NXP Semiconductors outpaces Q3 analyst, internal forecasts

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NXP has released new guidance for its fiscal Q1 results.

NXP Semiconductors recently published its preliminary third-quarter financial results, which revealed it topped Wall Street and its internal revenue estimates. The company revealed its stronger-than-expected performance is due to increased demand for its automotive and smartphone components.

The Dutch chipmaker will make its full and final quarterly regulatory disclosure on October 26.

NXP Preliminary Q3 Financial Results

As a global leading provider of semiconductor products for the vehicle sector, NXP’s core business took a major hit because of the coronavirus pandemic. But its Q3 results indicate it has entered a recovery phase.

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The company estimates it generated $2.267 billion in revenue and $1.09 billion in gross profit during Q3. In July, the corporation predicted it would generate between $1.9 billion and $2.1 billion in sales and earnings of $768 million to $900 million.

Market analysts anticipated the firm would take in $2.06 billion during the period prior. The chipmaker’s guidance beating performance prompted a 5 percent rise in its stock price.

NXP’s Road to Recovery

Earlier this year, regional governments issued self-quarantine mandates to halt the spread of the viral outbreak. That meant automobile manufacturers across the world had to shut down their production lines temporarily. In addition, local lockdown measures prevented consumers and businesses from test-driving or buying new vehicles.

While most areas eventually relaxed their restrictions, the global economy entered a recession, which curtailed high dollar consumer spending. But over time, certain national auto markets began to recover as manufacturers and buyers adjusted to life in the “new normal.” China, where NXP does most of its business, experienced a sustained four-month revival of its vehicle sector beginning in May.

For that reason, the chipmaker’s ability to overcome external and internal sales forecasts in Q3 makes sense.

In addition, analytics company IDC noted the Chinese mobile device market showed signs of a rebound in Q2. The sector contracted by 10.3 percent in the spring quarter, but it suffered a 20.3 percent decline in Q1. NXP’s announcement suggests the region’s smartphone segment slowed its fall or even resumed growing in the September ending period.

The semiconductor corporation’s preliminary Q3 financial results indicate its revenue and gross profit decreased by 1.43 and 8 percent year-over-year, respectively. But its disclosure also indicates it increased its sales and earnings by 24.7 and 26.7 percent. As long as there is no near-term widespread coronavirus outbreak, NXP could return to expansion in the holiday quarter.

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