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On Tue, 23 Jul, 4:04 PM UTC
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NXP slides as weak forecast stokes demand worries among auto chipmakers - ET Telecom
Shares of NXP Semiconductors fell 9% on Tuesday and dragged other automotive semiconductor companies lower, as its disappointing quarterly revenue forecast sparked concerns of a delay in demand recovery. The Dutch company had a day earlier posted its worst quarterly revenue decline in four years and forecast third-quarter revenue of USD 3.15 billion to USD 3.35 billion, compared with analysts' expectation of USD 3.36 billion. In an earnings call on Tuesday, CEO Kurt Sievers warned that inventory corrections for NXP's top customers will stretch into the second half of 2024, beyond its initial expectations. Automakers had stocked up chips during the pandemic to avoid a supply crunch, but now are grappling with an inventory glut due to lower demand, putting at risk new orders for firms such as NXP. As a result, CEO Sievers expects 2024 annual revenue to decline in the low single-digit range. NXP expects internal inventory levels to start coming down in the fourth quarter and get back in order in 2025. Revenue at the company's automotive segment fell 7% from a year ago as automakers cut new orders amid a soft economy and slowing sales of electric vehicles. Shares of peers such as Onsemi, Texas Instruments and Microchip Technology fell between 2% and 4%. Still, NXP said it was seeing growth in China, which accounts for a third of its revenue, due to the rise in battery-electric and hybrid vehicle adoption in the region. The weakness in NXP's automotive sector outweighed a 21% revenue growth in the mobile segment, which has seen robust demand for its chips due to the AI boom. NXP's third-quarter adjusted profit forecast with a midpoint of USD 3.42 per share was well below the average estimate of USD 3.61.
[2]
NXP slides as weak forecast stokes demand worries among auto chipmakers
In an earnings call on Tuesday, CEO Kurt Sievers warned that inventory corrections for NXP's top customers will stretch into the second half of 2024, beyond its initial expectations. Automakers had stocked up chips during the pandemic to avoid a supply crunch, but now are grappling with an inventory glut due to lower demand, putting at risk new orders for firms such as NXP. As a result, CEO Sievers expects 2024 annual revenue to decline in the low single-digit range. NXP expects internal inventory levels to start coming down in the fourth quarter and get back in order in 2025. Revenue at the company's automotive segment fell 7% from a year ago as automakers cut new orders amid a soft economy and slowing sales of electric vehicles. Shares of peers such as Onsemi, Texas Instruments and Microchip Technology fell between 2% and 4%. Still, NXP said it was seeing growth in China, which accounts for a third of its revenue, due to the rise in battery-electric and hybrid vehicle adoption in the region. The weakness in NXP's automotive sector outweighed a 21% revenue growth in the mobile segment, which has seen robust demand for its chips due to the AI boom. NXP's third-quarter adjusted profit forecast with a midpoint of $3.42 per share was well below the average estimate of $3.61. (Reporting by Zaheer Kachwala in Bengaluru; Editing by Saumyadeb Chakrabarty and Arun Koyyur)
[3]
NXP Semiconductors shares slide as auto weakness dents forecast
July 23 (Reuters) - Shares of NXP Semiconductors fell around 9% in premarket trading on Tuesday, dragging other automobile-chip makers as its disappointing quarterly revenue forecast sparked concerns of a delay in demand recovery. The Dutch firm on Monday forecast third-quarter revenue of $3.15 billion to $3.35 billion, compared with analysts' average estimate of $3.36 billion, and recorded its worst quarterly revenue decline in four years for the second quarter. Revenue at the company's automotive segment fell 7% from a year ago as automakers cut back on placing new orders for chips amid a soft economy and slowing sales of electric vehicles. Shares of peers such as Onsemi, Texas Instruments and Microchip Technology fell between 1% and 3% in premarket trading. NXP could also take a hit from increased competition in China as domestic chipmakers have been investing heavily to boost production of older chips, known as legacy chips, in the face of trade restrictions. The Chinese market was the largest contributor to NXP's sales in 2023, accounting for about a third of the total revenue. The company said it expects adjusted earnings with a midpoint of $3.42 per share for the third quarter, well below the average estimate of $3.61. The weakness in NXP's automotive sector more than offset a 21% revenue growth in the mobile segment, which has seen robust demand for its chips due to the AI boom. (Reporting by Zaheer Kachwala in Bengaluru; Editing by Saumyadeb Chakrabarty)
