, ZTE, Ericsson, Nokia and Alcatel-Lucent.

 70) The Notifying Party further explains that, within wireless infrastructure, LDMOS is the leading  technology  ([80-90]  %  of  all  RF  power
     devices for wireless infrastructure sold in 2013 were based  on  this  technology),  as  it  represents  a  good  compromise  for  cost,  RF
     performance, high voltage operation and ease of  use.  GaN  is  the  upcoming  technology,  mainly  used  in  military,  radar/avionics  and
     satellite/space communications, given that GaN devices are more efficient and resistant, but also more costly. However,  GaN  technology  is
     also being developed for more mainstream applications.

 71) Therefore, the Notifying Party submits that there is a separate relevant product market for RF power devices for base stations  in  wireless
     infrastructure. The Notifying Party emphasizes that such RF power market for base stations requires application specific RF  power  products
     that are optimised for linearity, allows for further differentiation in solution performance through innovative and patented  system  design
     concepts, and requires a rapid sampling capability with high performance consistency between samples and final products.

 72) However, the Notifying Party explains that the product market definition can ultimately be left open also with respect to RF  power  devices
     for base stations in wireless infrastructure, given that the commitments submitted by the Notifying Party remove any serious  doubts  as  to
     the proposed transaction’s compatibility with the internal market in relation to the RF power  transistors  market  and  its  possible  sub-
     segments.

2 The results of the market investigation and the Commission's assessment

 73) The market investigation confirmed that four segments can be identified within discretes: (i) RF and microwave, (ii) power  transistors  and
     thyristors; (iii) rectifiers and power diodes[26] and (iv) small signal and other discretes.[27]

 74) Moreover, the market investigation also confirmed that within the RF and microwave segment a further distinction  can  be  made  between  RF
     power transistors, RF SSTs, and RF diodes.[28] Respondents to the market investigation indicated that substitutability between  these  three
     categories is low. Furthermore, the results of the market investigation indicated that there are difficulties in switching to the production
     of RF power transistors from other types of semiconductors. RF Power transistors require specific technologies and expertise for the design,
     manufacturing, testing and packaging activities which can be obtained only thorough  a  sizable  investment  over  a  protracted  period  of
     time.[29] Customers also indicated that the RF Power transistors require a long qualification process.  This  differentiates  the  RF  Power
     transistors from the other two categories within the RF Power and microwave market.

 75) In relation to RF power transistors, market participants answering to the market investigation also agreed with the  classification  by  end
     application retained in the industry reports between (i) wireless infrastructure; (ii) military (iii) commercial avionics  and  air  traffic
     control; (iv) ISM (v) broadcast and (vi) non-cellular communications. Competitors explained that this is the common view  in  the  industry.
     One customer explained that these are applications that require individual approaches in relation to  the  development  and  design  of  the
     relevant products.[30] In particular, the majority of respondents to the market investigation explained that RF power  transistors  used  in
     base stations in wireless infrastructure constitute a separate product market. Customers commented that RF power  transistors  have  a  very
     specific function in the context of wireless infrastructure, as they are a critical part of the RF power amplifiers used in  base  stations.
     Furthermore, RF power transistors employ highly specialised technologies (LDMOS or GaN) and are  products  which  need  to  respond  to  the
     specific qualifications required by the six main customers in this market.

 76) In relation to RF power transistors used in wireless infrastructure, the majority of respondents to the market investigation also  indicated
     that it may be relevant to distinguish between LDMOS and GaN  technologies.[31]  Thus  respondents  highlighted  the  technology  and  price
     differences between LDMOS and GaN devices. One customer  explained  that  the  different  technologies  used  for  each  product  result  in
     fundamentally different device characteristics: GaN power chips operate at higher voltages,  frequencies  and  temperatures,  and  are  more
     expensive to produce than LDMOS devices.[32]

 77) Furthermore, market participants emphasised that while LDMOS technology’s main application is power  amplifiers  for  the  cellular  market,
     GaN's main application fields are industrial, aerospace and military applications.[33]  However, some market participants expect that in the
     next five to ten years there will be more demand for GAN technology within the wireless infrastructure market, although LDMOS will  continue
     to be the standard technology used in cellular infrastructure.[34]

 78) In light of the results of the market investigation, the Commission considers that, within discretes, a distinction can be made between  the
     segments for RF and microwave, power transistors and thyristors, rectifiers  and  power  diodes,  and  small  signal  and  other  discretes.
     Furthermore, within the RF and microwave segment, the Commission considers that RF power transistors should likely  be  distinguished  as  a
     separate product market from RF SSTs and RF diodes. There are also indications that RF power  transistors  for  base  stations  in  wireless
     infrastructure may constitute a separate product market from RF power transistors used for  other  applications.  Finally,  there  are  also
     indications that at present time, due to different technology and pricing, RF Power transistors employing LDMOS technology may be  different
     than those employing GaN technology. However, these differences may become blurred in the next few years. This is because  in  the  next  10
     years it is expected that the usage of GaN technology for RF Transistors will increase, including in wireless infrastructure, and the  price
     difference between LDMOS and GaN technology may decrease as well.

 79) For the purpose of the present decision, the Commission considers that within the segment  of  RF  and  microwave  of  discretes,  RF  power
     transistors constitute a separate product market from RF SST and RF diodes.

 80) As regards the other possible segmentations and sub-segmentations within discretes, the Commission considers that, for the  purpose  of  the
     present decision, the question on the exact scope of the product market for discretes can be left open, as the proposed transaction does not
     raise serious doubts with respect to discretes and most segments of discretes (that is to say in with respect to (i) power  transistors  and
     thyristors; (ii) rectifiers and power diodes and (iii) small signal and other discretes). Furthermore,  the  question  whether  the  product
     market of RF power transistors should be further segmented depending on the application can be left open, as the final commitments submitted
     by the Notifying Party on 16 September 2015 (the “Final Commitments”) remove any serious doubts as to  the  compatibility  of  the  proposed
     transaction with the internal market with regard to the RF power transistors market and any of its possible sub-segments.

2 Geographic market definition

1 The Notifying Party’s view

 81) The Notifying Party submits that the relevant geographic market for semiconductors is worldwide  in  scope,  irrespective  of  any  possible
     relevant categories or sub-segmentations considered, for the same reasons:  (i)  manufacturing  is  performed  on  a  worldwide  basis  with
     manufacturing facilities spread around the globe; (ii) competition between suppliers is at worldwide level both for  existing  products  and
     new pipeline products; (iii) there are no regulatory barriers; (iv) transportation costs are low and account for less than 1% of the product-
     value; and (v) price differences among regions are small.

 82) The Notifying Party takes the view that the geographic market for discretes, and  all  its  possible  segments  and  sub-segments,  is  also
     worldwide in scope.

2 The results of the market investigation and the Commission's assessment

 83) As explained in recital (55), in previous cases the Commission considered the geographic scope of semiconductor markets to be at least  EEA-
     wide, if not worldwide, although the precise scope of the geographic market was ultimately left open.

 84) The results of the market investigation in the present case indicate that the geographic scope of the semiconductor markets is likely to  be
     worldwide in scope. Respondents did not indicate that such geographic scope should be different for  discretes  or  any  of  their  possible
     segments and sub-segments.[35]

 85) Based on the results of the market investigation, the Commission notes that there are strong indications that the various  possible  markets
     and segments for discretes are likely to be worldwide in scope. However, for the purpose of the present decision, the question on the  exact
     scope of the geographic market for discretes can be left open, as  regardless  of  the  exact  geographic  market  definition  the  proposed
     transaction does not raise serious doubts with respect to most segments of discretes, (that is to say, with respect to (i) power transistors
     and thyristors; (ii) rectifiers and power diodes and (iii) small signal and other discretes; moreover within the RF and microwave market the
     transaction only raises concerns as regards the market for RF power transistors) and the Final Commitments remove any serious doubts  as  to
     the compatibility of the proposed transaction with the internal market with regard to the market of RF power transistors  and  its  possible
     segments and sub-segments.

4 Sensors

1 Product market definition

 86) Sensors semiconductors are used to help to manage and transmit data from a real-world  environment  for  embedded  processing  applications.
     Sensors are specifically designed to measure externalities like pressure, temperature, magnetic fields or acceleration.

 87) Actuators use electronic signals in order to influence the real world by performing a certain action.

 88) Given that the Parties have offerings only as regards sensors, actuators are not further discussed for the purposes of this decision.

1 The Notifying Party’s view

 89) The Notifying Party submits that separate product markets should be defined for sensors depending on their intended function. The  Notifying
     Party argues that sensors are  specifically  designed  for  a  particular  function  and  that  sensors  performing  one  function  are  not
     interchangeable with sensors performing a different function. The technology used for one type of sensor is generally not applicable for the
     functions of other sensors. Therefore, the Notifying Party argues that there is no supply-side substitutability between different  kinds  of
     sensors.

 90) The Notifying Party refers to previous Commission decisions, where the Commission defined separate product markets  for  speed  sensors  and
     temperature sensors and discussed a previous case, where it divided  sensors  by  function  and  identified  separate  product  markets  for
     temperature sensors, pressure sensors, level sensors, speed sensors and accelerometers.[36]

2 The results of the market investigation and the Commission's assessment

 91) The majority of customers responding to the market investigation agreed that it is appropriate  to  partition  sensors  according  to  their
     function. Such respondents identified separate market segments for sensors in automotive sector, in  particular:  (i)  temperature  sensors;
     (ii) pressure sensors; (iii) level sensors; (iv) speed sensors (ABS and powertrain); and (v) accelerometers.[37]

 92) Conversely, most of the competitors did not completely agree with this distinction and noted that  the  proposed  segmentation  was  missing
     certain product categories, such as acoustic sensors. One respondent among competitors submitted that  this  categorization  is  subject  to
     changes due to the market dynamics but, in any case, NXP and Freescale offer products for different uses,  therefore  they  are  not  direct
     competitors in this segment.[38]

 93) In light of the results of the market investigation, the Commission considers that sensors should likely be distinguished on  the  basis  of
     their function and end application.

 94) In any event, for the purpose of the present decision, the question on the exact scope of the product market for sensors can be  left  open,
     as the proposed transaction does not raise serious doubts as to its compatibility with the internal market with respect  to  sensors,  under
     any possible product market definition.

2 Geographic market definition

1 The Notifying Party’s view

 95) The Notifying Party submits that the relevant geographic market for semiconductors is worldwide  in  scope,  irrespective  of  any  possible
     relevant categories or sub-segmentations considered, for the same reasons:  (i)  manufacturing  is  performed  on  a  worldwide  basis  with
     manufacturing facilities spread around the globe; (ii) competition between suppliers is at worldwide level both for  existing  products  and
     new pipeline products; (iii) there are no regulatory barriers; (iv) transportation costs are low and account for less than 1% of the product-
     value; and (v) price differences among regions are small.

 96) The Notifying Party takes the view that the geographic market for sensors, and its possible sub-segments, is also worldwide in scope.

2 The results of the market investigation and the Commission's assessment

 97) As explained in recital (55), in previous cases the Commission considered the geographic scope of semiconductor markets to be at least  EEA-
     wide, if not worldwide, although the precise scope of the geographic market was ultimately left open.

 98) The results of the market investigation in the present case indicate that the geographic scope of the semiconductor markets is likely to  be
     worldwide in scope. Respondents did not indicate that such geographic scope should be different for sensor and actuators, and any  of  their
     possible segments or sub-segments.[39]

 99) Based on the results of the market investigation, the Commission notes that there are strong indications that the various possible  segments
     for sensors are likely to be worldwide in scope. However, the precise scope of the geographic market can  be  left  open,  as  the  proposed
     transaction does not raise serious doubts as to its compatibility with the internal market  with  regard  to  sensors  irrespective  of  the
     geographic market definition.

       COMPETITIVE ASSESSMENT

100) By way of introduction, the Commission notes that the market share data provided  in  this  Section  are  typically  based  on  third  party
     industry reports and are therefore considered to be reliable. Since these reports typically report  market  data  at  the  worldwide  level,
     unless otherwise indicated, the relevant share data refer to worldwide market shares. Furthermore, although  the  industry  reports  do  not
     comprise data at EEA or even Europe, Middle-East and Africa ("EMEA") level, the Notifying Party has been able to confirm[40], based  on  its
     internal analysis, the Parties' turnover and estimates[41], that to the best of its knowledge, the Parties’ and their competitors’ positions
     at the EEA level are unlikely to materially differ from their positions at the worldwide  level  in  the  various  relevant  (and  affected)
     markets and possible market segments for the purposes of the proposed transaction. Furthermore, the market investigation did not provide any
     indication that the position of the Parties and their competitors at the EEA level would substantially differ from  their  position  at  the
     world-wide level.

101) As explained in recital (15), the Parties’ activities overlap within three of the four broad categories of semiconductors identified by  the
     Notifying Party, which the market investigation has confirmed to be relevant, namely: ICs, discretes and sensors. However, at general  level
     of the categories of ICs, discretes and sensors, the proposed transaction does not give  rise  to  horizontally  affected  markets,  as  the
     Parties’ combined market share is below 20% in each of these three product groups. In more detail, within ICs, NXP and Freescale each have a
     share of [0-5]%. Within discretes, NXP’s share is of [5-10]%, Freescale’s of [0-5] %. Within sensors and actuators, NXP has a share  of  [0-
     5]%, Freescale of [0-5]%.

102) The Commission has further assessed the overlaps between the Parties’ activities within the various  narrower  relevant  segments  and  sub-
     segments of ICs, discretes and sensors identified and described in section IV.

1 Horizontally affected possible markets

1 ICs and further sub-segments

103) First, as regards ICs, the Parties have activities in both digital and analog ICs, but their combined shares are below 20% in each of  these
     categories.[42]

104) Within the three sub-categories of digital ICs, the Parties overlap within microcomponents and logic ICs, but not in Memory ICs, where  only
     NXP is active.

105) However, the Parties’ combined shares remain below 20% in both microcomponents and  logic  ICs.  In  microcomponents,  the  Parties  have  a
     combined share of [5-10]% (NXP [0-5]%, Freescale [0-5]%), whereas in logic ICs the Parties’ combined share is  around  [0-5]%  (NXP  [0-5]%,
     Freescale [0-5]%).

106) Within the narrower possible sub-segments of microcomponents, the Parties have overlapping activities within  MCUs  and  DSPs,  but  not  in
     MPUs, where only Freescale is active. However, the Parties’ shares are below 20% both in MCUs and DSPs. In MCUs, NXP has a share of [5-10]%,
     Freescale of [10-20]%. In DSPs, NXP has a share of [5-10]%, Freescale of [0-5]%.

107) Within the possible sub-segments of MCUs, classified by bit size and type of application, the proposed transaction gives  rise  to  possible
     horizontally affected markets only in relation to 8-bit MCUs and application specific MCUs for the automotive segment,  where  the  Parties’
     combined market share would be above 20%. In all other possible sub-segments classifications of MCUs per bit size and type  of  application,
     the proposed transaction does not give rise to any possible horizontally affected markets.[43]

108) Within the possible sub-segments of DSPs identified by the Notifying Party on the basis of type of application and recalled in recital  (30)
     of this decision, the proposed transaction does not give rise to potential horizontally affected markets  within  the  segments  of  general
     purpose DSPs and within application specific DSPs, where the Parties’ combined shares are below 20%. The Notifying  Party  further  explains
     that in application specific DSPs, NXP is particularly focused on the automotive industry, whereas Freescale sells application specific DSPs
     to the wired and wireless communications industry with limited sales of legacy baseband products for wireless handsets,  where  NXP  has  no
     market presence.

109) However, as regards application specific DSPs, the Parties’ combined share  is  above  20%  within  the  possible  narrower  sub-segment  of
     ASSPs.[44] More specifically, within the possible further classifications of ASSPs per end application, the  Parties’  share  is  above  20%
     within ASSPs for the automotive sector. In this sub-segment, the Parties would have a combined share of [70-80]%.

110) Therefore, within DSPs, the proposed transaction gives rise to a possible horizontally affected market as regards  application-specific  DSP
     ASSPs and ASSPs for the automotive sector therein.

111) Within analog ICs, the Parties’ activities do not overlap within general purpose analog ICs, where only NXP is active,[45]  but  overlap  as
     regards application specific analog ICs. However, the Parties’ combined share is below 20% in application specific analog ICs (NXP:  [0-5]%,
     Freescale: [0-5]%). The proposed transaction gives rise to a possible horizontally affected market  only  within  the  narrower  segment  of
     application specific analog ICs for the automotive sector, where the Parties’ combined share is more than 20%. In all  other  possible  sub-
     segments of application specific analog ICs per end use, the Parties do not overlap, or have shares below 20%.[46]

112) Therefore, as regards ICs, the proposed transaction does not give rise to any possible horizontally affected markets within the category  of
     digital ICs and its further segmentation, with the exception of the possible sub-segments of 8-bit MCUs and application  specific  MCUs  for
     the automotive segment. As regards the category of analog ICs, the proposed transaction does not raise any  possible  horizontally  affected
     markets, with the exception of the sub-segment of application specific analog ICs for the automotive sector.

2 Discretes and RF power

113) Within discretes and the relevant the sub-categories identified by the Notifying Party and the market investigation,  mentioned  in  recital
     (60) of this decision, the Parties’ activities overlap only within the RF power and microwave segment. The Parties do  not  overlap  in  the
     remaining possible narrower categories of discretes, that is, power transistors and thyristors,  rectifiers  and  power  diodes,  and  small
     signal and other discretes. In these remaining categories, only NXP is active.

114) Within the segment of RF power and microwave, the proposed transaction gives rise to a horizontally affected market, as the Parties  have  a
     combined share of  [30-40]% (NXP: [10-20]% and Freescale [20-30]%). However, the Parties only overlap in the narrower RF  power  transistors
     market, as in the other two possible sub-segments of SST and RF diodes, only NXP is active.

115) In the market of RF power transistors, the Parties’ combined share is of [60-70]% (NXP [20-30]% and  Freescale  [30-40]%).  Furthermore,  in
     the possible segment of RF Power transistors used in wireless infrastructure, the Parties' combined share amounts to [70-80]% (NXP  [20-30]%
     and Freescale [40-50]%).

