Chipmaker NXP forecasts Q2 profit above estimates on industrial demand recovery

NXP Semiconductors forecast second-quarter profit above estimates on Monday, as easing inventory corrections at its industrial and mobile customers helped offset decelerating revenue from automotive customers due to slowing EV demand.

U.S.-listed shares of the Eindhoven, Netherlands-based chipmaker rose 6% in extended trading.

After many quarters of working down existing chip inventory, orders from industrial and mobile customers show signs of rebounding. These markets were experiencing a chip supply glut after a pandemic-fueled buying spree.

Industrial and IoT revenue grew 14%, while mobile revenue was up 34% in the first quarter.

However, the automotive market, NXP’s biggest by revenue share, is starting to see an inventory build-up.

Expensive EVs have put off consumers already grappling with higher-for-longer interest rates, hurting demand for the company’s automotive chips, some of which are used in advanced driver-assistance system functions.

Revenue from the automotive segment fell 1% in the first quarter. NXP had said in February that automotive revenue would be down in the low single-digit percent range in the quarter.

“Relative to its competitors and peers, NXP’s first-quarter results and its second-quarter outlook are clearly better,” said Summit Insights analyst Kinngai Chan.