Like other chip companies, NXP has gained in value over the past year. Yet the Dutch chipmaker’s development is somewhat different from AI giant Nvidia’s meteoric rise. Due to a rather weak automotive sector, it presented disappointing quarterly figures.
NXP targets automotive, IoT and industrial solutions with its own hardware. Those those sectors are, in TSMC’s wording a few months ago, “soft.” Overall, chip year 2024 is one of “mixed momentum,” as the Taiwanese chip giant puts it. Where AI is thriving and the PC market is recovering, NXP’s specialties are not yet out of the post-Covid doldrums.
The automotive segment was down 7 percent from Q2 2023 for NXP, but Industrial IoT was up by the same percentage.
Cyclical nature
The bottom line is that NXP’s revenue fell 5 percent last quarter compared to the same quarter a year ago. Yet it is the current quarter that analysts are unhappy about, as NXP expects earnings per share between 2.95 euros and 3.33 euros, with the external forecast of 3.27 euros aiming on the high side. It led to a share price drop, although NXP’s longer-term value is growing steadily.
NXP president and CEO Kurt Sievers called the period a “cyclical trough” after which “sequential growth” should take place. “We continue to manage what we have control over, allowing NXP to achieve resilient profitability and earnings in a challenging demand environment.”
In the longer term, NXP technology will increasingly power “Software-Defined Vehicles,” where vehicles monitor and assist their drivers through a variety of sensors and telemetry. Sometimes that can lead to privacy issues, though.
Read on: Modern cars are proving to be a “privacy nightmare”