116) The proposed transaction thus gives rise to a horizontally affected market in relation to the market for RF  power  transistors,  where  the
     Parties have a combined share of more than 20%.

3 Sensors

117) Within sensors, both NXP and Freescale have activities. However, the Parties’ combined share within sensors and/or any of the possible  sub-
     segments thereof does not give rise to a horizontally affected market.

118) Moreover, the Notifying Party submits that within sensors the Parties’ activities are largely complementary,  and  do  not  overlap,  should
     sensors be segmented at a narrower level on the basis of a sensor’s end use. On the basis of one  of  the  relevant  industry  reports,  the
     Notifying Party explained that NXP has a position in the temperature sensors and  magnetic  field,  whereas  Freescale  has  a  presence  in
     pressure sensors, inertial sensors and other types of sensors.

119) More specifically, Freescale manufactures sensors for the automotive, consumer and the  industrial  segments.  In  the  automotive  segment,
     Freescale provides products such as accelerometers, battery sensors and pressure sensors.  Consumer  applications  include  smartphones,  e-
     readers, navigation devices, and home appliances. Freescale's sensor products are also present  in  industrial  applications  (gas  pressure
     sensors, blood pressure monitoring and motion sensing).

120) Conversely, NXP offers largely two types of sensors for automotive applications: (i) silicon based sensors for determining  temperature  and
     (ii) magneto-resistive sensors (“MR sensors”) to measure rotational speed and angle. Freescale also offers MR sensors (with limited  sales),
     but these are applied in mobile phone type applications and are not suitable for automotive applications.

4 Conclusion on horizontally affected possible markets

121) In light of the above, the Commission concludes that the proposed transaction gives rise to possible horizontally affected markets  only  in
     relation to the following possible market segments, where the Parties’ combined share is more than 20%.

                                    • Application specific MCUs for the automotive sector and 8-bit MCUs;

                                    • Application specific DSP ASSPs and application specific DSP ASSPs for the automotive sector;

                                    • Application specific analog ICs for the automotive sector; and

                                    • RF and microwave, and in the market for RF Power transistors and its sub-segment of RF  power  transistors
                                      for use in wireless infrastructure.

122) These horizontally affected markets/segments are assessed by the Commission in the following sections.

2 Application specific MCUs for automotive and 8-bit MCUs

123) The Notifying Party submits that the overall value of the MCUs segment amounts to approximately USD 3.0 billion worldwide.  In  relation  to
     these products, the Parties have a combined worldwide market share of [10-20]% (NXP [5-10]%, Freescale [10-20]%). Other competitors  include
     Renesas ([20-30]%), Infineon [5-10]%) and STMicroelectronics ([5-10]%).

124) As discussed in recital (121), the proposed transaction would lead to horizontally affected markets in the potential  narrower  segments  of
     application specific MCUs for the automotive sector and of 8-bit MCUs.

1 The Notifying Party’s view

125) The Notifying Party argues that there are a large number of strong competitors within MCUs, both on the overall market and on  all  narrower
     potential segments, which will remain active post-transaction both worldwide and at the EEA level.

2 The results of the market investigation and the Commission's assessment

126) On the basis of the results of the market investigation and the information provided by the Notifying Party, the Commission  considers  that
     the proposed transaction does not raise serious doubts as to  its  compatibility  with  the  internal  market  as  regards  8-bit  MCUs  and
     application specific MCUs for the automotive sector for the following reasons.

127) First, the Parties do not hold a significant combined share on either of these segments. Table 1 below shows the  worldwide  shares  of  the
     Parties and their main competitors within MCUs and the  possible  narrower  segments,  which  are  horizontally  affected  by  the  proposed
     transaction, based on the IHS technology report, to which the Notifying Party refers.

128) In both of the segments of 8-bit MCUs and application specific MCUs for the automotive sector, the Parties’ combined  share  is  just  above
     20%. As explained in recital (100), while EEA-wide market shares are not readily available from the relevant industry reports, the Notifying
     Party has confirmed, on the basis of internal estimates, that the Parties’ shares at the EEA level  do  not  materially  differ  from  their
     worldwide shares.[47]

                    Table 1: Parties’ worldwide shares in MCUs, 8 bit MCUs and application specific MCUs for automotive (2014)

|MCUs                                       |8 bit MCUs                                 |Application specific MCUs for automotive|
|NXP                       |[5-10]%         |NXP                       |[10-20]%        |NXP                       |[0-5]%       |
|Freescale                 |[10-20]%        |Freescale                 |[5-10]%         |Freescale                 |[20-30]%     |
|Combined                  |[10-20]%        |Combined                  |[20-30]%        |Combined                  |[20-30]%     |
|Renesas Electronics       |[20-30]%        |Microchip Technology      |[10-20]%        |Renesas Electronics       |[20-30]%     |
|Corporation               |                |                          |                |Corporation               |             |
|Infineon Technologies     |[5-10]%         |Renesas Electronics       |[10-20]%        |Infineon Technologies     |[10-20]%     |
|                          |                |Corporation               |                |                          |             |
|STMicroelectronics        |[5-10]%         |Atmel Corporation         |[5-10]%         |Microchip Technology      |[5-10]%      |
|Microchip Technology      |[5-10]%         |STMicroelectronics        |[5-10]%         |STMicroelectronics        |[5-10]%      |
|Others                    |[20-30]%        |Others                    |[20-30]%        |Others                    |[20-30]%     |

                                                              Source: IHS Technology

129) Second, the results of the market investigation indicated that the Parties do not closely compete as regards MCUs, including 8 bit MCUs  and
     application-specific MCUs for automotive, both worldwide and at the EEA level.

130) Most customers responding to the Commission’s market investigation indicated that in their view the Parties do not closely  compete  in  the
     manufacture and supply of MCUs.[48] Customers commented that NXP is mainly in active in the manufacture and supply of general purpose  MCUs,
     whereas Freescale mainly operates in the “niche” segment of MCUs for the automotive sector.[49] One respondent  replied  that  the  Parties’
     portfolios in MCUs are mostly complementary.

131) Customers responding to the market investigation confirmed such findings also in relation the possible narrower  market  segments  of  8-bit
     MCUs and application specific MCUs for the automotive sector.

132) With respect to 8-bit MCUs, most respondents among customers found that NXP and Freescale are not close  competitors  in  this  segment.[50]
     The results are similar when considering automotive-specific MCUs. One customer submitted that NXP has no real focus on automotive MCUs  and
     that several other major manufacturers, such as  Texas  Instruments,  ST  Microelectronics  and  Renesas  are  active  in  the  same  market
     segment.[51] Customers’ views as regards closeness of competition between the Parties did not differ in relation to the EEA level.

133) Most competitors also submitted that NXP and Freescale do not closely compete in relation to 8-bit and automotive MCUs,[52]  but  considered
     them to closely compete in the overall MCUs market. However, all the competitors that indicated the Parties as  close  competitors  did  not
     provide support for their reasoning.[53] In addition, these same respondents, when asked  to  rank  the  top  five  market  players  in  the
     production and sale of MCUs, did not list NXP and Freescale within the top five market players.[54] Competitors’ views  did  not  differ  as
     regards the Parties’ position within the EEA.

134) In any event, the market investigation confirmed that post-transaction there will be a sufficient number of manufacturers and  suppliers  in
     the overall market of MCUs and in the segments of 8-bit and automotive MCUs, both worldwide and EEA-wide. Other  major  operators  remaining
     active in the market include Microchip, Texas Instruments, ST Microelectronics, Infineon and, in particular, Renesas, which  will  keep  its
     leading position in the market. [55]

135) Lastly, the majority of respondents to the market investigation considered that the proposed transaction would not have any  impact  in  the
     MCUs market and/or its possible sub-segments. Some customers and competitors submitted  that  the  proposed  transaction  may  also  have  a
     positive impact, as the merged entity will likely compete more vigorously in the market.[56]

136) Therefore, the Commission considers that the proposed transaction does not raise serious doubts as to its compatibility  with  the  internal
     market in relation to potential MCUs market and narrower potential markets for 8-bit MCUs and automotive MCUs, in light of the fact that the
     Parties do not have a significant combined share (their combined share being slightly over 20%), do not  closely  compete,  and  alternative
     market players will remain active post-transaction, both worldwide and within the EEA.

3 Application specific DSP ASSPs and application-specific DSP ASSPs for automotive

137) As discussed in recital (121), the proposed transaction would lead to  a  possible  horizontally  affected  market  as  regards  application
     specific DSP ASSPs and ASSPs for the automotive sector therein.

1 The Notifying Party’s view

138) The Notifying Party submits that NXP and Freescale target different applications with their application specific DSPs. NXP's DSPs  are  only
     used in car radio devices while Freescale's DSPs are used for different purpose for wired and wireless communications.

139) On that basis, the Notifying Party submits that, while the Parties’ activities may overlap within the overall  category  of  DSP  ASSP,  the
     Parties have hardly any overlap within the narrower potential markets for automotive, wired  and  wireless  communications.  NXP  is  mainly
     active in the automotive segment, whereas Freescale is specialized in DSPs for wired and wireless communications.

140) In relation to DSPs for the automotive sector, where NXP has a leading position, the Notifying  Party  explains  that  a  provider  of  non-
     automotive DSPs such as Freescale would need between two to three years and significant investment to ensure  that  its  products  meet  the
     standards qualifications required by the automotive industry.

2 The Commission's assessment

141) On the basis of the results of the market investigation and the information provided by the Notifying Party, the Commission  considers  that
     the proposed transaction does not raise serious doubts as to its compatibility with the internal market as regards application specific  DSP
     ASSPs and application specific DSP ASSPs for the automotive sector for the following reasons.

142) First, the share data provided by the Notifying Party on the basis of the relevant industry reports confirm that, while the Parties  have  a
     share above 20% in the potential overall market for application specific DSP ASSPs, they would hold a combined share below 20%  in  most  of
     the potential narrower sub-segments therein.

143) The possible narrower sub-segments of DSP ASSPs by end application are: consumer; computers and peripherals;  wireless  communications;  and
     wired communications. Within these narrower sub-segments, the proposed transaction does not raise possible horizontally affected markets.

144) In application specific DSP ASSPs for consumer uses, the Parties’ share is below 20% (NXP: [0-5]%; Freescale: [0-5]%). The Parties  have  no
     activities as regards application specific DSP  ASSPs  for  computers  and  peripherals.  Finally,  in  wireless  communications  and  wired
     communications, only Freescale is active.

145) Therefore, the Parties’ combined share raises a possible horizontally affected market only within the narrower  sub-segment  of  application
     specific DSP ASSPs for the automotive sector, where the Parties would have a combined share of [70-80]%, as mentioned in recital (109).

146) However, in this potential narrower market for application specific DSP ASSPs for the automotive sector, Freescale's position in the  market
     segment is limited, and amounts only to [0-5]%, whereas NXP has a share of [70-80]%. Therefore, the proposed transaction would cause only  a
     limited increment to the Parties’ shares. Furthermore, Freescale’s low share is due to the sale  of  a  legacy  product  line  to  only  two
     customers,[…] who continue to use the products for longer than Freescale anticipated.[57]

147) Table 2 below shows the Parties’ worldwide shares, based on the IHS technology report, which the Notifying Party relies upon.  As  explained
     in recitals (143) to (146), the Parties’ have different focus and portfolio offering within  application  specific  DSP  ASSPs.  As  regards
     wireless and wired communications, only Freescale is active, and within application specific DSP ASSPs for the automotive sector,  Freescale
     has a very limited presence compered to NXP. As explained in recital (100), while EEA-wide market shares are not readily available from  the
     relevant industry reports, the Notifying Party has confirmed, on the basis of internal estimates, that the Parties’ shares at the EEA  level
     do not materially differ from their worldwide shares.[58] Therefore, the Parties’ activities at the  EEA  level  also  do  not  overlap,  or
     overlap to a very limited extent, as regards application specific DSP ASSPs.

      Table 2: Parties’ worldwide shares in DSPs ASSP and DSPs ASSP for automotive, wireless communications and wired communications (2014)

|DSP ASSPs                          |DSP ASSPs – Automotive         |DSP ASSPs – Wireless           |DSPs ASSPs – Wired             |
|                                   |                               |Communications                 |Communications                 |
|NXP                 |[10-20]%      |NXP             |[70-80]%      |NXP             |[0-5]%        |NXP             |[0-5]%        |
|Freescale                                  |[5-10]%                                       |Freescale                                |
|NXP                       |[10-20]%        |NXP                           |[0-5]%          |NXP                      |[10-20]%       |
|Freescale                 |[5-10]%         |Freescale                     |[10-20]%        |Freescale                |[0-5]%         |
|Combined                  |[20-30]%        |Combined                      |[10-20]%        |Combined                 |[10-20]%       |
|Infineon Technologies     |[20-30]%        |Infineon                      |[20-30]%        |Texas Instruments        |[10-20]%       |
|STMicroelectronics        |[10-20]%        |STMicroelectronics            |[20-30]%        |STMicroelectronics       |[10-20]%       |
|Texas Instruments         |[5-10]%         |Bosch                         |[10-20]%        |ON Semi                  |[10-20]%       |
|Sanken Electric Company   |[5-10]%         |Texas Instruments             |[10-20]%        |Rohm                     |[5-10]%        |
|Others                    |[20-30]%        |Others                        |[10-20]%        |Others                   |[5-10]%        |

                                                  Source: IHS Technology and Strategy Analytics.

148) The shares provided above show that the Parties have no overlap in  each  of  the  segments  of  power  and  non-power  analog  devices  for
     automotive. In fact, such two possible sub-segments would not be horizontally affected by the proposed transaction. As explained in  recital
     (100), while EEA-wide market shares are not readily available from the relevant industry reports, the Notifying Party has confirmed, on  the
     basis of internal estimates, that the Parties’ shares at the EEA level do not materially differ from their worldwide shares.[60]  Therefore,
     the Parties’ activities at the EEA level as regards application specific analog ICs for automotive also do not overlap when considering  the
     narrower possible segments of power and non-power analog ICs therein.

149) Second, most respondents to the market investigation confirmed that the Parties do not closely compete in the manufacturing  and  supply  of
     automotive analog ICs, both at worldwide and at EEA level.[61] Those results are also confirmed by the fact that, as also shown by the share
     data included in Table 3 above, NXP is only active in power analog ICs and Freescale in non-power analog ICs.[62]

150) Third, the majority of respondents to the market investigation consider that a sufficient number of manufacturers  will  remain  present  in
     these segments post-transaction, both  at  worldwide  and  at  EEA-wide  level.  These  players  include  Infineon,  Texas  Instruments,  ST
     Microelectronics, with shares higher than the combined entity in the Power Analog ICs segment, and shares close to NXP  in  the  non-  power
     analog ICs segment.

151) In addition, within the automotive market segment, the Commission also focused its  assessment  on  the  categories  of  system  base  chips
     (“SBCs”) and In Vehicle Networking (“IVN”), where the Parties’ offerings in the automotive sector overlap or appear to be  more  significant
     based on contact with third parties during pre-notification. [63] These products partially include analog ICs and thus, for the  purpose  of
     the present decision, will be discussed in this section as possible sub-segments of the market for application specific analog ICs  for  the
     automotive sector.

152) Therefore, the Commission considers that the proposed transaction does not raise serious doubts as to its compatibility  with  the  internal
     market in relation to the potential market for Analog ICs in the automotive sector, as well as in the narrower potential markets  for  power
     and non-power Analog ICs in the automotive sector, in light of the fact that the Parties have a low combined market share,  do  not  closely
     compete, and alternative market players will remain active post-transaction, both at worldwide level and within the EEA.

1 SBCs

153) SBCs are a type of IC consisting of a number of components that are integrated into a single device. In the design stage,  these  components
     are integrated and subsequently printed on the same silicon die in the wafer fabs. The majority of the components in an SBC are analog power
     devices such as power supply, drivers, switches, diagnostics or watchdog.

154) SBCs are used in the automotive industry to perform the analog power functions of various automotive electronic control units (“ECUs”).  The
     same functions can often be performed by the relevant standalone components assembled together. There is no standard type or  form  of  SBC.
     SBCs can include different components depending on the supplier's or  on  the  customer's  requirements,  and  customers  can  select  other
     similarly integrated devices with similar functionality as alternatives to SBCs.

155) NXP sells SBCs that include voltage regulators and  transceivers  for  application  in  the  automotive  industry,  in  particular  for  IVN
     functionality. Freescale's SBCs are comprised of power analog blocks, transceivers, and sometimes also MCUs.

156) The Commission understands that industry reports do not comprise separate sales data as regards SBCs.

157) Most customers that responded to the market investigation did not consider NXP and Freescale to closely compete  in  the  manufacturing  and
     sale of SBCs, either at worldwide or at EEA-wide level.[64] These respondents  also  indicated  different  market  players  as  the  closest
     competitors for each of NXP and Freescale, and considered that the same competitive conditions  of  analog  ICs  also  apply  to  SBCs.  One
     respondent submitted that NXP is mainly active in CAN/LIN SBCs where Infineon is its closest competitor, while Freescale is focused on Motor
     control SBCs where Renesas and Texas Instruments are its closest competitors.

158) The results of the market investigation report that a sufficient number of manufacturers will  be  present  in  this  market  segment  post-
     transaction, both at worldwide and at EEA-wide level.[65] Other competitors active in the market segment include  large  suppliers  such  as
     Infineon, Renesas, ST Microelectronics, Atmel and Texas Instruments. [66]

159) Therefore, the Commission considers that the proposed transaction does not raise serious doubts as to its compatibility  with  the  internal
     market as regards SBCs.

2 IVN

160) The various ECUs that can be used across various car applications are linked with each other through the car's IVN. The IVN is a  collection
     of various interface technologies that act as the car's nervous system.

161) Non-power analog transceiver devices are required for the ECUs to move signals by transmitting signals to  or  receiving  signals  from  the
     car's data bus. Transceivers use different interface technologies depending on the data bandwidth and safety requirements. These  interfaces
     are well-defined and standardised formats used for exchanging messages with varying data bandwidth. The four main IVN  technologies  in  the
     automotive industry are: LIN (low-speed single-mastered/multiple-slave serial networking  protocol),  CAN  (multiple-master  serial  network
     protocol), FlexRay (next-generation protocol enabling high-bandwidth) and RF/Ethernet.

