NXP Semiconductors N.V. reported earnings guidance that may not be as optimistic as some investors had hoped, sending the company's shares lower in after-hours trading.

Q2 Results

Performance data

NXP Semiconductors reported second-quarter earnings of $2.72 per share before certain costs such as stock compensation, and revenue of $2.93 billion, down 6% from the same period last year. Analysts had expected earnings of only $2.67 per share, with sales slightly lower than the $2.9 billion in the same period last year, which was a pretty good performance.

Cash flow

The chipmaker also reported operating cash flow of $779 million and free cash flow of $696 million in the quarter ended June 29. Adjusted gross margin was 56.5%, slightly lower than 58.6% a year ago.

Net profit

Due to lower profit margins, it is not surprising that NXP Semiconductors' net profit of $445 million was slightly lower than the $490 million in revenue in the same period last year.

CEO comments

NXP's outgoing CEO Kurt Sievers, who revealed three months ago that he planned to retire at the end of October, was optimistic about today's performance, saying that the company achieved solid profitability and earnings. "We achieved this by strengthening our competitive product portfolio and aligning our wafer manufacturing footprint with our hybrid manufacturing strategy," he explained.

Business Distribution

NXP produces computer chips for high-speed digital processing in industries such as automotive, manufacturing, IoT and telecommunications. The company gets most of its sales from its automotive business, which had revenue of $1.73 billion in the quarter, flat year-over-year.

Segment Performance

Unfortunately for NXP, this was the best performing segment. Sales in the communications and infrastructure business fell 27% to $320 million; sales in the mobile business fell 4% to $331 million; and sales in the industrial and IoT business fell 11% to $546 million.

Future Outlook

Demand concerns

Analysts worry that ongoing demand issues in the automotive and industrial sectors could weigh on NXP Semiconductors' future revenue, as do rival chipmakers such as Infineon Technologies AG and STMicroelectronics. Renault SA, for example, last week slashed its operating margin forecast for the current fiscal year, citing lower demand and increased competition.

Oversupply

Like its peers, NXP is struggling with an oversupply of chips needed for electric vehicles and manufacturing operations. The oversupply has persisted for more than 18 months, hurting chip sales in those sectors as demand for electric vehicles in China and other markets has fallen.

Guidance for next quarter

That may explain why NXP was a little hesitant on guidance for the next quarter. The company said it expects third-quarter earnings of between $2.89 and $3.30 per share and revenue of between $3.05 billion and $3.25 billion. Although the guidance range was wider than usual, its results did beat Wall Street's expectations for earnings of $3.06 per share and sales of $3.05 billion, suggesting some uncertainty.

Analyst interpretation

Some analysts interpreted the outlook as evidence that NXP is still dealing with a lot of turbulence. The chipmaker's reliance on the automotive industry means it is highly vulnerable to the uncertainty of US President Donald Trump and his tariff actions.

CEO optimism

Sievers again expressed optimism, saying the guidance "reflects the cyclical improvement that is emerging in NXP's core end markets" and "the performance of specific growth drivers in our company."

Analyst warnings

However, Bloomberg Intelligence analyst Ken Hui said the performance guidance may disappoint investors amid an "uncertain market backdrop." He noted that automotive chipmakers may face "greater pricing pressure and the end of tariff-reducing restocking needs from European customers" due to the market decline. Mr. Hui also warned that the industrial revenue recovery may also be "unsustainable" given the decline in demand from factory automation customers in China.

Stock price impact

NXP shares fell 5% after the bell, erasing a 1% gain in the regular trading session before today's earnings release. However, the stock is still up more than 9% so far this year.

Source: Content compiled from Bloomberg

Reference link

https://siliconangle.com/2025/07/21/nxp-delivers-bullish-guidance-despite-declining-revenue-investors-not-convinced/