Chipmaker NXP Semiconductors NV (NXPI.US) issued a better-than-expected revenue guidance for the first quarter of 2026; however, its stock fell nearly 5% in Monday's after-hours trading, pressured by growth in the automotive market that slightly missed expectations. The financial report revealed that NXP's Q4 revenue increased 7% year-over-year to $3.34 billion, surpassing the analyst consensus estimate of $3.3 billion. On a Non-GAAP basis, gross profit rose 7% to $1.91 billion, with a gross margin of 57.4%; operating profit grew 8% to $1.15 billion, resulting in an operating margin of 34.6%; and diluted earnings per share were $3.35, beating the average analyst estimate of $3.31. By business segment, Automotive revenue increased 5% year-over-year to $1.88 billion, falling short of the analyst consensus of $1.89 billion, with some analysts having projected as high as $1.97 billion; Industrial & IoT revenue grew 24% to $640 million; Mobile revenue increased 22% to $490 million; and Communications Infrastructure & Other revenue declined 18% to $330 million. NXP primarily supplies chips to the automotive industry, which contributes more than half of the company's total revenue. Its chips, manufactured using mature process technologies, are widely used for functions such as driving safety, vehicle connectivity, and in-car infotainment systems. Like its peers STMicroelectronics (STM.US) and Texas Instruments (TXN.US), NXP has been affected by a post-pandemic chip supply glut. Automotive and consumer electronics clients, who had stockpiled chips during the pandemic-driven shortages, have been slowly working through their inventories. The threat of tariffs from U.S. President Trump has further delayed the recovery process. NXP indicated last year that the supply overhang might finally be nearing its end, noting that its automotive business was accelerating "significantly." CEO Rafael Sotomayor, who took office last October, also stated that he was seeing "signs of a cyclical recovery." Last week, STMicroelectronics, a supplier to Apple (AAPL.US), provided first-quarter revenue guidance that exceeded analyst expectations, citing a rebound in demand from consumer electronics customers. However, its stock price still declined as the analog chipmaker's earnings report revealed an uneven recovery across different end markets. STMicroelectronics CEO Jean-Marc Chery told analysts on a conference call that the automotive market "has not yet stabilized." Looking ahead, NXP expects Q1 2026 revenue to be between $3.05 billion and $3.25 billion, with a midpoint of $3.15 billion, which is better than the average analyst estimate of $3.09 billion. The company forecasts Non-GAAP diluted earnings per share to be in the range of $2.77 to $3.17, with a midpoint of $2.97, slightly above the analyst consensus of $2.95.
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