162) For some IVN applications, it is also possible to use SBCs as these consist of a number of integrated  components,  including  power  analog
     devices such as power supply, drivers, switches, diagnostics or watchdog.

163) As regards IVN, NXP sells non-power analog ICs in the automotive industry, which  are  also  used  for  IVN  functionality.  Therefore,  the
     majority of NXP's IVN portfolio consists of non-power analog standalone transistor ICs, with some additional sales in FlexRay standalone non-
     power analog ICs and limited sales in power-analog SBCs. Freescale’s sales in power analog ICs in the automotive sector include SBCs for IVN
     application.

164) The results of the market investigation confirmed that NXP and Freescale are  both  active  in  the  provision  of  IVN,  but  most  of  the
     respondents among customers and competitors indicated that they do not closely compete, either at  worldwide  or  at  EEA-wide  level.  Some
     respondents highlighted that, even if NXP is a leader  in  this  market  segment,  the  two  companies  have  complementary  products.  Some
     respondents argued that in this segment Freescale is focused on the combination with MCUs and relying on the provision of transceivers  from
     other suppliers, while NXP produces its own transceivers.[67]

165) Customers also considered that post-transaction there will be a sufficient number of players in the IVN segment, both at  worldwide  and  at
     EEA-wide level, that the merger will not change the competitive landscape in the IVN segment and that several suppliers would  still  remain
     active and for this reason the proposed transaction would not affect the dynamics in the market segment.[68]

166) Competitors expressed more mixed views on competition post-transaction. Some competitors considered that the  merged  entity  would  have  a
     very substantive share of sales in the IVN segment, with the other competitors following at  a  far  distance.  However,  other  competitors
     explained that, although the merged entity would have a significant position in IVN, the merger would not impact the market, since  NXP  was
     very strong in IVN even before the proposed transaction.[69] In any case, respondents indicated that other suppliers would remain active  in
     the market segment including Infineon, Renesas, Atmel and Texas Instruments. [70]

167) Therefore, the Commission considers that the proposed transaction does not raise serious doubts as to its compatibility  with  the  internal
     market as regards IVN systems.

4 RF Power transistors

168) As mentioned in recital (114), the Parties’ combined share is above 20% within RF power and  microwave.  However,  the  Parties’  activities
     overlap and are above 20% only as regards the narrower market for RF power transistors, whereas Freescale has no activities in the other two
     possible sub-segments of SSTs and RF diodes.

169) Therefore, in this section the Commission will carry out its competitive  assessment  only  with  reference  to  the  market  for  RF  power
     transistors.

1 The Notifying Party’s view

170) The Notifying Party submits that both Parties are large manufacturers of RF power transistors. However, NXP plans to  divest  its  RF  Power
     transistors business, thereby removing the entire overlap between the Parties' activities with respect to RF power transistors.

2 The results of the market investigation and the Commission’s assessment

171) The overall value of the RF Power transistors market amounts to approximately USD 1.5 billion worldwide.  In  relation  to  these  products,
     based on the information provided by the Notifying Party, the Parties have a combined worldwide market  share  of  [60-70]%  (NXP  [20-30]%,
     Freescale [30-40]%). Other competitors include Infineon, Mitsubishi and Qorvo. These shares are illustrated in Table 4 below. The  Notifying
     Party has confirmed that Parties' shares at EEA-level do not materially differ from those at world-wide level, and  thus  they  remain  very
     high within the EEA.

     Table 4: The Parties’ worldwide market shares in the RF Power Transistors

|RF power transistors                                                                                                          |
|                               |2012                           |2013                           |2014                           |
|NXP                            |[10-20]%                       |[20-30]%                       |[20-30]%                       |
|Freescale                      |[20-30]%                       |[30-40]%                       |[30-40]%                       |
|Combined                       |[40-50]%                       |[50-60]%                       |[60-70]%                       |
|Infineon Technologies          |[10-20]%                       |[10-20]%                       |[5-10]%                        |
|Mitsubishi                     |[10-20]%                       |[5-10]%                        |[5-10]%                        |
|M/A-Com Technology solutions   |[5-10]%                        |[5-10]%                        |[0-5]%                         |
|Qorvo                          |[0-5]%                         |[0-5]%                         |[0-5]%                         |
|Cree                           |[0-5]%                         |[0-5]%                         |[0-5]%                         |
|Microsemi                      |[0-5]%                         |[0-5]%                         |[0-5]%                         |
|Skyworks solutions             |[0-5]%                         |[5-10]%                        |[0-5]%                         |
|Others                         |[10-20]%                       |[10-20]%                       |[0-5]%                         |

                                                              Source: IHS Technology

172) The Parties’ position is even stronger in the narrower segment of  RF  power  transistors  for  wireless  infrastructure,  which  represents
     approximately […]% and […]% of respectively NXP's and Freescale's RF Power business. On this segment, the Parties’ combined worldwide market
     share is [70-80]% (NXP [20-30]%, Freescale [40-50]%) and Infineon [10-20]%) and SEDI [5-10]%)[71] would be the only other operators  with  a
     meaningful market presence. Furthermore, the Notifying Party estimates that the Parties' combined share for LDMOS RF power  transistors  for
     wireless infrastructure would be [80-90]% (NXP: [20-30]%, Freescale: [50-60]%) with Infineon [10-20]%)  being  the  only  other  significant
     competitor.

173) Finally, in two other possible segments of the RF Power transistors market, the proposed transaction gives  rise  to  horizontally  affected
     markets: in the industrial, scientific, medical (ISM) and broadcast segments, the Parties estimate that they have a combined market share of
     over [60-70]%. In the ISM segment, the Parties would have a combined market share of approximately [60-70]% (NXP: [40-50]%,  Freescale  [20-
     30]%) and in the broadcast segment they would have a combined market share of [70-80] (NXP: [60-70]%, Freescale [10-20]). [72]

174) According to the Guidelines on the assessment of horizontal mergers under the Council Regulation on the control  of  concentrations  between
     undertakings (the "Horizontal Merger Guidelines"), market shares and concentration levels provide useful first  indications  of  the  market
     structure and of the competitive importance of the Parties and their competitors.[73] The larger the market share, the more likely a firm is
     to possess market power. And the larger the addition of market share, the more likely it is that a merger will lead to significant  increase
     in market power.[74] The Horizontal Merger Guidelines indicate that very large market shares - 50 % or more - may in themselves be  evidence
     of the existence of a dominant market position.[75]

175) In the present case, NXP and Freescale are the number one and two supplier in the market for RF power transistors and the Parties'  combined
     share will be over [60-70]% in the RF power transistors market and even higher in the segment of RF transistors for wireless infrastructure,
     ISM and broadcast. Therefore, the proposed transaction will create a dominant market player and, as  a  result,  give  rise  to  competition
     concerns.

176) The market investigation also confirmed that Freescale and NXP are the  two  main  suppliers  of  RF  Power  transistors  worldwide  and  in
     particular of RF power transistors employing LDMOS technology[76], and that they closely compete  with  each  other.[77]  For  example,  one
     customer explained that, as far as LDMOS RF power transistors are concerned, “Freescale is the  dominant  market  leader  followed  by  NXP.
     Infineon remains a distant third”.[78]

177) In relation to Freescale, one respondent commented that “Freescale has a very  strong  technology  base  in  LDMOS  and  integrated  passive
     devices (IPD) matching elements, as well as a very strong plastic overmold packaging technology. Freescale also has a very  broad  portfolio
     of products in all RF Power applications (cellular and other). It has a very large and experienced R&D team in several locations  worldwide.
     Moreover, Freescale has a very strong application knowledge and ability to  design  circuits  for  customers.”[79]  Other  respondents  also
     submitted that Freescale had potentially the broadest and best product portfolio in the RF power transistors sector. In relation to NXP, one
     respondent noted that “NXP recently launched a new family of RFIC[80] (MMIC)[81] products. NXP has a very  strong  customer  support  and  a
     worldwide application engineering network.”[82]

178) The Parties' internal documents confirm the intense rivalry between NXP and Freescale. In one internal document, NXP targets  leadership  in
     the RF power transistors for wireless infrastructure and in this context identifies Freescale as its main competitor from which  intends  to
     gain market share.[83] Freescale's internal documents also indicate NXP as its main competitor in RF power transistors.  As  illustrated  in
     the picture below, NXP's product portfolio is the most comparable to that of Freescale and Freescale also identifies NXP  as  aggressive  on
     price and R&D.[84]

                                       Figure 1 - Freescale's internal documents – RF competitive landscape

                                                                       […]

179) In another internal document, Freescale notes in relation  to  RF  Power  transistors:  “Taken  share  from  NXP,  plus  build  out  of  LTE
     infrastructure in China, India and Europe over 2015-2018 will sustain growth. With [60-70]% market share and some pick up from NXP, how much
     to go for and what happens when the LTE slows?”[85]

180) In addition, most respondents to the market investigation believe that there should be at least three competitors in  the  RF  power  market
     for a healthy competition[86] and that post-transaction there would not be enough alternative providers left in the market.[87]

181) The market investigation showed that most customers have more than one potential  supplier.  A  competitor  indicated  that:  “all  6  major
     customers (Ericsson, Huawei, Nokia, Alcatel-Lucent, ZTE, Samsung) have high-level relationships with at least 2 (or  all  3)  of  the  major
     LDMOS suppliers (Freescale, NXP, Infineon). A few of these customers have already established similar relationships with GaN-on-SiC  vendors
     (e.g. Sumitomo, RFHIC). Due to the strategic importance of RF Power products for their wireless infrastructure  business,  all  6  customers
     have policies in place to ensure that they do not become overly dependent on 1 or 2 vendors.”[88]

182) Additionally, the Commission notes that entry in the market for RF Power transistors is difficult, if not very  difficult:  all  respondents
     to the market investigation explained that entry on the market required serious investment (several million dollars) and time (at least  two
     years).[89] Furthermore, according to market participants, there has been no significant entrant for the supply of  LDMOS  transistors,  but
     there have been several entrants using the GAN-on-SIC technology.[90] This fact aggravates the anticompetitive effects of the merger, as the
     difficulty and unlikelihood of market entry makes it more likely that the merger would pose significant anti-competitive risks.

183) In light of the above, the Commission concludes that the proposed transaction raises  serious  doubts  as  to  its  compatibility  with  the
    internal market in relation to RF Power transistors and, at a further level of  segmentation  of  RF  power  transistors  for  (i)  wireless
    infrastructure, (ii) ISM and (iii) broadcast.

5 Conclusion on competitive assessment

184) The Commission concludes that, irrespective of whether the markets for semiconductors are worldwide or EEA-wide,  the  proposed  transaction
    does not raises serious doubts as to its compatibility with the internal market with regard to application specific MCUs for the  automotive
    sector and 8-bit MCUs, application specific DSP ASSPs and application specific DSP ASSPs for the  automotive  sector,  application  specific
    analog ICs for the automotive sector and other potential narrower segments for the automotive industry.

185) The proposed transaction raises serious doubts as to its compatibility with the internal market in relation to RF Power transistors and,  at
    a further level of segmentation of RF power transistors for (i) wireless infrastructure, (ii) ISM and (iii) broadcast.

       COMMITMENTS

186) In order to remove the competition concerns arising from the proposed transaction described in Section V.5, the  Notifying  Party  submitted
     commitments as a fix-it-first solution (that is to say that the Notifying Party identified and entered into a legally binding agreement with
     a buyer outlining the essential of the purchase during the Commission procedure[91]) on the same day of formal notification of the  proposed
     transaction (the "First Commitments"). The Commission launched a market test of the First Commitments on 10 August 2015,  seeking  responses
     from customers (including all major customers of RF power transistors for wireless infrastructure) and competitors of the Parties.

187) The Commission communicated the preliminary results of the market test and the Commission's assessment  of  the  First  Commitments  to  the
     Notifying Party on 20 August 2015.

188) In light of the procedural developments in the review of the transaction by the U.S. Committee on Foreign Investment in  the  United  States
     ("CFIUS") as further described in Section VI.1.2, the Notifying Party submitted the Final  Commitments  on  16  September  2015.  The  Final
     Commitments consist of a revised set of commitments, essentially transforming the First Commitments into an up-front buyer remedy,  that  is
     to say, the Notifying Party submitted the same remedy in scope and undertook not to complete the proposed transaction before having  entered
     into a binding agreement with a purchaser for the divested business, purchaser which first has to be approved by the Commission.

1 Description of the proposed commitments

1 First Commitments

189) The First Commitments consist of the divestment of NXP's entire RF Power business (the “RF  Power  business”)  as  a  fix-it-first  solution
     aiming to eliminate the entire overlap between the Parties’ activities in RF Power transistors for all applications. The Divestment Business
     did not exist pre-merger as a separate legal entity within NXP. It was therefore carved out by NXP from its existing semiconductor  business
     and included the following assets (that will be transferred to newly created legal entities):

                                   a. All tangible assets required for the operation, production and sales of the RF Power  business,  including
                                      but not limited to:

              i. The ownership of part of the manufacturing  facility  located  in  Cabuyao  (Philippines)  ("APP")  used  or  held  for  use  in
                 manufacturing products of the RF Power business and all manufacturing equipment of the APP manufacturing facility used  or  held
                 for use in manufacturing products of the RF Power business;

             ii. Selected assets at NXP’s facility in Hamburg (Germany) ("DHAM") that are currently used exclusively for the RF Power business in
                 the backside metallization and thin wafer grinding processes;

            iii. Selected assets at NXP's facility in Kaoshiung (Taiwan) ("APK") that are currently used exclusively for the RF  Power  business,
                 in back-end manufacturing processes, including wafer testing and sawing and the assembly and testing of plastics packages;

             iv. All R&D assets currently used exclusively for the RF Power business, including all lab and pilot line (product  development  and
                 sample production) equipment in Nijmegen (the Netherlands) and Shanghai (China) and application  lab  equipment  in  Smithfield,
                 Rhode Island (US), Nijmegen (the Netherlands), Shanghai and Shenzhen (China), and lab equipment in Toulouse (France);

              v. All customer support equipment in Kista (Sweden), Oulu (Finland), Chengdu and Xian (China), Seoul (South Korea) and Dallas (US);
                 and

             vi. All raw materials, finished goods, dies, work-in-process and goods in transit allocated to the  APP  manufacturing  facility  or
                 physically located elsewhere thereafter in the flow, and finished goods allocated to APK in Taiwan, to  the  extent  that  these
                 goods consist of, or are intended for use in the manufacture and packaging of products of the RF Power business.

                                   b. All intangible assets required for the operation, production and sales of the RF Power business, including
                                      but not limited to:

              i. All patents and technologies that are exclusively or predominantly used for the RF Power business;

             ii. Four unregistered trademarks;

            iii. A non-exclusive, non-transferable, irrevocable, world-wide, royalty-free, fully paid-up license to use all other NXP patents and
                 technologies required by the RF Power business;

             iv. A non-exclusive, non-transferable, irrevocable, world-wide, royalty-free, fully paid-up license to use all third  party  patents
                 and technologies licensed to NXP for the RF Power business, provided that NXP has the right to grant sublicenses; and

              v. Temporary licenses to use NXP's trademarks (including the brand name of NXP) exclusively for the  RF  Power  Transistors  for  a
                 period of nine months from Closing.

                                   c. All customer and supplier contracts, R&D contracts, records and related materials necessary to operate the
                                      RF Power business, to the extent permitted under those arrangements.

190) The new holding company of the Divestment Business, Samba Holdco Netherlands B.V. ("Samba"), has been  incorporated  and  is  registered  in
     Eindhoven (the Netherlands). Its place of management and operation will be Nijmegen (the Netherlands). Samba will be the operational company
     for the Netherlands, and will also own five subsidiaries respectively registered and operational in  Shanghai  (China),  Toulouse  (France),
     Cabuyao (Philippines), Kista (Sweden), and Smithfield, Rhode Island (USA). In Finland, South Korea, Japan, Hong Kong and the United Kingdom,
     Samba will be registered as a branch office and all local assets and liabilities will be transferred to Samba.

191) The RF Power  business  comprises  researching,  designing,  developing,  testing,  manufacturing,  commercializing,  packaging,  marketing,
     distributing, selling and/or servicing of RF Power transistors.

192) With specific respect to RF power transistor manufacturing, it should be noted that the manufacturing of these  products  comprises  several
     steps, which can be broadly grouped into front-end manufacturing and back-end manufacturing.

193) Front-end manufacturing consists first of the printing of the circuitry on semiconductor material (“wafers”). An RF Power  transistor  is  a
     module with 4 to 16 ICs that are packaged together in one module package. An LDMOS RF Power Transistor consists of 1-4 LDMOS ICs,  and  3-12
     Metal Oxide Silicon Capacitors ("MOSCAPs"). MOSCAPs are standard products and represent the "simple" components of an RF Power transistor. A
     GaN RF Power transistor consists of 1-4 GaN ICs, and 3-12 MOSCAPs.

194) The subsequent phases in the front-end manufacturing of RF Power transistors are grinding (thinning) and backside metallization  of  wafers.
     Grinding makes a wafer thinner and backside metal is then applied to enhance thermal connectivity to the  package  and  therefore  the  heat
     dissipating capacity.

195) Back-end manufacturing involves the assembly and packaging in non-plastic (high-end) packaging or in plastic (low-end) packaging.  Different
     package material and packaging processes are applied that will determine the heat dissipation capacity of the RF Power transistors. The best
     heat dissipation for high power devices is typically offered by non-plastic packages (ceramic and  air  cavity  packages),  whereas  plastic
     packages (such as quad flat no-lead and overmolded plastic packages) offer a lower ability for heat dissipation.  After  packaged,  products
     are then assembled and tested.

196) The front-end manufacturing is currently carried out by NXP in the sites of ICN8 (Nijmegen, the Netherlands) and DHAM  (Germany).  The  ICN8
     site is the main location for the front-end manufacturing. In the ICN8 site only [ a very limited part]  […] of the capacity is used for the
     RF Power transistors manufacturing, with the rest of the capacity being used for the manufacturing of  other  semiconductor  products.  ICN8
     does not have production lines separated per specific products, but consists of numerous and different categories  of  tools  and  machines,
     that are capable of running a multitude of different "recipes" for the manufacturing of different wafers in a cost effective way. As regards
     the DHAM site, only [a limited part][…] of the capacity is used for RF Power transistors manufacturing with the rest of the  capacity  being
     used for the manufacturing of other semiconductor products.

