NXP expects uncertain times due to automotive industry setbacks - Techzine Global

Nov 05, 2024

NXP recently presented disappointing expectations for this year’s fourth and final quarter. The Dutch chip manufacturer is particularly troubled by the uncertain times European and American car industries are facing.

According to a call by NXP CEO Kurt Sievers on the quarterly figures for the third quarter of this year, he expects setbacks in the fourth quarter. Although the company was still profitable, the third quarter already shows a decline in sales.

The main reason for the disappointing figures is that the European and American automotive industry, especially the market for electric cars, is experiencing a major dip. The chip manufacturer is making the most money in this segment—at least, that is the intention.

European consumers still find European and American electric cars far too expensive. As a result, they are currently opting more often for Chinese alternatives that often use Chinese chips.

In addition, the EU notes that chip manufacturing within member states is lagging behind foreign competition from China and the US, especially. It calls on European chip manufacturers to scale up quickly. Otherwise, the European chip sector risks losing the global competitive battle.

Furthermore, US sanctions against China also play a role, severely limiting an important sales market for NXP’s chips.

In the third quarter, NXP’s chip sales fell 5.4 percent to a total of 3.26 billion dollars, slightly below analysts’ expected sales of 3.26 billion dollars. Quarterly profit for the third quarter of this year came in at 1.89 billion dollars, down 6 percent from the same period in 2023 but up another 3 percent from the second quarter of this year.

However, NXP expects disappointing figures for the fourth quarter of this year. Total revenue is expected to be between 3 and 3.2 billion dollars, less than the 3.36 billion analysts expected. Profit for that quarter is estimated at between 1.71 and 1.86 billion dollars.

According to Sievers, NXP will do everything it can to limit the damage as long as it has control over it. The chip maker commits to maintaining its profit margin and generating a revenue source that can weather geopolitical storms. That is precisely the major challenge within the company’s uncertain market.

Read more: NXP optimistic about second-quarter profit despite slumping EV market

automotive industry / NXP / Q4 2024 / quarterly figures / setbacks

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