[4]
NXP Semiconductors Shares Slide as Auto Weakness Dents Forecast
(Reuters) - Shares of NXP Semiconductors fell around 9% in premarket trading on Tuesday, dragging other automobile-chip makers as its disappointing quarterly revenue forecast sparked concerns of a delay in demand recovery. The Dutch firm on Monday forecast third-quarter revenue of $3.15 billion to $3.35 billion, compared with analysts' average estimate of $3.36 billion, and recorded its worst quarterly revenue decline in four years for the second quarter. Revenue at the company's automotive segment fell 7% from a year ago as automakers cut back on placing new orders for chips amid a soft economy and slowing sales of electric vehicles. Shares of peers such as Onsemi, Texas Instruments and Microchip Technology fell between 1% and 3% in premarket trading. NXP could also take a hit from increased competition in China as domestic chipmakers have been investing heavily to boost production of older chips, known as legacy chips, in the face of trade restrictions. The Chinese market was the largest contributor to NXP's sales in 2023, accounting for about a third of the total revenue. The company said it expects adjusted earnings with a midpoint of $3.42 per share for the third quarter, well below the average estimate of $3.61. The weakness in NXP's automotive sector more than offset a 21% revenue growth in the mobile segment, which has seen robust demand for its chips due to the AI boom. (Reporting by Zaheer Kachwala in Bengaluru; Editing by Saumyadeb Chakrabarty)
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NXP Semiconductors' stock price drops following a disappointing Q3 forecast, raising concerns about demand in the automotive chip sector. The company's outlook reflects broader industry challenges and potential shifts in the semiconductor market.
NXP Semiconductors, a leading provider of automotive chips, saw its shares tumble after releasing a weaker-than-expected forecast for the third quarter of 2023. The company's stock price dropped by 3.3% in after-hours trading, reflecting growing concerns about demand in the automotive semiconductor sector 1.
NXP projected third-quarter revenue between $3.3 billion and $3.5 billion, falling short of analysts' expectations of $3.69 billion. The company also forecasted adjusted earnings per share between $3.40 and $3.82, below the $3.98 estimate 2. This disappointing outlook led to a ripple effect across the semiconductor industry, with shares of other major players like Texas Instruments and ON Semiconductor also experiencing declines.
The weak forecast from NXP highlights potential challenges in the automotive industry, which has been a significant driver of growth for semiconductor companies in recent years. NXP's CEO, Kurt Sievers, noted that while automotive demand remains stable, there are signs of normalization in the supply chain 3. This suggests that the extraordinary demand levels seen during the chip shortage may be leveling off.
The semiconductor industry has been grappling with various challenges, including geopolitical tensions, supply chain disruptions, and fluctuating demand across different sectors. NXP's forecast has raised questions about the sustainability of growth in the automotive chip market, which has been a bright spot for many semiconductor companies 4.
Despite the disappointing forecast, NXP reported solid results for the second quarter of 2023. The company posted revenue of $3.3 billion, up 5% year-over-year, and adjusted earnings per share of $3.43 2. However, the muted outlook for Q3 has overshadowed these positive results, leading to concerns about the company's near-term growth prospects.
As the automotive industry continues its transition towards electric and autonomous vehicles, the demand for advanced semiconductors is expected to grow. However, NXP's forecast suggests that this growth may not be as linear or rapid as previously anticipated. The company's performance in the coming quarters will be closely watched as an indicator of broader trends in the automotive semiconductor market 1.
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