197) The back-end manufacturing is currently carried out by NXP in its plants of APK (Taiwan) and APP (the Philippines).

198) Wafer testing for all RF Power transistors is currently performed at NXP's APK site in Taiwan. Already prior to  the  proposed  transaction,
     NXP planned to move wafer testing to the APP site in the Philippines in […] . The  assembly  and  final  testing  in  plastic  packaging  is
     currently done at the APK site, where [ a very limited part][…] of the capacity is used for the manufacturing of RF Power transistors.

199) The assembly and final testing of all other non-plastic packages is currently performed at NXP's APP site in the Philippines. Around […]  of
     the manufacturing space in the APP site is used for the manufacturing of RF Power transistors, and there are dedicated production lines  for
     the manufacturing of the RF Power transistors in a separate area of this site. The  manufacturing  activities  at  the  APP  site  represent
     approximately 85% of the total manufacturing costs of RF Power transistors.

200) Based on the First Commitments, the Divestment Business' manufacturing activities would be organised as follows:

201) The front-end manufacturing of LDMOS wafers will be outsourced to a (pre-identified) third party foundry […], Thus, no current equipment  of
     NXP for the front-end manufacturing will be transferred to the Divestment Business, which will rely on the foundry agreement for its  front-
     end manufacturing.[92] The Notifying Party submitted that many providers of semiconductor devices rely on third-party  “fabrication”  plants
     (also called "fabs" or "foundries"). A foundry manufactures in  its  fab  many  other  semiconductor  products  on  machines  that  are  not
     specifically dedicated to RF Power or other semiconductor products, and will use these machines to manufacture for the  Divestment  Business
     as well. In fact, although for historic reasons NXP has been producing RF Power wafers in-house, […].

202) Nevertheless, all R&D assets used by the RF Power business, including lab and pilot lines in various locations, as well  the  R&D  personnel
     currently working for the RF Power, business will be transferred to the Divestment Business.

203) As for the back-end manufacturing (packaging and wafer testing), under the First Commitments, NXP offered to  transfer  the  activities  and
     assets from the APK and APP sites to the Divestment Business in the APP Philippines site. The Divestment Business would relocate the  assets
     in a separate building in the APP site next to the NXP's (remaining) facilities in the site.[93] The Divestment  Business’  assets  will  be
     physically separated from the other remaining NXP's assets in APP, which will be used for the manufacturing of other semiconductor  products
     of NXP.[94]

204) As a result, the Divestment Business would concentrate its (LDMOS and MOSCAP) RF Power transistors manufacturing activities in two  physical
     sites, the third party foundry site for front-end manufacturing and the APP site in the Philippines for back-end manufacturing, compared  to
     the four different sites where NXP's manufacturing process is currently located.

205) Finally, as part of the First Commitments, NXP’s existing contracts with third party  foundries  for  the  wafer  supply  of  GaN  RF  Power
     manufacturing will also be assigned to the Divestment Business. The Divestment Business already works with a third party  foundry,[…].  Both
     these foundry services supplier contracts with these two partners will be assigned to the Divestment Business, which will also have all GaN-
     on-SiC process engineers and relevant IP.

206) In order to ensure that the Divestment Business can operate during the period of the transfer  and  re-location  of  the  assets,  NXP  also
     committed under the First Commitments to enter into a manufacturing services agreement (“MSA”)[95] and a  transitional  services  agreements
     (“TSAs”) with the Divestment Business.

207) First, through the MSA, NXP committed to provide to the Divestment Business the front-end and back-end manufacturing in  relation  to  LDMOS
     RF Power transistors for the time necessary for the Divestment Business to start relying on the front-end manufacturing  activities  of  the
     third party foundry. The services under the MSAs would be provided at cost and most of them for a duration between […] from the  Closing  of
     the transaction.

208) Only in relation to the provision of front-end manufacturing of the LDMOS wafers, the MSA envisages a duration of the services for a  period
     of five years, with the possibility of a […]extension.

209) Under the First Commitments,  immediately  after  closing,  the  Divestment  Business  will  start  the  transfer  of  the  LDMOS  front-end
     manufacturing to the foundry partner.

210) The older generations of LDMOS […] will not be transferred to […] For these LDMOS wafers, the Divestment Business will rely on the MSA  with
     NXP to supply the wafers, through NXP’s front-end manufacturing in its ICN8 site. On the other hand, the front-end  manufacturing  of  LDMOS
     […] generation and of the upcoming generation LDMOS […] will be transferred  from  NXP  to  the  foundry  partner.  The  LDMOS  […]  process
     technology was expected to be fully released in the foundry partner by […]  and the LDMOS […] process technology by […].

211) For these […] LDMOS generations, new products will be released at the foundry partner only after their transfer. For the products  of  LDMOS
     Generations […] which will have already been released at ICN8, NXP will  continue  to  supply  to  the  Divestment  Business  the  front-end
     manufacturing as part of the MSA. The Notifying Party explained that this is necessary because otherwise customers would need  to  requalify
     the new foundry for the front-manufacturing of products already released in ICN8.[96]

212) In the Notifying Party’s view, should the front-end manufacturing of products already released in ICN8 also be transferred  to  the  foundry
     partner by the Divestment Business, customers would not be willing to carry out the requalification for those products,  given  that  it  is
     extremely time consuming and costly. This would hamper the viability of the Divestment Business, as customers would not rely on it. For that
     reason, the Notifying Party argues, the MSA will cover also LDMOS Generation […] products already released in ICN8, in addition to  previous
     generations of LDMOS, so that customers need not requalify.

213) Second, the TSAs included in the First Commitments covered various services that NXP will provide to the Divestment Business  such  as:  (i)
     IT, (ii) marketing and sales, (iii) finance and  accounting,  (iv)  pensions,  (v)  supply  chain  management,  (vi)  purchasing,  regarding
     purchasing support capacity and master data administration, (vii) R&D support, (viii) real estate, (ix) quality and  reliability,  including
     reliability testing and failure analysis, (x) human resources, (xi) technical assistance in relation to transferred IP,  and  (xii)  various
     services at the APP facility in Cabuyao, Philippines. The services under the TSAs would be provided at cost and for a  duration  of  between
     […] from the Closing of the transaction. The Commission launched a market test on the First Commitments on 10 August 2015.

214) Most of the customers responding to the market test identified the Divestment Business as  a  viable  and  standalone  business  capable  to
     compete effectively on the market.[97] One customer noted that the Divestment Business was already moving to a  standalone  business  before
     the divestment, and will have the same products as before.

215) As regards the scope of the First Commitments, most respondents found that the Divestment Business would have  all  the  necessary  tangible
     and intangible assets to operate as an independent and viable business on the market.[98] One customer indicated that all parts  of  the  RF
     Power division are included in the Divestment Business and that the terms and conditions of the technology transfer to  the  new  wafer  fab
     allow business continuity. Another customer commented that the Divestment Business would be successful, as long as the relationship with the
     third part foundry could be set up to ensure production. Respondents to the market test also agreed that the  Divestment  Business  included
     all the necessary R&D assets and personnel.[99]

216) As regards the outsourcing of front-end manufacturing of RF power, respondents agreed that the Divestment Business could be effectively  run
     while relying on a third party foundry  for  that  purpose.[100]  Some  respondents  raised  the  concern  that  outsourcing  the  front-end
     manufacturing to a third party (as opposed to carrying out such activity in-house, as NXP currently does for the majority of  its  LDMOS  RF
     power transistors) may put the Divestment Business at a competitive disadvantage  (in  terms  of  manufacturing  flexibility,  supply  chain
     management, etc.). In particular, these respondents noted that special knowledge and expertise are needed to make wafers for  RF  power  and
     that much depends on the quality of the personnel, and that close cooperation between technical and project  management  is  necessary.  One
     customer explained that the Divestment Business and the foundry will need a solid agreement to make sure  the  process  functions  properly.
     Others highlighted the importance of adjusting the process to meet specific requirements of LDMOS wafers, and that  it  would  be  important
     that a foundry partner allows this.

217) However, most respondents found that there would not be difficulties  in  running  the  Divestment  Business  while  relying  on  a  foundry
     partner.[101] One customer commented that there could be challenges, but that it should be possible to  manage  communication  across  sites
     effectively. Most customers also indicated that the production of LDMOS wafers does not require specific technology or equipment, and can be
     carried out by third party foundries.[102] In this sense, one customer explained that many foundries have equal  or  better  processes  than
     most semiconductor suppliers and are able to innovate faster, as many of their customers would rely on their accumulated  critical  mass  of
     production. One customer commented that, given that the transition to the third party foundry will be made step by step and with appropriate
     qualifications, this will not impact product quality and reliability. The market test also confirmed that the selected foundry  partner  […]
     has the required knowledge, expertise and means to serve as a foundry partner to the Divestment Business.[103]

218) As regards the MSA, respondents to the market investigation confirmed that a manufacturing arrangement is essential to ensure the  viability
     of the Divestment Business.[104] One customer explained that it would be a significant expense to have to re-qualify  products  and  efforts
     should be made to eliminate or minimize this. Another commented that the transfer of products to a new wafer fab is extremely difficult  and
     all products need to be re-qualified, and that the MSA would provide stable business continuity without  transfers.  Customers  also  agreed
     that the MSA would not affect the viability and the independence of the Divestment Business.[105]

219) Most of the respondents also agreed that the Divestment Business can be run as a viable competitive force while relying  on  the  TSAs  with
     NXP[106] and, further, confirmed that the timing and pricing structure proposed as appropriate.[107] In particular one customer  highlighted
     how NXP and the Divestment Business will have a good working relationship since they have been working together as one company and there  is
     no reason why this should change in the future.

220) Most of the respondents to the market test considered that, overall, the Divestment Business is a viable and stand-alone business that  will
     be able to compete effectively on the market[108] and that customers will continue to purchase products from the  Divestment  Business  post
     transaction.[109]

2 Final Commitments

221) The First Commitments were submitted as a fix-it-first solution. On 27  May  2015  NXP  signed  a  Sales  Purchase  Agreement  (“SPA”)  with
     Jianguang Asset Management Co. Ltd (“JAC”) of China, for the sale of the Divestment Business. JAC is a subsidiary of the private equity  JIC
     Capital ("JIC") – a state-controlled Chinese investment company.

222) The sale of the Divestment Business to the proposed purchaser JAC is, among other things, subject to a regulatory approval by the  Committee
     on Foreign Investment in the U.S. (“CFIUS”).

223) CFIUS is authorized by the U.S. President to investigate the impact on U.S. national security of mergers that could result in control  of  a
     U.S. business by a foreign person. The CFIUS review entails a first phase review that may last up to 30 days. After that, CFIUS may initiate
     an additional 45-day investigation (an in-depth review). In exceptional circumstances, when CFIUS cannot decide on a recommendation or  when
     the transaction should be suspended or blocked, the matter may be referred to the U.S. President who will have 15 more days to decide on the
     case, and in this scenario the CFIUS process may take up to 90 days in total.

224) During the first phase investigation, it became clear that the CFIUS review process of JAC's acquisition of the  Divestment  Business  would
     likely not be completed before the deadline for a Commission decision in first phase. As a result, the Commission would not be in a position
     to assess, as part of its phase I investigation, the possible impact of the outcome of the CFIUS review process  on  the  viability  of  the
     Divestment Business in the hands of JAC.

225) […].

226) Although the Notifying Party was confident of a positive outcome of the CFIUS review process, to address the uncertainty stemming  from  the
     timing and outcome of this, NXP submitted the Final Commitments on 16 September 2015.

227) The Final Commitments comprise in terms of scope the same Divestment Business as the First Commitments. However  they  provide  for  an  up-
     front buyer clause instead of a fix-it-first solution. Therefore, the proposed transaction  will  not  be  implemented  before  NXP  or  the
     appointed divestiture trustee has entered into a final binding sale and purchase agreement for the sale of the Divestment Business  and  the
     Commission has approved the purchaser and the terms of sale.

228) In more detail, the Final Commitments comprise the same tangible and intangible assets that were included in the First Commitments.

229) Moreover, NXP also commits to provide for as long as required manufacturing and transitional services to the Divestment  Business  upon  the
     purchaser's request. These services comprise (but are not limited to) the services to be provided  under  the  MSA  and  TSA  of  the  First
     Commitments. However, the duration of these manufacturing and transitional services is not specified in the  Final  Commitments.   NXP  also
     committed to provide any other services that may be requested by the purchaser, as well  as  to  include  in  the  Divestment  Business,  if
     necessary, an agreement with a reputable wafer foundry partner.

230) Finally, NXP commits to put in place all necessary measures to ensure that no commercially  sensitive  information  is  shared  between  the
     Divestment Business and NXP as a result of the implementation of the transitional agreements beyond what is strictly necessary  for  NXP  to
     comply with these agreements.

231) Because the Final Commitments encompass in scope the same Divestment Business as the First Commitments and the  market  test  of  the  First
     Commitments was positive regarding the scope of the Divestment Business, the Commission did not consider it necessary to carry  out  another
     market test of the Final Commitments.

2 The Commission’s assessment

1 Remedies principles

232) According to the Commission's notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission  Regulation  (EC)
     No 802/2004 (the "Remedies Notice"), where a concentration raises serious doubts as to its  compatibility  with  the  internal  market,  the
     parties may undertake to modify the concentration so as to resolve the competition concerns identified by the Commission  and  thereby  gain
     clearance of their merger.[110]

233) The following principles from the Remedies  Notice  apply  where  parties  choose  to  offer  commitments  in  order  to  restore  effective
     competition.

234) It is for the parties to the concentration to put forward commitments.[111] The Commission only has power to  accept  commitments  that  are
     deemed capable of rendering the concentration compatible with the internal market.[112] In Phase I, commitments can only be  accepted  where
     the competition problem is readily identifiable and can easily be remedied. The competition problem therefore needs to be so straightforward
     and the remedies so clear-cut that it is not necessary to enter into an in-depth investigation and that the commitments  are  sufficient  to
     clearly rule out serious doubts within the meaning of Article 6(1)(c) of the Merger Regulation. Where  the  assessment  indicates  that  the
     proposed commitments remove the grounds for serious doubts on this basis, the Commission clears the merger in phase I.[113]

235) Although normally the divestiture of an existing viable standalone business is required, the Commission taking into  account  the  principle
     of proportionality, may also consider the divestiture of businesses which have existing  strong  links  or  are  partially  integrated  with
     businesses retained by the parties and therefore need to be 'carved out' in those respects. However, the Commission is only able  to  accept
     such commitments if it can be certain that, at least at the time when the business is transferred to the purchaser, a viable business  on  a
     standalone basis will be divested and the risks for the viability and competitiveness caused by the carve-out will thereby be reduced  to  a
     minimum.

236) The divested activities must consist of a viable business that, if operated by a  suitable  purchaser,  can  compete  effectively  with  the
     merged entity on a lasting basis and that is divested as a going concern. The business must include all the assets which contribute  to  its
     current operation or which are necessary to ensure its viability and competitiveness and all personnel which are currently employed or which
     are necessary to ensure the business' viability and competitiveness.[114]

237) Personnel and assets which are currently shared between the business to  be  divested  and  other  businesses  of  the  parties,  but  which
     contribute to the operation of the business or which are necessary to ensure its viability  and  competitiveness,  must  also  be  included.
     Otherwise, the viability and competitiveness of the business to be divested would be  endangered.  Therefore,  the  divested  business  must
     contain the personnel providing essential functions for the business such as, for instance, group R&D and information technology staff  even
     where such personnel are currently employed by another business unit of the parties — at least in a sufficient proportion to  meet  the  on-
     going needs of the divested business.[115]

238) A viable business is a business that can operate on a stand-alone-basis, which means independently of the merging  parties  as  regards  the
     supply of input materials or other forms of cooperation other than during a transitory period.[116]

239) The intended effect of the divestiture will only be achieved if and once the business is transferred to a suitable purchaser in whose  hands
     it will become an active competitive force in the market. The potential of a business to  attract  a  suitable  purchaser  is  an  important
     element already of the Commission's assessment of the appropriateness of the proposed commitment. In order to ensure that  the  business  is
     divested to a suitable purchaser, the commitments must include criteria to define the suitability of potential purchasers. This  will  allow
     the Commission to conclude that the divestiture  of  the  business  to  such  a  purchaser  will  likely  remove  the  competition  concerns
     identified.[117]

240) In the ultimate assessment of proposed commitments, the Commission considers all relevant factors including inter alia the type,  scale  and
     scope of the proposed commitments, judged by reference to the structure and particular characteristics of the  market  concerned,  including
     the position of the parties and other participants on the market.[118] The commitments must be  capable  of  being  implemented  effectively
     within a short period of time.[119]

241) It is against this background that the Commission analysed the proposed Commitments in this case.

2 Assessment of the Final Commitments

242) In this case, the Commission considers that the Final Commitments are sufficient to remove the serious doubts  regarding  the  compatibility
     of the proposed transaction with the internal market in relation to RF Power transistors and, at a further level of segmentation of RF power
     transistors for (i) wireless infrastructure, (ii) ISM and (iii) broadcast as outlined in Section V.5.

243) The competition concerns in this case, as outlined in Section V.5, are readily identifiable, given the Parties’ significant  market  shares,
     the limited number of competitors and the high barriers to entry in the market for RF Power transistors.

244) The Final Commitments are suitable to provide a clear-cut answer to the competition concerns identified by the Commission.

245) Indeed, the Final Commitments consist of the divestment of the RF Power business, containing all the necessary assets and  personnel  for  a
     viable stand-alone business, and eliminate the entire overlap between the Parties in the  RF  Power  transistors  market  and  its  possible
     segments. Although the Divestment Business is in the form of a "carve-out", it has already been operated by NXP as  a  separate  operational
     business line and it could be disentangled from NXP semiconductor business and transferred to a different undertaking.

