NXP Semiconductor (NXP) has released disappointing fourth quarter sales and earnings forecasts, with its stock price falling in after hours trading due to the slowdown in the automotive industry.
NXP stated in a statement that its fourth quarter revenue will be between $3 billion and $3.2 billion. Excluding some projects, the maximum profit per share will reach $3.33. According to compiled data, analysts expect the company's revenue to be $3.36 billion and earnings per share to be $3.62.
Our expectations for the fourth quarter reflect broader macro weakness, particularly in Europe and the Americas, "said Kurt Sievers, CEO of NXP." We are focused on managing what we can control to enable NXP to achieve resilient profitability and revenue in an uncertain demand environment
In the third quarter, NXP's sales decreased by 5.4% to $3.25 billion. This is slightly lower than the expected $3.26 billion. Excluding certain items, earnings per share fell to $3.45, compared to an expected $3.42.
NXP's stock price fell 7.1% to $220.10 in after hours trading after the announcement of its results. The stock closed earlier at $236.90.
Chip manufacturers that rely on car manufacturers have been struggling this year, facing issues of excess inventory and sluggish demand for electric vehicles using their products. STMicroelectronics has recently been pessimistic about its sales prospects for the first quarter, while US chip manufacturer Texas Instruments (TI) stated in October that automotive chips are still affected by excess inventory.
Consumers' willingness to purchase electric vehicles is not high, and European car manufacturers are striving to compete with cheap electric vehicle alternatives from China. China has also been expanding its domestic semiconductor market, and the European Commission has previously warned that chip manufacturers in the region are at risk of losing a significant market share.
Chinese car manufacturers are also facing increasing restrictions in Europe. Recently, the EU has imposed higher tariffs on electric vehicles produced in China, exacerbating tensions. EU car manufacturers have stated that this may harm their sales in China.
The global annual outlook for electric vehicles is set to lower its sales forecast by 14% until 2026 compared to a year ago. Several of the world's largest car manufacturers, including Volkswagen Group and Mercedes Benz Group, have recently reduced their targets.
