NXP sees automotive slump, industrial sales up

Business news |
By Nick Flaherty

NXP saw a decline in automotive as a result of the Covid-19 pandemic but, like other chip makers, sees a bounce back in the second half of the year.   

“Our automotive business was significantly impacted by the Covid-19 caused factory shutdowns of our customers, so we did experience better than anticipated trends, and sequential growth in all of our other end markets,” said Kurt Sievers, CEO of NXP. “We are encouraged by the positive trends we experienced in China and the sales out of our distribution channel did improve sequentially.

Taken together, NXP delivered revenue of $1.82bn, $17 million above the midpoint of its guidance range.

“In automotive, revenue was $674m, down 35 percent versus the year ago period and showing a 32 percent sequential decline. In industrial and IoT, revenue was $435 million, 12% versus the year ago period and up 16 percent sequentially,” he said.

The mobile market was less strong, with $255m for the quarter, down 14 percent on the previous year but up three percent sequentially, but Sievers points out this was impacted by the sale of the voice and audio business. For communication infrastructure, the revenue was $453m, down 9 percent on a year ago but up 12 percent this year.

“We believe the setup is gradually more positive heading into the second half of the year,” said Sievers. “This is thanks to customer attraction with NXP specific drivers, including automotive radar, wireless connectivity, our crossover processes, our secure ultra-widebands, just to name a few. And furthermore, we do see an ongoing stabilization of our end markets.”

The company is reducing production to keep its distribution channel at 12 weeks and reducing to 100 days by the end of Q3. “Our stringent discipline of our distributor channel inventory maintains our target channel inventory at 2.4 months of supply. And exactly in that light, we held back about $145 million of shipments to distributors during the past quarter,” he said. “Additionally, we continue to run our internal factories significantly below normal operating levels, avoiding building excess inventory.”

For Q3, the company sees the same improvements as Texas Instruments and STMicroelectronics as markets recover in the second half of the year. The company expects Q3 revenue at $2bn, down about 12 percent on Q3 2019 but up 10 percent from Q2.

”Automotive is expected to be down in the low 20 percent range versus Q3 2019, and up about 20 percent versus Q2 2020. Industrial and IoT is expected to be up in the mid teens range versus Q3 2019 and is expected to be up in the mid teens range versus Q2 2020,” said Sievers. “Mobile is expected to be down in the low teens range versus Q3 2019. Again, the year-on-year trends are being impacted by the sale of the voice and audio business. On a sequential basis, mobile is expected to be up about 10 percent versus Q2 2020.”

Related articles


Linked Articles