246) As regards R&D, all R&D assets currently used for RF Power business including all labs and pilot line will be transferred to the  Divestment
     Business. The relevant R&D engineers working on the front-end product development are today already part of the RF Power business line,  and
     can thus easily be transferred to the Divestment Business. These resources are exclusively working on  LDMOS  process  development  that  is
     useful only to the RF Power business and therefore are easily identifiable. The Final Commitments ensure that all R&D  personnel,  including
     R&D Manager and Technology Fellow, working in France and the Netherlands on LDMOS and GaN-on-Sic process technologies  are  transferred  and
     are part of the Divestment Business.

247) Moreover, in order to ensure the viability of the Divestment Business, all intangible assets required  for  the  operation,  production  and
     sales of the RF Power business will also be transferred as described in paragraph (201) above.

248) Furthermore, the Commission also considers that the fact that the Final Commitments do not include NXP’s front-end manufacturing  facilities
     and/or assets for RF Power products (such as the ICN8 site for example), but provide for the outsourcing of  this  step  of  the  production
     process to a reputable foundry is not likely to negatively impact the viability and competitiveness of the Divestment Business:

249) First, outsourcing of wafer manufacturing is a common practice in the semiconductors industry. The Notifying Party itself also has  numerous
     experiences with previous transfers of manufacturing activities from one location to another. For instance, in NXP's  case,  the  GaN-on-Sic
     process technology already runs at a foundry partner […].

250) Second, the process technology R&D engineers will transfer with the Divestment Business, and will thus continue to drive process  innovation
     for the Divestment Business. When working with the foundry, the RF Power business R&D engineers will be  in  the  future  working  with  the
     production engineers at the foundry instead of those at ICN8. Because the foundry partner would have to be a reputable one, it would have to
     possess the necessary technical capabilities ensuring that the manufacturing of the RF Power products as well as the development and release
     of new processes at least preserves the competitiveness of the Divestment Business. Having  a  geographical  distance  between  the  process
     technology R&D in the Netherlands and a fab elsewhere is not a significant issue. For example, the Divestment Business has helped drive  GaN
     process technology development in the fab of the foundry […] from Nijmegen, and as regards back-end manufacturing has implemented innovation
     between Nijmegen on the one hand and the Philippines and Taiwan on the other. Therefore, the Divestment Business will be  able  to  continue
     the technology development and innovation implementation as regards the front-end LDMOS manufacturing as well.

251) Third, establishing a wafer fab dedicated only to the production of LDMOS  RF  Power  transistors  would  likely  be  uneconomical.  Such  a
     dedicated fab could be up to ten times less efficient than an average sized wafer fab like ICN8, which includes the production of wafers for
     many other semiconductor products, and most of the manufacturing assets needed would be underutilized to a great extent.

252) Fourth, the lack of transferred equipment will not be an issue, as should a foundry be  selected  it  will  have  its  own  installed  wafer
     manufacturing lines, and no specific front-end equipment will need to be transferred to the Divestment Business.

253) Fifth, as already mentioned, during the market test of the First Commitments, the majority of the market  participants  also  expressed  the
     view that the outsourcing of the front-end manufacturing will not negatively affect the competitiveness of the Divestment Business. Based on
     the results of the market test, the Commission considers that the outsourcing of the front-end manufacturing to a reputable foundry and  the
     fact that the RF Power business R&D engineers will be working closely with the production engineers at the chosen foundry, will  ensure  the
     competitiveness of the Divestment Business.

254) Finally, the commitments include a requirement for an agreement with a reputable foundry (at the purchaser's request), similar  to  the  one
     tested as part of the First Commitments, to be put in place regarding the front-end manufacturing.

255) In terms of the independence of the Divestment Business, the Commission considers that  the  existence  of  manufacturing  and  transitional
     services agreements between the Divestment Business and NXP is not of a nature as  to  compromise  its  independence.  The  Commission  also
     considers that the inclusion in the Final Commitments of the requirement that NXP  will,  upon  the  Purchaser's  request,  provide  to  the
     Divestment Business several transitional services as long as reasonably required, is necessary to preserve the viability of  the  Divestment
     Business. The market test supports the Notifying Party's claims that these agreements will  be  necessary  to  ensure  that  the  Divestment
     Business will be a credible supplier during the transitional period, including for legacy LDMOS products ([…]) that will gradually be phased
     out as new generations of LDMOS are released. The MSA in particular is necessary in order to avoid requalification costs and additional time
     for the customers of the Divestment Business. In the absence of such agreement, it may well be that the customers would be driven away  from
     the Divestment Business post-transaction.

256) Furthermore, the Final Commitments provide that NXP will take the necessary measures to ensure that no  commercially  sensitive  information
     is shared between the Divestment Business and NXP as a result of the implementation of the transitional agreements.

257) Lastly, given the increased incentive for the Notifying Party to close the divestiture in order to complete the  proposed  transaction,  the
     inclusion of an up-front buyer clause is likely to accelerate the transfer of the Divestment Business. The Commission  considers  that  this
     provision further ensures the long term viability and competitiveness of Divestment Business.

3 Conclusion

258) For the reasons outlined above, the Final Commitments entered into by the undertakings concerned are sufficient  to  eliminate  the  serious
     doubts as to the compatibility of the proposed transaction with the internal market.

3 Conditions and obligations

259) Under the first sentence of the second subparagraph of Article 6(2) of the Merger Regulation, the Commission  may  attach  to  its  decision
     conditions and obligations intended to ensure that the undertakings concerned comply with the commitments they have entered  into  vis-à-vis
     the Commission with a view to rendering the concentration compatible with the internal market.

260) The achievement of the measure that gives rise to the change of the market  is  a  condition,  whereas  the  implementing  steps  which  are
     necessary to achieve this result are generally obligations on the parties. Where a condition is not  fulfilled,  the  Commission's  decision
     declaring the concentration compatible with the internal market no longer stands. Where the undertakings concerned commit  a  breach  of  an
     obligation, the Commission may revoke the clearance decision in accordance with Article 8(6)(b) of the Merger Regulation.  The  undertakings
     concerned may also be subject to fines and periodic penalty payments under Articles 14(2) and 15(1) of the Merger Regulation.[120]

261) In accordance with the basic distinction between conditions and obligations, the decision in this case is  conditional  on  full  compliance
     with the requirements set out in section B (as well as the associated Schedule)  of  the  Final  Commitments,  which  constitute  conditions
     attached to this decision, as only through full compliance therewith can the structural changes in the relevant  markets  be  achieved.  The
     other requirements set out in the Final Commitments constitute obligations, as they concern the implementing steps which  are  necessary  to
     achieve the modifications sought in a manner compatible with the internal market.

262) The full text of the Final Commitments is annexed to this decision as Annex and forms an integral part thereof.

       CONCLUSION

263) For the above reasons, the Commission has decided not to oppose the notified operation as modified by the Final Commitments and  to  declare
     it compatible with the internal market and with the functioning of the EEA Agreement, subject to full  compliance  with  the  conditions  in
     section B of the Final Commitments annexed to the present decision and with the obligations contained in the  other  sections  of  the  said
     commitments. This decision is adopted in application of Article 6(1)(b) in conjunction with  Article  6(2)  of  the  Merger  Regulation  and
     Article 57 of the EEA Agreement.

For the Commission
(Signed)
Margrethe VESTAGER
Member of the Commission

By hand and by fax: +32 2 296 43 01

European Commission

DG Competition

Merger Registry

Place Madou / Madouplein 1

1210 Saint-Josse-ten-Noode / Sint-Joost-ten-Node

Belgique / België

                                             Case M.7585 – NXP Semiconductors/Freescale Semiconductor

                                                      COMMITMENTS TO THE EUROPEAN COMMISSION

Pursuant to Article 6(2) of Council Regulation (EC) No. 139/2004 (the  "Merger  Regulation"),  NXP  Semiconductors  N.V.  ("NXP")  and  Freescale
Semiconductor Limited ("Freescale", and together with NXP the "Parties") hereby provide the following  Commitments  (the  "Commitments")  to  the
European Commission (the "Commission") with a view to rendering the acquisition by NXP of  sole  control  over  Freescale  (the  "Concentration")
compatible with the internal market and the functioning of the EEA Agreement.

This text shall be interpreted in light of the Commission's Decision pursuant to  Article  6(1)(b)  of  the  Merger  Regulation  to  declare  the
Concentration compatible with the internal market and the functioning of the  EEA  Agreement  (the  "Decision"),  in  the  general  framework  of
European Union law, in particular in light of the Merger Regulation, and by reference to the  Commission  Notice  on  remedies  acceptable  under
Council Regulation (EC) No. 139/2004 and under Commission Regulation (EC) No. 802/2004 (the "Remedies Notice").

section A.  definitions

   1. For the purpose of the Commitments, the following terms shall have the following meaning:

   Affiliated Undertakings: undertakings controlled by the Parties and/or by the ultimate parents of the Parties, whereby the notion  of  control
   shall be interpreted pursuant to Article 3 of the Merger Regulation and in light of the Commission Consolidated  Jurisdictional  Notice  under
   Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (the "Consolidated Jurisdictional Notice").

   Assets: the assets that contribute to the current operation or are necessary to ensure the viability and  competitiveness  of  the  Divestment
   Business as indicated in Section B, paragraph 6 (a), (b) and (c) and described more in detail in the Schedule.

   Closing: the transfer of the legal title of the Divestment Business to the Purchaser.

   Closing period: the period of […] from the approval of the Purchaser and the terms of sale by the Commission.

   Confidential information: any business secrets, know-how, commercial information, or any other information of a proprietary nature that is not
   in the public domain.

   Conflict of Interest: any conflict of interest that impairs the Trustee's objectivity and independence in discharging  its  duties  under  the
   Commitments.

   Corporate Trade Names: all NXP’s commercial names, trade names, doing business as (d/b/a) names, registered and  unregistered  trademarks  and
   service marks.

   Divestment Business: the business as defined in Section B and in the Schedule which NXP commits to divest.

   Divestiture Trustee: one or more natural or legal person(s), who is/are approved by the Commission and  appointed  by  NXP  and  who  has/have
   received from NXP the exclusive Trustee Mandate to sell the Divestment Business to a Purchaser at no minimum price.

   Effective Date: the date of adoption of the Decision.

   First Divestiture Period: the period of […] from the Effective Date.

   Freescale: Freescale Semiconductor Limited, incorporated under the laws of Bermuda, with its registered office at Clarendon  House,  2  Church
   Street, Hamilton HM11, Bermuda.

   Hold Separate Manager: the person appointed by NXP for the Divestment Business to manage the day-to-day business under the supervision of  the
   Monitoring Trustee.

   Key Personnel: all personnel necessary to maintain the viability and competitiveness of the Divestment Business, as listed in Annex 2  to  the
   Schedule, including the Hold Separate Manager.

   Monitoring Trustee: one or more natural or legal person(s), who is/are approved by the Commission and appointed by NXP, and who  has/have  the
   duty to monitor NXP's compliance with the conditions and obligations attached to the Decision.

   NXP: NXP Semiconductors N.V., incorporated under the laws of the Netherlands, with its registered office at High Tech Campus 60 2-22, 5656  AG
   Eindhoven, The Netherlands.

   Parties: NXP Semiconductors N.V. and Freescale Semiconductor Limited.

   Personnel: all staff currently employed by the Divestment Business, including staff seconded to the Divestment Business, shared personnel  and
   the additional personnel listed in the Schedule.

   Purchaser: the entity approved by the Commission as acquirer of the Divestment Business in accordance with the criteria set out in Section D.

   Purchaser Criteria: the criteria laid down in paragraph 18 of these Commitments that the Purchaser must fulfil in order to be approved by  the
   Commission.

   Retained Assets: (i) Corporate Trade Names and portion of website content, domain names, or e-mail  addresses  that  contain  Corporate  Trade
   Names;

    (ii) Real property (except for the BY Building located at Halfgeleiderweg 8, 6534 AV,  Nijmegen,  The  Netherlands  and  the  SiPS  Building,
   located at Philips Avenue, LISP 1, Barrio Diezmo, Cabuyao City, Laguna, Philippines); and (iii) Tangible Personal Property  relating  to  both
   the operation of the RF Power Business and any other business owned by NXP prior to the proposed concentration, unless such Tangible  Personal
   Property is primarily relating to or connected with, or belonging to or required for or used in the Divestment Business as at Closing.

   Retained Intellectual Property: any owned or licensed (as licensor or licensee) intellectual property (not included in  the  Retained  Assets)
   relating to both the operation of the RF Power Business and any other business owned by NXP prior to the concentration proposed,  unless  such
   intellectual property is predominantly used by the RF Power Business.

   RF Power business: the entire RF Power business currently owned by NXP, which comprises the business of  researching,  designing,  developing,
   testing, manufacturing, commercializing, packaging, marketing, distributing, selling and/or servicing of RF Power Transistors.

   RF Power Transistors: for "high power" RF Power transistors (from >1 watt peak power to more than 1 kW) for  applications  including  but  not
   limited to cellular base stations, broadcast systems, radars, medical equipment (such as MRI machines) and  various  industrial  applications,
   which are manufactured using Si-LDMOS, VDMOS or GaN-on-SiC process technologies in order to be able to deliver the desired high  output  power
   and heat dissipation.

   Schedule: the schedule to these Commitments describing more in detail the Divestment Business.

   Tangible Personal Property: all machinery, equipment, tools, furniture, office equipment, computer hardware,  supplies,  materials,  vehicles,
   and other items of tangible personal property (other than inventories) of every kind owned or leased, together with  any  express  or  implied
   warranty by the manufacturers or sellers or lessors of any item or component part thereof and all  maintenance  records  and  other  documents
   relating thereto.

   Trustee(s): the Monitoring Trustee and/or the Divestiture Trustee as the case may be.

   Trustee Divestiture Period: the period of […] from the end of the First Divestiture Period.

section B.  the commitment to divest and the divestment business

Commitment to divest

   2. In order to maintain effective competition, NXP commits to divest, or procure the divestiture of the Divestment Business by the end of  the
      Trustee Divestiture Period as a going concern to a purchaser and on terms of sale  approved  by  the  Commission  in  accordance  with  the
      procedure described in paragraph 19 of these Commitments. To carry out the divestiture, NXP commits to enter into a final binding sale  and
      purchase agreement with the Purchaser for the sale of the Divestment Business within the First Divestiture Period. If NXP has  not  entered
      into such an agreement at the end of the First Divestiture Period, NXP shall grant the Divestiture Trustee an exclusive mandate to sell the
      Divestment Business in accordance with the procedure described in paragraph 30 in the Trustee Divestiture Period.

   3. The proposed concentration shall not be implemented before NXP or the Divestiture Trustee  has  entered  into  a  final  binding  sale  and
      purchase agreement for the sale of the Divestment Business and the Commission  has  approved  the  Purchaser  and  the  terms  of  sale  in
      accordance with paragraph 19.

   4. NXP shall be deemed to have complied with this commitment if:

   a. by the end of the Trustee Divestiture Period, NXP or the Divestiture Trustee has entered into a final binding sale and  purchase  agreement
      and the Commission approves the proposed purchaser and the terms of sale as being consistent with the Commitments in  accordance  with  the
      procedure described in paragraph 19;
   b. the Closing of the sale of the Divestment Business to the Purchaser takes place within the Closing Period; and
   c. NXP complies with all transitional agreements entered with the Purchaser pursuant to paragraphs 7(e), 7(f) and 7(g), which  agreements  NXP
      shall not terminate unilaterally because of a material breach by the Purchaser, in the absence of a final order of a court  of  arbitration
      or a court of competent jurisdiction.

   5. In order to maintain the structural effect of the Commitments, NXP shall, for a period of 10 years  after  Closing,  not  acquire,  whether
      directly or indirectly, the possibility of exercising influence (as defined in paragraph 43 of the Remedies Notice, footnote  3)  over  the
      whole or part of the Divestment Business (including, but not limited to, by entering into supply or other agreements  with  the  Divestment
      Business which may negatively impact on the Divestment Business' independence and/or on its ability and/or incentive to effectively compete
      with NXP), unless, following the submission of a reasoned request from NXP showing  good  cause  and  accompanied  by  a  report  from  the
      Monitoring Trustee (as provided in paragraph 62 of these Commitments), the Commission finds that the structure of the market has changed to
      such an extent that the absence of influence over the Divestment Business is no longer  necessary  to  render  the  proposed  concentration
      compatible with the internal market.

