NXP Semiconductors recently announced that it grew its first-quarter revenue by 27 percent year-over-year despite its recent challenges. The company has grappled with the global chip shortage, and one of its fabs temporarily going offline in the last few months.
The firm’s robust financial performance last period is the result of strong demand across all of its main product segments.
The Dutch corporation expects its growth trend to continue into the second quarter and throughout 2021.
Outstanding Performance Driven by High Component Demand
During Q1, NXP generated $2.56 billion in sales with a gross profit of $1.35 billion. Those results substantially exceeded the $2.02 billion in revenue with earnings of $997 million it made in the same timeframe last year. The firm also blew past the midpoint of the intake guidance it offered in early February.
The chipmaker’s success last period was driven by the 24 percent year-over-year growth of its core automotive segment. The unit brought in $1.22 billion in the three months ending April 4 versus $994 million in Q1 2020. That said, its industrial and IoT division experienced the greatest expansion, increasing by 52 percent annually. Moreover, its mobile electronic parts sales jumped by 40 percent, totaling $421 million.
CEO Kurt Sievers attributed the corporation’s expectation-defying earnings to its diverse product mix.
NXP’s outstanding financial performance is notable given that the worldwide chip shortage began affecting its business last December. The firm informed its clients that the supply-demand imbalance would disrupt the availability of its components. In addition, it shuttered its Austin, Texas fab for three weeks after a severe winter storm disrupted the state’s power grid.
Despite those obstacles, NXP kept its production and logistics operations steady enough to grow its quarterly income significantly.
NXP Expects Growth to Continue Throughout 2021
The Dutch company predicts revenue of $2.5 billion to $2.64 billion with gross profit of $1.34 billion to $1.43 billion in the second quarter. If the corporation hits the midpoint of its projections, it will grow its Q2 sales by 41.9 percent and its gross income by 61.8 percent.
NXP’s guidance for the current period should be viewed in the context of recent events.
One, the corporation’s Q2 earnings will reflect the protracted unscheduled downtime of its Texas foundry from earlier this year. It previously estimated the incident would shave $100 million off of its June period returns.
Two, the COVID-19 outbreak took a big bite out of its earnings last year, with its Q2 automotive business declining 35 percent. Since vehicle demand has rebounded from the impact of the pandemic, its car chip intake is much better in comparison. That said, its forecast is still 15.92 percent higher than its sales for the second quarter of 2019.
NXP’s chief executive also commented that the firm’s expansion trend should continue throughout this year.
At this point, the chipmaker’s positive outlook seems well-founded. The company managed to capitalize on multi-market demand for its products even with chip shortage-related challenges. As industry analysts believe the component crisis will last through 2022, the manufacturer’s revenue should remain at a high level.
Given its operational resiliency, NXP should have no problem achieving its near and long-term financial goals.