Phillips' Spinoffs Outperform Parent (TSMC, ASML, NXP)
Philips, initially an electronics company founded in 1891 in the Netherlands, transitioned to focus on healthcare technology. It started with manufacturing light bulbs and expanded into various electronics. Over time, Philips created successful spinoffs, including TSMC (semiconductors), ASML (photolithography equipment), NXP Semiconductors (mixed-signal electronics), and Signify (lighting).
- TSMC: Founded in 1987 as a joint venture between Philips (28%), the Taiwanese government (48%), and private investors, TSMC has become the world's second-largest semiconductor company, following NVIDIA, with a valuation of over $850 billion. Philips exited its position in 2007 when its stake was valued at $9 billion.
- ASML: Spun off from Philips' advanced lithography division in 1995 with a $1B valuation, ASML is now a key player in the photolithography equipment industry, crucial for producing ICs. Today, ASML's market cap exceeds $400B, making it 16 times more valuable than Philips.
- NXP Semiconductors: Spun off in 2006, NXP specializes in high-performance mixed-signal electronics and is crucial in the automotive and other industries. With a market cap of $70B, NXP is now three times more valuable than Philips.
- Signify: Spun off from Philips’s lighting division in 2016, Signify, valued at over $3B, continues to innovate in the lighting industry.
Philips' future direction remains uncertain. While spinning off its healthcare division to replicate the success of its former spinoffs and focus on research and IP is a potential path, recent changes indicate the company is prioritizing its healthcare division and reducing its research efforts.
Source: Linkedln Post
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