      Structure and definition of the Divestment Business

   6. The Divestment Business consists of the RF Power business.

   7. The legal and functional structure of the Divestment Business as operated to date is described in  Schedule  A.  The  Divestment  Business,
      described further in Schedule A, includes all assets and staff that contribute to the current operation or  are  necessary  to  ensure  the
      viability and competitiveness of the Divestment Business, in particular:

        a) All customer and supplier contracts, R&D contracts, records and related materials necessary to operate the RF Power Business, to  the
           extent permitted under those arrangements;

        b) All tangible assets required for the operation, production and sales of the RF Power business, including but not limited to:

              i) the ownership of part of the manufacturing  facility  located  in  Cabuyao  (Philippines)  ("APP")  used  or  held  for  use  in
                 manufacturing products of the RF Power Business and all manufacturing equipment of the APP manufacturing facility used  or  held
                 for use in manufacturing products of the RF Power Business;

             ii) Selected assets at NXP’s facility in Hamburg (Germany) ("DHAM") that are currently used exclusively for the RF Power Business in
                 the backside metallization and thin wafer grinding processes;

            iii) Selected assets at NXP's facility in Kaoshiung (Taiwan) ("APK") that are currently used exclusively for the RF  Power  Business,
                 in back-end manufacturing processes, including wafer testing and sawing and the assembly and testing of plastics packages;

             iv) All R&D assets currently used exclusively for the RF Power Business, including all lab and pilot line (product  development  and
                 sample production) equipment in Nijmegen (the Netherlands) and Shanghai (China) and application  lab  equipment  in  Smithfield,
                 Rhode Island (US), Nijmegen (the Netherlands), Shanghai and Shenzhen (China), and lab equipment in Toulouse (France);

              v) All customer support equipment in Kista (Sweden), Oulu (Finland), Chengdu and Xian (China), Seoul (South Korea) and Dallas (US).

             vi) All raw materials, finished goods, dies, work-in-process and goods in transit allocated to the  APP  manufacturing  facility  or
                 physically located elsewhere thereafter in the flow, and finished goods allocated to APK in Taiwan, to  the  extent  that  these
                 goods consist of, or are intended for use in the manufacture and packaging of products of the RF Power Business;

                 Provided, however, that the Divestment Business shall not include the Retained Assets.

        c) All intangible assets required for the operation, production and sales of the RF Power business, including but not limited to:

              i) All patents and technologies that are exclusively or predominantly used for the RF Power Business;

             ii) Four unregistered trademarks;

            iii) A non-exclusive, non-transferable, irrevocable, world-wide, royalty-free, fully paid-up license to use all other NXP patents and
                 technologies required by the RF Power Business;

             iv) A non-exclusive, non-transferable, irrevocable, world-wide, royalty-free, fully paid-up license to use all third  party  patents
                 and technologies licensed to NXP for the RF Power Business, provided that NXP has the right to grant sublicenses;

              v) Temporary licenses to use NXP's trademarks (including the brand name of NXP) exclusively for the  RF  Power  Transistors  for  a
                 period of nine months from Closing;

                 Provided, however, that the Divestment Business shall not include the Retained Intellectual Property.

        d) Upon the Purchaser's request, an agreement between the Divestment Business and a reputable third party wafer foundry  for  LDMOS  and
           MOSCAP wafer manufacturing, thinning of the wafer ("grinding") and backside metallization, allowing the Divestment Business to  start
           competitively manufacturing all of its RF Power Transistors at the third party wafer fab independently of NXP and as soon as possible
           after the Closing, thereby ensuring the viability and competitiveness of the Divestment Business.

        e) Upon the Purchaser's request, the provision by NXP to the Divestment Business after the Closing as long as reasonably required and at
           cost of all manufacturing services which are necessary to ensure the  viability  and  competitiveness  of  the  Divestment  Business,
           including but not limited to:

   i) Production and supply of LDMOS wafers and LDMOS technology innovation;

  ii) Production and supply of MOSCAP wafers;

 iii) Grinding and backside metallization of LDMOS and MOSCAP wafers;

  iv) Wafer testing and sawing;

   v) OMP assembly and final testing;

  vi) QFN assembly and final testing;

        f) Upon the Purchaser's request, the provision by NXP to the Divestment Business of services in the area of  IT,  marketing  and  sales,
           finance and accounting, pensions, supply chain management (SCM), purchasing, R&D, real estate, quality and reliability  (Q&R),  human
           resources, IP, and various services at the APP facility, at cost, including, but not limited to, services in the following areas:

   i) IT, regarding IT issues such as general business applications, R&D applications, generic infrastructure, firewall  management  and  desktop
      virtualization services (Citrix);

  ii) Marketing and sales;

 iii) Finance and accounting;

  iv) Pensions;

   v) Supply chain management (SCM);

  vi) Purchasing, regarding purchasing support capacity and master data administration services;

 vii) R&D support services;

viii) Real estate;

  ix) Quality and reliability (Q&R), including reliability testing and failure analysis;

   x) Human resources, notably pay-rolling, pensions, insurance and travel and expenses;

  xi) Technical assistance in relation to transferred IP;

 xii) Various services at the APP facility in Cabuyao, Philippines.

        g) Upon the Purchaser's request, the provision by NXP to the Divestment Business after the Closing and as long as reasonably required of
           any other transitional services which may be necessary to ensure the viability and competitiveness of  the  Divestment  Business,  at
           cost.

8. In addition, the Divestment Business includes the benefit, for a transitional period after Closing and on terms and conditions  equivalent  to
   those at present afforded to the Divestment Business, as detailed in Schedule A, of all current arrangements under  which  NXP  or  Affiliated
   Undertakings supply products or services to the Divestment Business, unless otherwise agreed with the Purchaser.

9. NXP commits to put in place all necessary measures to ensure that no commercially sensitive  information  is  shared  between  the  Divestment
   Business and NXP as a result of the implementation of the above identified supply agreements beyond what is  strictly  necessary  for  NXP  to
   comply with these agreements and that, in any event, no such information is shared within NXP beyond the individuals who are  responsible  for
   the implementation of these agreements. NXP shall provide the Monitoring Trustee and  the  Commission  with  a  detailed  description  of  the
   measures that it proposes to put in place within one month from the Effective Date. The Monitoring Trustee shall assess the appropriateness of
   these measures and be entitled to request any amendment that it deems necessary. The Monitoring Trustee shall also monitor the  implementation
   of these measures for the entire duration of the relevant agreements.

      section C.  related commitments

      Preservation of viability, marketability and competitiveness

  10. From the Effective Date until Closing, NXP shall preserve or  procure  the  preservation  of  the  economic  viability,  marketability  and
      competitiveness of the Divestment Business, in accordance with good business practice, and shall minimise as far as possible  any  risk  of
      loss of competitive potential of the Divestment Business. In particular NXP undertakes:

   a) not to carry out any action that might have a significant adverse impact on the value, management  or  competitiveness  of  the  Divestment
      Business or that might alter the nature and scope of activity, or the industrial or commercial strategy or the  investment  policy  of  the
      Divestment Business;

   b) to make available, or procure to make available, sufficient resources for the development of the Divestment  Business,  on  the  basis  and
      continuation of the existing business plans;

   c) to take all reasonable steps, or procure that all reasonable steps are being taken,  including  appropriate  incentive  schemes  (based  on
      industry practice), to encourage all Key Personnel to remain with the Divestment Business, and not to solicit  or  move  any  Personnel  to
      NXP's remaining business. Where, nevertheless, individual members of the Key Personnel exceptionally leave  the  Divestment  Business,  NXP
      shall provide a reasoned proposal to replace the person or persons concerned to the Commission and the Monitoring Trustee. NXP must be able
      to demonstrate to the Commission that the replacement is well suited to carry out the functions exercised by those  individual  members  of
      the Key Personnel. The replacement shall take place under the supervision of the Monitoring Trustee, who shall report to the Commission.

Hold-separate obligations of Parties

  11. NXP commits, from the Effective Date until Closing, to procure that the Divestment Business is kept separate from the businesses  that  NXP
      will be retaining and, after closing of the notified transaction to keep the Divestment Business separate from the  business  that  NXP  is
      retaining, and to ensure that unless explicitly permitted under these Commitments: (i) management and staff of the businesses  retained  by
      NXP have no involvement in the Divestment Business; (ii) the Key Personnel and Personnel of the Divestment Business have no involvement  in
      any business retained by NXP and do not report to any individual outside the Divestment Business.

  12. Until Closing, NXP shall assist the Monitoring Trustee in ensuring that the Divestment Business is  managed  as  a  distinct  and  saleable
      entity separate from the businesses which NXP is retaining. Immediately after the adoption of  the  Decision,  NXP  shall  appoint  a  Hold
      Separate Manager. The Hold Separate Manager, who shall be part of the Key Personnel, shall manage the Divestment Business independently and
      in the best interest of the business with a view to ensuring its continued economic viability, marketability and  competitiveness  and  its
      independence from the businesses retained by NXP. The Hold Separate Manager shall closely cooperate  with  and  report  to  the  Monitoring
      Trustee and, if applicable, the Divestiture Trustee. Any replacement of the Hold Separate Manager shall be subject to  the  procedure  laid
      down in paragraph 10(c) of these Commitments. The Commission may, after having heard NXP, require NXP to replace the Hold Separate Manager.

      Ring-fencing

  13. NXP shall implement, or procure to implement, all necessary measures to ensure that it does not,  after  the  Effective  Date,  obtain  any
      Confidential Information relating to the Divestment Business and that  any  such  Confidential  Information  obtained  by  NXP  before  the
      Effective Date will be eliminated and not be used by NXP. This includes measures vis-à-vis NXP's appointees on the supervisory board and/or
      board of directors of the Divestment Business. In particular, the participation of the  Divestment  Business  in  any  central  information
      technology network shall be severed to the extent possible, without comprising the viability of the Divestment Business. NXP may obtain  or
      keep information relating to the Divestment Business which is reasonably necessary for the divestiture of the Divestment  Business  or  the
      disclosure of which to NXP is required by law.

Non-solicitation clause

  14. The Parties undertake, subject to customary limitations, not to solicit, and to procure that Affiliated Undertakings do  not  solicit,  the
      Key Personnel transferred with the Divestment Business for a period of […] after Closing.

Due Diligence

  15. In order to enable potential purchasers to carry out a reasonable due diligence of the Divestment Business, NXP shall, subject to customary
      confidentiality assurances and dependent on the stage of the divestiture process:

   a) provide to potential purchasers sufficient information as regards the Divestment Business;

   b) provide potential purchasers sufficient information relating to the Personnel and allow them reasonable access to the Personnel.

Reporting

  16. NXP shall submit written reports in English on potential purchasers of the Divestment Business and developments in  the  negotiations  with
      such potential purchasers to the Commission and the Monitoring Trustee no later than 10 days after the end of  every  month  following  the
      Effective Date (or otherwise at the Commission’s request). NXP shall submit a list of all potential purchasers having expressed interest in
      acquiring the Divestment Business to the Commission at each and every stage of the divestiture process, as well as a copy of all the offers
      made by potential purchasers within five days of their receipt.

  17. NXP shall inform the Commission and the Monitoring Trustee on the preparation  of  the  data  room  documentation  and  the  due  diligence
      procedure and shall submit a copy of an information memorandum to the Commission and the Monitoring Trustee before sending  the  memorandum
      out to potential purchasers.

      section D.  the purchaser

  18. In order to be approved by the Commission, the Purchaser must fulfil the following criteria:

   a) The Purchaser shall be independent of and unconnected to the Parties and their Affiliated Undertakings (this being assessed  having  regard
      to the situation following the divestiture);

   b) The Purchaser shall have the financial resources, proven expertise and incentive to maintain and  develop  the  Divestment  Business  as  a
      viable and active competitive force in competition with the Parties and other competitors;

   c) The acquisition of the Divestment Business by the Purchaser must neither be likely to create, in the light of the information available  to
      the Commission, prima facie competition concerns nor give rise to a risk that the implementation of the Commitments  will  be  delayed.  In
      particular, the Purchaser must reasonably be expected to obtain all necessary approvals from the relevant regulatory  authorities  for  the
      acquisition of the Divestment Business.

  19. The final binding sale and purchase agreement (as well as ancillary agreements) relating to the divestment of the Divestment Business shall
      be conditional on the Commission’s approval. When NXP has reached an agreement with a purchaser, it shall submit  a  fully  documented  and
      reasoned proposal, including a copy of the final agreements, within one week to the Commission and the Monitoring Trustee. NXP must be able
      to demonstrate to the Commission that the purchaser fulfils the Purchaser Criteria and that the Divestment Business  is  being  sold  in  a
      manner consistent with the Commission's Decision and Commitments. For the approval, the Commission shall verify that the purchaser  fulfils
      the Purchaser Criteria and that the Divestment Business is being sold in a manner consistent with the Commitments including their objective
      to bring about a lasting structural change in the market. The Commission may approve the sale of the Divestment  Business  without  one  or
      more Assets or parts of the Personnel, or by substituting one or more Assets or parts of the Personnel with one or more different assets or
      different personnel, if this does not affect the viability and competitiveness of the Divestment Business after the sale, taking account of
      the proposed purchasers.

section E.  trustee

I.    Appointment Procedure

  20. NXP shall appoint a Monitoring Trustee to carry out the functions specified in the Commitments for a Monitoring Trustee. The Parties commit
      not to close the Concentration before the appointment of a Monitoring Trustee.

  21. If NXP has not entered into a binding sale and purchase agreement regarding the Divestment Business one month before the end of  the  First
      Divestiture Period or if the Commission has rejected a purchaser proposed  by  NXP  at  that  time  or  thereafter,  NXP  shall  appoint  a
      Divestiture Trustee. The appointment of the Divestiture Trustee shall take effect upon the commencement of the Trustee Divestiture Period.

  22. The Trustee shall:
   (i) be independent of the Parties and their Affiliated Undertakings at the time of appointment;
   (ii) possess the necessary qualifications to carry out its mandate, for example have sufficient relevant experience as an investment banker or
   consultant or auditor; and
   (iii) neither have nor become exposed to a Conflict of Interest.

  23. The Trustee shall be remunerated by NXP in a way that does not  impede  the  independent  and  effective  fulfilment  of  its  mandate.  In
      particular, where the remuneration package of a Divestiture Trustee includes a success premium linked  to  the  final  sale  value  of  the
      Divestment Business, such success premium may only be earned if the divestiture takes place within the Trustee Divestiture Period.

      Proposal by NXP

  24. No later than two weeks after the Effective Date, NXP shall submit the name or names of one or more  natural  or  legal  persons  whom  NXP
      proposes to appoint as the Monitoring Trustee to the Commission for approval. No  later  than  one  month  before  the  end  of  the  First
      Divestiture Period, NXP shall submit a list of one or more persons whom NXP proposes to appoint as Divestiture Trustee  to  the  Commission
      for approval. The proposal shall contain sufficient information for the Commission to verify that person or  persons  proposed  as  Trustee
      fulfils the requirements set out in paragraph 22 and shall include:

   a) the full terms of the proposed mandate, which shall include all provisions necessary to enable the Trustee to fulfil its duties under these
      Commitments;

   b) the outline of a work plan which describes how the Trustee intends to carry out its assigned tasks;

   c) an indication whether the proposed Trustee is to act as both Monitoring Trustee an Divestiture Trustee or whether  different  trustees  are
      proposed for the two functions.
Approval or rejection by the Commission

  25. The Commission shall have the discretion to approve or reject the proposed Trustee(s) and to approve the proposed mandate  subject  to  any
      modifications it deems necessary for the Trustee to fulfil its obligations. If only one name is approved, NXP shall appoint or cause to  be
      appointed the person or persons concerned as Trustee, in accordance with the mandate approved by the Commission. If more than one  name  is
      approved, NXP shall be free to choose the Trustee to be appointed from among the names approved. The Trustee shall be appointed within  one
      week of the Commission’s approval, in accordance with the mandate approved by the Commission.

New proposal by NXP

  26. If all the proposed Trustees are rejected, NXP shall submit the names of at least two more natural or legal  persons  within  one  week  of
      being informed of the rejection, in accordance with paragraphs 21 and 25 of these Commitments.

Trustee nominated by the Commission

  27. If all further proposed Trustees are rejected by the Commission, the Commission shall nominate a Trustee, whom NXP shall appoint, or  cause
      to be appointed, in accordance with a trustee mandate approved by the Commission.

II.   Functions of the Trustee

  28. The Trustee shall assume its specified duties in order to ensure compliance with the Commitments. The Commission may, on its own initiative
      or at the request of the Trustee or NXP, give any orders or instructions to the Trustee in order to ensure compliance with  the  conditions
      and obligations attached to the Decision.

Duties and obligations of the Monitoring Trustee

  29. The Monitoring Trustee shall:

   i) propose in its first report to the Commission a detailed work plan describing how it intends to monitor compliance with the obligations and
      conditions attached to the Decision.

  ii) oversee, in close co-operation with the Hold Separate Manager, the on-going management of the Divestment Business with a view  to  ensuring
      its continued economic viability, marketability and competitiveness and monitor compliance by  NXP  with  the  conditions  and  obligations
      attached to the Decision. To that end the Monitoring Trustee shall:

   a) monitor the preservation of the economic viability, marketability and competitiveness of the Divestment Business, and the keeping  separate
      of the Divestment Business from the business retained by NXP, in accordance with paragraphs 8 and 9 of the Commitments;

   b) supervise the management of the Divestment Business as a distinct and saleable entity, in accordance with paragraph 10 of the Commitments;

   c) with respect to Confidential Information:
    • determine all necessary measures to ensure that NXP does not after the Effective Date obtain any Confidential Information relating  to  the
      Divestment Business,
    • in particular strive for the severing of the Divestment Business’ participation in a central information technology network to  the  extent
      possible, without compromising the viability of the Divestment Business,
    • make sure that any Confidential Information relating to the Divestment Business obtained by NXP before the Effective Date is eliminated and
      will not be used by NXP and
    • decide whether such information may be disclosed to or kept by NXP as the disclosure is reasonably necessary to allow NXP to carry out  the
      divestiture or as the disclosure is required by law;

   d) monitor the splitting of assets and the allocation of Personnel between the Divestment Business and NXP or Affiliated Undertakings;

 iii) propose to NXP such measures as the Monitoring Trustee considers necessary to ensure NXP's compliance with the conditions  and  obligations
      attached to the Decision, in particular the maintenance of the full economic viability, marketability or competitiveness of the  Divestment
      Business, the holding separate of the Divestment Business and the non-disclosure of competitively sensitive information;

  iv) review and assess potential purchasers as well as the progress of the divestiture process and verify that, dependent on the  stage  of  the
      divestiture process:

        (a)       potential purchasers receive sufficient and correct information relating to the  Divestment  Business  and  the  Personnel  in
        particular by reviewing, if available, the data room documentation, the information memorandum and the due diligence process, and

        (b)       potential purchasers are granted reasonable access to the Personnel;

   v) act as a contact point for any requests by third parties, in particular potential purchasers, in relation to the Commitments;

  vi) provide to the Commission, sending NXP a non-confidential copy at the same time, a written report within 15 days after  the  end  of  every
      month that shall cover the operation and management of the Divestment Business as well as the splitting of assets  and  the  allocation  of
      Personnel so that the Commission can assess whether the business is held in a manner consistent with the Commitments and  the  progress  of
      the divestiture process as well as potential purchasers;

 vii) promptly report in writing to the Commission, sending NXP a non-confidential copy at the same time, if it concludes on  reasonable  grounds
      that NXP is failing to comply with these Commitments;

viii) within one week after receipt of the documented proposal referred to in paragraph 18  of  these  Commitments,  submit  to  the  Commission,
      sending NXP a non-confidential copy at the same time, a reasoned opinion as to the suitability and independence of the  proposed  purchaser
      and the viability of the Divestment Business after the Sale and as to whether the Divestment Business is sold in a manner  consistent  with
      the conditions and obligations attached to the Decision, in particular, if relevant, whether the Sale of the  Divestment  Business  without
      one or more Assets or not all of the Personnel affects the viability of the Divestment Business after  the  sale,  taking  account  of  the
      proposed purchaser;

  ix) assume the other functions assigned to the Monitoring Trustee under the conditions and obligations attached to the Decision.

  30. If the Monitoring and Divestiture Trustee are not the same legal or natural persons, the Monitoring Trustee  and  the  Divestiture  Trustee
      shall cooperate closely with each other during and for the purpose of the preparation  of  the  Trustee  Divestiture  Period  in  order  to
      facilitate each other's tasks.

Duties and obligations of the Divestiture Trustee

  31. Within the Trustee Divestiture Period, the Divestiture Trustee shall sell at no minimum price  the  Divestment  Business  to  a  purchaser,
      provided that the Commission has approved both the purchaser and the final binding sale and purchase agreement (and  ancillary  agreements)
      as in line with the Commission's Decision and the Commitments in accordance with paragraphs 17 and 18 of these Commitments. The Divestiture
      Trustee shall include in the sale and purchase agreement (as well as any ancillary agreements) such terms and conditions  as  it  considers
      appropriate for an expedient sale in the Trustee Divestiture Period. In particular, the Divestiture Trustee may include  in  the  sale  and
      purchase agreement such customary representations and warranties and indemnities as  are  reasonably  required  to  effect  the  sale.  The
      Divestiture Trustee shall protect the legitimate financial interests of NXP, subject to NXP’s unconditional  obligation  to  divest  at  no
      minimum price in the Trustee Divestiture Period.

  32. In the Trustee Divestiture Period (or otherwise at the Commission’s request), the Divestiture Trustee shall provide the Commission  with  a
      comprehensive monthly report written in English on the progress of the divestiture process. Such reports shall be submitted within 15  days
      after the end of every month with a simultaneous copy to the Monitoring Trustee and a non-confidential copy to NXP.

      III.  Duties and obligations of NXP

  33. NXP shall provide and shall cause its advisors to provide the Trustee with all such co-operation, assistance and information as the Trustee
      may reasonably require to perform its tasks. The Trustee shall have full and complete access to any of NXP's or  the  Divestment  Business’
      books, records, documents, management or other personnel, facilities, sites and technical information necessary for fulfilling  its  duties
      under the Commitments and NXP and the Divestment Business shall provide the Trustee upon request with copies of any document. NXP  and  the
      Divestment Business shall make available to the Trustee one or more offices on their premises and shall be available for meetings in  order
      to provide the Trustee with all information necessary for the performance of its tasks.

  34. NXP shall provide the Monitoring Trustee with all managerial and administrative support that it may reasonably request  on  behalf  of  the
      management of the Divestment Business. This shall include all administrative support functions relating to the  Divestment  Business  which
      are currently carried out at headquarters level. NXP shall provide and shall cause its advisors  to  provide  the  Monitoring  Trustee,  on
      request, with the information submitted to potential purchasers, in particular  give  the  Monitoring  Trustee  access  to  the  data  room
      documentation and all other information granted to potential purchasers in the due diligence procedure. NXP  shall  inform  the  Monitoring
      Trustee on possible purchasers, submit a list of potential purchasers at each stage of the selection process, including the offers made  by
      potential purchasers at those stages, and keep the Monitoring Trustee informed of all developments in the divestiture process.

  35. NXP shall grant or procure the Affiliated Undertakings to grant comprehensive powers of attorney, duly executed, to the Divestiture Trustee
      to effect the sale (including ancillary agreements), the Closing and all actions and declarations which the Divestiture  Trustee  considers
      necessary or appropriate to achieve the sale and the Closing, including the appointment of advisors to assist with the sale  process.  Upon
      request of the Divestiture Trustee, NXP shall cause the documents required for effecting the sale and the Closing to be duly executed.

  36. NXP shall indemnify the Trustee and its employees and agents (each an  "Indemnified  Party")  and  hold  each  Indemnified  Party  harmless
      against, and hereby agrees that an Indemnified Party shall no liability to NXP for any liabilities arising out of the  performance  of  the
      Trustee’s duties under the Commitments, except to the extent that such liabilities result from  the  wilful  default,  recklessness,  gross
      negligence or bad faith of the Trustee, its employees, agents or advisors.

  37. At the expense of NXP, the Trustee may appoint advisors (in particular for corporate finance or legal advice), subject  to  NXP's  approval
      (this approval not to be unreasonably withheld or delayed) if  the  Trustee  considers  the  appointment  of  such  advisors  necessary  or
      appropriate for the performance of its duties and obligations under the Mandate, provided that any fees and other expenses incurred by  the
      Trustee are reasonable. Should NXP refuse to approve the advisors proposed by the Trustee the Commission may  approve  the  appointment  of
      such advisors instead, after having heard NXP. Only the Trustee shall be entitled to issue instruction to the advisors. Paragraph 36  shall
      apply mutatis mutandis. In the Trustee Divestiture Period, the Divestiture Trustee may use advisors who served NXP during  the  Divestiture
      Period if the Divestiture Trustee considers this in the best interest of an expedient sale.

  38. NXP agrees that the Commission may share Confidential Information proprietary to NXP with the Trustee. The Trustee shall not disclose  such
      information and the principles contained in Article 17 (1) and (2) of the Merger Regulation apply mutatis mutandis.

  39. NXP agrees that the contact details of the Monitoring Trustee are published on the website  of  the  Commission's  Directorate-General  for
      Competition and it shall inform interested third parties, in particular any potential purchasers, of the identity  and  the  tasks  of  the
      Monitoring Trustee.

  40. For a period of 10 years from the Effective Date the Commission may request all information from the Parties that is  reasonably  necessary
      to monitor the effective implementation of these Commitments.

      IV.   Replacement, discharge and reappointment of the Trustee

  41. If the Trustee ceases to perform its functions under the Commitments or for any other good cause, including the exposure of the Trustee  to
      a Conflict of Interest:

  a) the Commission may, after hearing the Trustee and NXP, require NXP to replace the Trustee; or

  b) NXP may, with the prior approval of the Commission, replace the Trustee.

  42. If the Trustee is removed according to paragraph 41, the Trustee may be required to continue in its function until  a  new  Trustee  is  in
      place to whom the Trustee has effected a full hand over of all relevant information. The new Trustee shall be appointed in accordance  with
      the procedure referred to in paragraphs 20-27 of these Commitments.

  43. Unless removed according to paragraph 41 of these Commitments, the Trustee shall cease to act as Trustee  only  after  the  Commission  has
      discharged it from its duties after all the Commitments with which the Trustee has been  entrusted  have  been  implemented.  However,  the
      Commission may at any time require the reappointment of the Monitoring Trustee if it subsequently appears that the relevant remedies  might
      not have been fully and properly implemented.

      section F.  Fast Track Dispute Resolution

  44. In the event that a third party claims that NXP or an Affiliated Undertaking is failing to comply with the requirements described above  in
      Section B (the "Commitment") vis-à-vis that third party, the fast track dispute resolution procedure as described herein shall apply.

  45. Any third party who wishes to avail itself of the fast track dispute resolution procedure (a  "Requesting  Party")  shall  send  a  written
      request to NXP (with a copy to the Trustee) setting out in detail the reasons leading that party to believe that NXP is failing  to  comply
      with the requirements of the Commitment. The Requesting Party and NXP will use their best efforts to resolve all differences of opinion and
      to settle all disputes that may arise through co-operation and consultation within a reasonable period of time not exceeding  fifteen  (15)
      working days after receipt of the Request. The Trustee shall present its own proposal (the "Trustee Proposal") for  resolving  the  dispute
      within eight (8] working days, specifying in writing the action, if any, to be taken by NXP or an Affiliated Undertaking in order to ensure
      compliance with the commitments vis-à-vis the Requesting Party, and be prepared, if requested, to facilitate the settlement of the dispute.

  46. Should the Requesting Party and NXP (together the "Parties to the Arbitration") fail  to  resolve  their  differences  of  opinion  in  the
      consultation phase, the Requesting Party shall serve a notice (the "Notice"), in the sense  of  a  request  for  arbitration,  to  the  ICC
      (hereinafter the "Arbitral Institution"), with a copy of such Notice and request for arbitration to NXP. The Notice shall set out in detail
      the dispute, difference or claim (the "Dispute") and shall contain, inter alia, all issues of both fact and law, including any  suggestions
      as to the procedure, and all documents relied upon shall be attached, e.g. documents, agreements, expert reports, and  witness  statements.
      The Notice shall also contain a detailed description of the action to be undertaken by NXP (including, if  appropriate,  a  draft  contract
      comprising all relevant terms and conditions) and the Trustee Proposal, including a comment as to its appropriateness.

  47. NXP shall, within ten (10) working days from receipt of the Notice, submit its answer (the "Answer"), which shall provide detailed  reasons
      for its conduct and set out, inter alia, all issues of both fact and law, including any suggestions as to the procedure, and all  documents
      relied upon, e.g. documents, agreements, expert reports, and witness statements. The Answer  shall,  if  appropriate,  contain  a  detailed
      description of the action which NXP proposes to undertake vis-à-vis the Requesting Party  (including,  if  appropriate,  a  draft  contract
      comprising all relevant terms and conditions) and the Trustee  Proposal  (if  not  already  submitted),  including  a  comment  as  to  its
      appropriateness.

Appointment of the Arbitrators

  48. The Arbitral Tribunal shall consist of three persons. The Requesting Party shall nominate its arbitrator in the Notice; NXP shall  nominate
      its arbitrator in the Answer. The arbitrator nominated by the Requesting Party and by NXP shall,  within  five  (5)  working  days  of  the
      nomination of the latter, nominate the chairman, making such nomination known to the parties  and  the  Arbitral  Institution  which  shall
      forthwith confirm the appointment of all three arbitrators. Should the Requesting Party  wish  to  have  the  Dispute  decided  by  a  sole
      arbitrator it shall indicate this in the Notice. In this case, the Requesting Party and NXP  shall  agree  on  the  nomination  of  a  sole
      arbitrator within five (5) working days from the communication of the Answer, communicating this to the Arbitral  Institution.  Should  NXP
      fail to nominate an arbitrator, or if the two arbitrators fail to agree on the chairman, or should the Parties to the Arbitration  fail  to
      agree on a sole arbitrator, the default appointment(s) shall be made by the Arbitral Institution. The three-person arbitral tribunal or, as
      the case may be, the sole arbitrator, are herein referred to as the "Arbitral Tribunal".

Arbitration Procedure

  49. The Dispute shall be finally resolved by arbitration under the rules of the ICC, with such modifications or adaptations as foreseen  herein
      or necessary under the circumstances (the "Rules"). The arbitration shall be conducted  in  Amsterdam,  the  Netherlands,  in  the  English
      language.

  50. The procedure shall be a fast-track procedure. For this purpose, the Arbitral Tribunal shall shorten all applicable procedural  time-limits
      under the Rules as far as admissible and appropriate in the circumstances. The Parties to the Arbitration shall consent to the  use  of  e-
      mail for the exchange of documents. The Arbitral Tribunal shall, as soon as practical after the confirmation of the Arbitral Tribunal, hold
      an organisational conference to discuss any procedural issues with the Parties to the Arbitration. Terms of Reference shall be drawn up and
      signed by the Parties to the Arbitration and the Arbitration Tribunal at the organisational meeting or thereafter and  a  procedural  time-
      table shall be established by the Arbitral Tribunal. An oral hearing shall, as a rule, be established within two months of the confirmation
      of the Arbitral Tribunal.

  51. In order to enable the Arbitral Tribunal to reach a decision, it shall be entitled to request any relevant information from the Parties  to
      the Arbitration, to appoint experts and to examine them at the hearing, and to establish the facts by all appropriate means.  The  Arbitral
      Tribunal is also entitled to ask for assistance by the Trustee in all stages of the procedure if the Parties to the Arbitration agree.

  52. The Arbitral Tribunal shall not disclose confidential information and apply the standards attributable to  confidential  information  under
      the Merger Regulation. The Arbitral Tribunal may take the measures necessary for  protecting  confidential  information  in  particular  by
      restricting access to confidential information to the Arbitral Tribunal, the Trustee, and outside  counsel  and  experts  of  the  opposing
      party.

  53. The burden of proof in any dispute under these Rules shall be borne as follows: (i) the Requesting Party must produce evidence of  a  prima
      facie case and (ii) if the Requesting Party produces evidence of a prima facie case, the Arbitral Tribunal  must  find  in  favour  of  the
      Requesting Party unless NXP can produce evidence to the contrary.

Involvement of the Commission

  54. The Commission shall be allowed and enabled to participate in all stages of the procedure by
      • Receiving all written submissions (including documents and reports, etc.) made by the Parties to the Arbitration;
      • Receiving all orders, interim and final awards and other  documents  exchanged  by  the  Arbitral  Tribunal  with  the  Parties  to  the
        Arbitration (including Terms of Reference and procedural time-table);
      • Giving the Commission the opportunity to file amicus curiae briefs; and
      • Being present at the hearing(s) and being allowed to ask questions to parties witnesses and experts.

The Arbitral Tribunal shall forward, or shall order the Parties to the Arbitration to forward, the documents mentioned to the Commission  without
delay.

In the event of disagreement between the Parties to the Arbitration regarding the interpretation of the Commitment,  the  Arbitral  Tribunal  may
seek the Commission’s interpretation of the Commitment before finding in favour of any Party to  the  Arbitration  and  shall  be  bound  by  the
interpretation.

Decision of the Arbitral Tribunal

  55. The Arbitral Tribunal shall decide the dispute on the basis of the Commitment and the Decision. Issues not covered by  the  Commitment  and
      the Decision shall be decided (in the order as stated) by reference to the Merger Regulation, EU law and general principles of  law  common
      to the legal orders of the Member States without a requirement to apply a particular national system. The Arbitral Tribunal shall take  all
      decisions by majority vote.

  56. Upon request of the Requesting Party, the Arbitral Tribunal may make a preliminary ruling on the Dispute. The preliminary ruling  shall  be
      rendered within one month after the confirmation of the Arbitral Tribunal, shall be applicable immediately and, as a rule, remain in  force
      until a final decision is rendered.

  57. The Arbitral Tribunal shall, in the preliminary ruling as well as in the final award, specify the action, if any, to be taken by NXP or  an
      Affiliated Undertaking in order to comply with the commitments vis-à-vis the Requesting  Party  (e.g.  specify  a  contract  including  all
      relevant terms and conditions). The final award shall be final and binding on the Parties to the Arbitration and shall resolve the  Dispute
      and determine any and all claims, motions or requests submitted to the Arbitral Tribunal. The  arbitral  award  shall  also  determine  the
      reimbursement of the costs of the successful party and the allocation of the arbitration costs. In case of granting a preliminary ruling or
      if otherwise appropriate, the Arbitral Tribunal shall specify that terms and conditions determined in the final award apply retroactively.

  58. The final award shall, as a rule, be rendered within six (6) months after the confirmation of the Arbitral Tribunal. The time-frame  shall,
      in any case, be extended by the time the Commission takes to submit an interpretation of the Commitment if asked by the Arbitral Tribunal.

  59. The Parties to the Arbitration shall prepare a non-confidential version of the final award, without business secrets.  The  Commission  may
      publish the non-confidential version of the award.

  60. Nothing in the arbitration procedure shall affect the power to the Commission to take decisions in relation to the Commitment in accordance
      with its powers under the Merger Regulation.

      section G.  the review clause

  61. The Commission may extend the time periods foreseen in the Commitments in response to a request from NXP or, in appropriate cases,  on  its
      own initiative. Where NXP requests an extension of a time period, it shall submit a reasoned request to the Commission no  later  than  one
      month before the expiry of that period, showing good cause. This request shall be accompanied by a report from the Monitoring Trustee,  who
      shall, at the same time send a non-confidential copy of the report to NXP. Only in exceptional  circumstances  shall  NXP  be  entitled  to
      request an extension within the last month of any period.

  62. The Commission may further, in response to a reasoned request from NXP showing good cause  waive,  modify  or  substitute,  in  exceptional
      circumstances, one or more of the undertakings in these Commitments. This request shall be accompanied by  a  report  from  the  Monitoring
      Trustee, who shall, at the same time send a non-confidential copy of the report to NXP. The request shall not have the effect of suspending
      the application of the undertaking and, in particular, of suspending the expiry of any time period in  which  the  undertaking  has  to  be
      complied with.

      section H.  entry into force

  63. The Commitments shall take effect upon the date of adoption of the Decision.

      _____________________

      duly authorised for and on behalf of

      NXP Semiconductors N.V.

      schedule A

 1. NXP's RF Power Business is currently a separate operational business line in NXP's secure interface and power segment. It is  currently  not
    carried out in a separate legal entity.

 2. NXP will disentangle its complete RF Power Business and transfer it to newly created legal  entities.  The  holding  company,  Samba  Holdco
    Netherlands B.V., has been incorporated and is registered in Eindhoven (the Netherlands). Its place of  management  and  operation  will  be
    Nijmegen (the Netherlands). Samba Holdco Netherlands B.V. will be the operational company for  the  Netherlands,  and  will  also  own  five
    subsidiaries respectively registered and operational in Shanghai (China), Toulouse (France),  Cabuyao  (Philippines),  Kista  (Sweden),  and
    Smithfield, Rhode Island (USA). In Finland, South Korea, Japan, Hong Kong and the United Kingdom, Samba  Holdco  Netherlands  B.V.  will  be
    registered as a branch office and all local assets and liabilities will be transferred to Samba Holdco Netherlands B.V.

 3. Samba Holdco Netherlands B.V. will together with its subsidiaries operate as a stand-alone operating unit and will be  responsible  for  the
    development, production and sales of RF Power Business products on a worldwide scale. A  provisional  legal  structure  chart  is  submitted
    below.

(Provisional) Legal structure after completion of the disentanglement

[pic]

 4. In addition to paragraph 7 of these Commitments, the Divestment Business also includes, but is not limited to:

   a) the main customer and supplier contracts. No later than the Closing, NXP shall secure all consents, assignments, and waivers from all  main
      customers and suppliers that are necessary for the divestiture of the Assets; provided, however, that NXP may satisfy this  requirement  by
      certifying that the Purchaser has executed appropriate agreements directly with each of the relevant  main  customers  and  suppliers;  and
      provided further that in the event NXP is unable to obtain any consent, assignment, or waiver required by this par. 4(a), NXP shall provide
      such assistance as the Purchaser may reasonably request in its efforts to obtain the consent..

   b) The Divestment Business' current Personnel counting approximately 1,741 FTEs, as listed in Annex 1; and

   c) The Key Personnel as listed in Annex 2.

 5. The Divestment Business includes all assets and personnel necessary for the  continued  viability  and  competitiveness  of  the  Divestment
    Business. If there is any asset or personnel which is not be covered by these Commitments but which is both used (exclusively or not) in the
    Divestment Business and necessary for the continued viability and competitiveness  of  the  Divestment  Business,  that  asset  or  adequate
    substitute will be offered to the potential purchasers of the Divestment Business.
      Annex 1 – Personnel

      FTEs working in function of the Divestment Business

      |Site                                  |Headcount (FTEs)                      |Primary activities                                  |
|Netherlands                           |[…]                                   |[…]                                                 |
|Philippines                           |[…]                                   |[…]                                                 |
|France                                |[…]                                   |[…]                                                 |
|Finland                               |[…]                                   |[…]                                                 |
|Sweden                                |[…]                                   |[…]                                                 |
|China                                 |[…]                                   |[…]                                                 |
|US                                    |[…]                                   |[…]                                                 |
|Hong Kong                             |[…]                                   |[…]                                                 |
|South Korea                           |[…]                                   |[…]                                                 |
|Japan                                 |[…]                                   |[…]                                                 |
|United Kingdom                        |[…]                                   |[…]                                                 |
|Germany                               |[…]                                   |[…]                                                 |
|Total                                 |[…]                                   |                                                    |

                                                 Organizational chart of the Divestment Business

      […]
      Annex 2 – Key Personnel

      |Name                                             |Position                                                                |
|[…]                                              |General Manager                                                         |
|[…]                                              |Manager Sales China                                                     |
|[…]                                              |Manager Operations Manila                                               |
|[…]                                              |HR Manager                                                              |
|[…]                                              |Manager PL Multi Market                                                 |
|[…]                                              |Manager Sales EMEA, AMEC                                                |
|[…]                                              |Executive Vice President NXP                                            |
|[…]                                              |R&D Manager                                                             |
|[…]                                              |Manager PL Base Stations                                                |
|[…]                                              |R&D-Technology Fellow                                                   |
|[…]                                              |F&A - Business controller                                               |
|[…]                                              |Manager Operations & Quality                                            |

-----------------------
[1]   OJ L 24, 29.1.2004, p. 1 ('the Merger Regulation'). With effect from 1 December 2009, the Treaty on the Functioning of the  European  Union
('TFEU') has introduced certain changes, such as the replacement of 'Community'  by  'Union'  and  'common  market'  by  'internal  market'.  The
terminology of the TFEU will be used throughout this decision.

[2]   OJ L 1, 3.1.1994, p.3 ("the EEA Agreement").

[3]   Publication in the Official Journal of the European Union No C 258, 7.08.2015, p. 3.

[4]   Turnover calculated in accordance with Article 5 of the Merger Regulation and the Commission Consolidated Jurisdictional Notice (OJ  C  95,
16.4.2008, p. 1).

[5]   See replies to Commission questionnaires to competitors Q1 and to customers Q2 of 31 July 2015, question 4.

[6]   Optical semiconductors are devices that have either luminescent or light-receiving  functionalities.  Luminescent  devices  include  light-
emitting diodes (“LED”) and laser diodes, while light-receiving devices include solar cells and photo-detectors.

[7]   Analog circuitry serves as a bridge connecting the real-world signals with the digital world, making  analog  technology  indispensable  in
almost all electronic applications.

[8]   Memory ICs provide data storage and retrieval capacity within an electronic system. There is  a  range  of  different  memory  ICs  on  the
market, such as dynamic random-access memory (“DRAM”), electrically erasable programmable read-only memory (“EEPROM”  and  flash  memory).  Logic
ICs are chips that perform a logical operation based on multiple digital  inputs,  consisting  of  “1”s  and  “0”s.  Logic  ICs  can  be  further
classified between general purpose and application specific.

[9]   A DC-to-DC converter is an electronic circuit which converts a source of direct current (“DC”) from one voltage level to another.

[10]  See replies to Commission questionnaires to competitors Q1 and to customers Q2 of 31 July 2015, question 5.

[11]  See replies to Commission questionnaires to competitors Q1 and to customers Q2 of 31 July 2015, question 5.

[12]  See replies to Commission questionnaires to competitors Q1 and to customers Q2 of 31 July 2015, question 6.

[13]  Commission decision of 2 December 2009 in Case M. 5535 - Renesas Technology/NERC Electronics.

[14]  Commission decision of 26 January 2011 in Case M.5984 - Intel / Mcafee, paragraphs 23 to 30.

[15]  See replies to Commission questionnaires to competitors Q1 and to customers Q2 of 31 July 2015, question 8.

[16]  See replies to Commission questionnaires to competitors Q1 and to customers Q2 of 31 July 2015, question 9.

[17]  See replies to Commission questionnaires to competitors Q1 and to customers Q2 of 31 July 2015, question 10.

[18]  See replies to Commission questionnaires to competitors Q1 and to customers Q2 of 31 July 2015, question 11.

[19]  See replies to Commission questionnaires to competitors Q1 and to customers Q2 of 31 July 2015, question 12.

[20]  See replies to Commission questionnaires to competitors Q1 and to customers Q2 of 31 July 2015, question 13.

[21]  See replies to Commission questionnaires to competitors Q1 and to customers Q2 of 31 July 2015, question 14.

[22]  Commission decision of 24 June 2002 in Case M. 2820 - STMicroelectronics/AlcatelMicroelectronics; Commission decision of  3  July  2001  in
Case M.2439 - Hitachi/STMicroelectronics/SuperH JV; Commission decision of 10 August 2007 in Case M. 4751- STM/Intel/JV; Commission  decision  of
27 June 2008 in Case M. 5173 - STM/NXP/JV; Commission decision of 25 November 2008 in Case M. 5332 - Ericson/STM/JV; and Commission  decision  of
2 December 2009 in Case M.5535 - Renesas Technology/NEC Electronics.

[23]  Case M.5984 - Intel / McAfee of 26 January 2011, para. 33.

[24]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 26 and to customers Q2 of 31 July 2015, question 23.

[25]  RF power amplifiers are essential parts of base stations for wireless  infrastructure.  Since  a  radio  signal  loses  its  strength  when
traveling through space, base stations must be able to both  transmit  a  sufficiently  powerful  signal  in  order  to  reach  wireless  devices
kilometres away and amplify a weak received signal and then pass it on. RF power transistors serve this purpose.

[26]  The word "power" used in categories (ii) and (iii) has a different meaning than when it is used in relation to  RF  power  transistors.  In
fact categories (ii) and (iii) are power management discretes, which have as purpose to control the flow of  the  electric  current,  whereas  RF
power transistors amplify the strength of a radio frequency signal, making it more powerful. Therefore, RF  Power  transistors  are  a  different
product from power transistors.

[27]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 17 and to customers Q2 of 31 July 2015, question 16.

[28]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 18 and to customers Q2 of 31 July 2015, question 17.

[29]  See replies to Commission questionnaire to competitors Q1 of 31 July 2015, question 21.

[30]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 19 and to customers Q2 of 31 July 2015, question 18.

[31]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 22 and to customers Q2 of 31 July 2015, question 20.

[32]        See replies to Commission questionnaire to customers Q2 of 31 July 2015, question 21.

[33]        See replies to Commission questionnaire to competitors Q1 of 31 July 2015, question 24.

[34]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 25 and to customers Q2 of 31 July 2015, question 22.

[35]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 26 and to customers Q2 of 31 July 2015,  question  23.
Only one customer pointed out that in the case of RF power transistors employing GaN technology due to export  restrictions  the  market  may  be
narrower than worldwide. However, such restrictions do not exist for the RF transistors employing the LDMOS technology.

[36]  Commission decision of 4 August 2000 in Case M. 2036- Valeo / Labinal.

[37]  See replies to Commission questionnaire to customers Q2 of 31 July 2015, question 7.

[38]  See replies to Commission questionnaire to competitors Q1 of 31 July 2015, question 7.

[39]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 26 and to customers Q2 of 31 July 2015, question 23.

[40]  Notifying Party's response to Commission's Request for information of 4 September 2015, Question 1, p1.

[41]  Notifying Party's response to Commission's Request for information of 20 April 2015, Question 3, p2.

[42]  In the overall category of digital ICs, NXP has a market share of [0-5]%, Freescale of [0-5]%. Within analog ICs, NXP has  a  market  share
of [0-5] %, Freescale of [0-5]%.

[43]  As regards bit size, the proposed transaction does not give rise to possible horizontally affected markets for 4 bit, 16  bit  and  32  bit
MCUs, as the Parties do not overlap or have combined shares below 20% in these segments. As  regards  application  type,  the  Parties’  combined
share is below 20% within general application MCUs, and the Parties’ activities do not overlap in the other possible  categories  of  application
specific MCUs (ID and smart card, consumer, computer and peripheral, wireless communications, wired communications).

[44]  Within the other possible segment of application specific DSPs, which is ASICs, the Parties are not active.

[45]  General purpose Analog ICs are divided into four product categories: amplifiers/comparators, voltage regulators/reference, data  converters
and interface devices.

[46]  The Parties’ activities do not overlap in application specific analog ICs for computers and peripherals and wired communications,  and  the
Parties’ combined share is below 20% in application specific analog ICs for consumers and wireless communications.

[47]  Notifying Party's response to Commission's Request for information of 4 September 2015, Question 1, p1, and Notifying Party's  response  to
Commission's Request for information of 20 April 2015, Question 3, p2.

[48]  See replies to Commission questionnaire to customers Q2 of 31 July 2015, question 26.1.

[49]  See replies to Commission questionnaire to customers Q2 of 31 July 2015, question 26.1.1.

[50]  See replies to Commission questionnaire to customers Q2 of 31 July 2015, question 26.2.

[51]  See replies to Commission questionnaire to customers Q2 of 31 July 2015, question 26.3.

[52]  See replies to Commission questionnaire to competitors Q1 of 31 July 2015, questions 29.2 and 29.3.

[53]  See replies to Commission questionnaire to competitors Q1 of 31 July 2015, question 29.1.

[54]  See replies to Commission questionnaire to competitors Q1 of 31 July 2015, question 28.

[55]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 30 and to customers Q2 of 31 July 2015, question 27.

[56]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 55.1 and to customers Q2 of  31  July  2015,  question
53.1.

[57]  See the Notifying Party’s reply to question 16 to the Commission request for information of 20 April 2015.

[58]  Notifying Party's response to Commission's Request for information of 4 September 2015, Question 1, p1, and Notifying Party's  response  to
Commission's Request for information of 20 April 2015, Question 3, p2.

[59]  Analog ICs shares are from IHS Technology while segmentation in Power and Non-power analog ICs has been  provided  by  Strategy  Analytics.
Gartner Technology and Strategy Analytics used different classification technics and for this reason the size of the  market  segment  of  Analog
ICs for automotive does not perfectly match. Based on Gartner's IHS Technology, Analog ICs for automotive in 2014 amounted to  USD  [~7  billion]
(NXP: USD [~800 million]; Freescale: USD [~400 million); while based on Strategy Analytics, the size of the market segment was USD  [~9  billion]
(NXP: USD [~900 million]; Freescale: USD [~500 million].

[60]  Notifying Party's response to Commission's Request for information of 4 September 2015, Question 1, p1, and Notifying Party's  response  to
Commission's Request for information of 20 April 2015, Question 3, p2.

[61]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, questions 33 and 33.1 and to customers  Q2  of  31  July  2015,
questions 30 and 30.1.

[62]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, questions 33.2 and 33.3 and to customers Q2 of  31  July  2015,
questions 30.2 and 30.3.

[63]  Conference call with a competitor: "Non confidential minutes - Conference call with a competitor", dated 12 May 2015.

[64]  See replies to Commission questionnaires to customers Q2 of 31 July 2015, question 30.4.

[65]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 35.4 and to customers Q2 of  31  July  2015,  question
33.4.

[66]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 32 and to customers Q2 of 31 July 2015, question 29.

[67]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 37 and to customers Q2 of 31 July 2015, question 35.

[68]  See replies to Commission questionnaire to customers Q2 of 31 July 2015, question 36.

[69]  See replies to Commission questionnaire to competitors Q1 of 31 July 2015, question 38.

[70]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 36.

[71]  SEDI uses GaN technology.

[72]  The Parties' activities are limited in the military, commercial avionics and air traffic control and non-cellular communications.

[73]  Horizontal Merger Guidelines, OJ C 31, 5.2.2004, p. 5, paragraphs 14 and  15;  Case  T-79/12,  Cisco  Systems  v.  Commission,  T:2013:635,
paragraph 47.

[74]  Horizontal Merger Guidelines, paragraph 27.

[75]  Horizontal Merger Guidelines, paragraph 17. Case T-221/95, Endemol v Commission, T:1999:85, paragraph 134,  and  Case  T-102/96,  Gencor  v
Commission, T:1999:65, paragraph 205.

[76]  In relation to RF power transistors employing GaN-on-Sic technology, respondents to the  market  investigation  do  not  consider  NXP  and
Freescale as important suppliers. Sumitomo is generally considered the market leader for this type of RF power transistors.

[77]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, questions 42 and 43 and  to  customers  Q2  of  31  July  2015,
questions 40 and 41.

[78]  See replies to Commission questionnaires to customers Q2 of 31 July 2015, questions 41.1.

[79]  See replies to Commission questionnaire to competitors Q1 of 31 July 2015, question 46.1.

[80]  RFIC is an abbreviation of Radio Frequency Integrated Circuit. Applications for RFICs include radar and communications, although  the  term
RFIC might be applied to any integrated electrical circuit operating in a frequency range suitable for wireless transmission.

[81]  A Monolithic Microwave Integrated Circuit is a type of integrated circuit (IC) device that operates at microwave frequencies  (300  MHz  to
      300 GHz).

[82]  See replies to Commission questionnaire to competitors Q1 of 31 July 2015, question 46.2.

[83]  NXP's internal documents, "RF Power Strategy slides" of September 2014, page 14, ID 391-84.

[84]  Freescale's internal documents, "RF Strategic Plan Review", of 30 October 2014, page 3, ID 39.

[85]  Freescale's internal documents, "Freescale portfolio review", of 24 November 2014, page 3, ID 93-50.

[86]  See replies to Commission questionnaire to customers Q2 of 31 July 2015, question 50.

[87]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 49 and to customers Q2 of 31 July 2015, question 50.

[88]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 50.

[89]  See replies to Commission questionnaire to competitors Q1 of 31 July 2015, question 52.

[90]  See replies to Commission questionnaires to competitors Q1 of 31 July 2015, question 51 and to customers Q2 of 31 July 2015, questions 53.

[91]  Commission notice on the remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation  (EC)  No  802/2004,
OJ 2008/C 267/01, paragraph 56.

[92]  An exception is the option for the buyer of the Divestment Business to purchase some assets  for  the  front-end  manufacturing  of  MOSCAP
wafers, from NXP's DHAM facility.

[93]  Some of the back-end packaging activities will also be outsourced to third parties.

[94]  Until these assets have been completely separated from NXP's site, NXP will provide to  the  Divestment  Business  basic  utility  services
(e.g. water, energy and IT).

[95]  According to the Commitments, under the MSA NXP will provide to the Divestment Business manufacturing services including (i) production  of
      LDMOS wafers for […]years, (ii) production of MOSCAP wafers for […]years, (iii) grinding and backside metallization  of  LDMOS  and  MOSCAP
      wafers for […] years, and (iv) wafer testing & sawing, and assembly and final testing of QFN and OMP packaged products for […]

[96]  Requalification would be necessary because, when front-end manufacturing production  is  transferred  from  one  foundry  to  another,  the
products released at the latter will never be exactly match those previously released at the former. Therefore,  when  such  a  transfer  process
takes place, customers must requalify the new foundry so that it can manufacture the requested products to the requisite standards.

[97]  See replies to Commission remedies questionnaires Q4 to customers of 10 August 2015, question 4.

[98]  See replies to Commission remedies questionnaires to customers Q4 of 10 August 2015, questions 5 and 24.

[99]  See replies to Commission remedies questionnaires to competitors Q3 of 10 August 2015, questions 24, 25 and 26,  and to customers Q4 of  10
August 2015, questions 24, 25 and 26.

[100]       See replies to Commission remedies questionnaires to competitors Q3 and to customers Q4 of 10 August 2015, question 7.

[101]       See replies to Commission remedies questionnaires to competitors Q3 and to customers Q4 of 10 August 2015, question 10.

[102]       See replies to Commission remedies questionnaires to customers Q4 of 10 August 2015, question 9.

[103]       See replies to Commission remedies questionnaires to competitors Q3 and to customers Q4 of 10 August 2015, question 8.

[104]       See replies to Commission remedies questionnaires to competitors Q3 and to customers Q4 of 10 August 2015, questions 14 to 16.

[105]       See replies to Commission remedies questionnaires to customers Q4 of 10 August 2015, questions 12.

[106]       See replies to Commission remedies questionnaires to competitors Q3 and to customers Q4 of 10 August 2015, question 21.

[107]       See replies to Commission remedies questionnaires to competitors Q3 and to customers Q4 of 10 August 2015, questions 22 and 23.

[108]       See replies to Commission remedies questionnaires to competitors Q3 and to customers Q4 of 10 August 2015, question 4.

[109]       See replies to Commission remedies questionnaires to competitors Q3 and to customers Q4 of 10 August 2015, question 39.

[110] OJ 2008/C 267/01, paragraph 5.

[111]       Remedies Notice, Paragraph 6.

[112]       Remedies Notice, Paragraph 9.

[113]       Remedies Notice, Paragraph 81.

[114] Remedies Notice, paragraph 23-25.

[115] Remedies Notice, paragraph 26.

[116] Remedies Notice, paragraph 32.

[117] Remedies Notice, paragraph 47.

[118]       Remedies Notice, Paragraph 12.

[119]       Remedies Notice, Paragraph 9.

[120]       See case T-471/11, Éditions Odile Jacob v Commission, T:2014:739, paragraphs 79-83.

-----------------------
 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC)  No  139/2004
 concerning non-disclosure of business secrets and other confidential information.  The  omissions  are  shown  thus  […].  Where  possible  the
 information omitted has been replaced by ranges of figures or a general description.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE

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