NXP Semiconductors Gives Bullish Forecast on Industrial and Auto Market Demand

(Bloomberg) — NXP Semiconductors NV, the second-biggest supplier of chips to the automotive industry, gave a strong forecast for the current quarter driven by demand for components used in cars.

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Third-quarter revenue will be $3.35 billion to $3.5 billion, NXP said Monday in a statement. That compares with an average analyst estimate of $3.32 billion. Gross margin, or the percentage of sales remaining after deducting the cost of production, will be as high as 58.3%. Analysts has projected a margin of 57.6%.

NXP generates about half its revenue from the sales of chips used in autos. The Eindhoven, Netherlands-based company has posted rapid growth fueled by the increasing use of semiconductors in vehicles. That’s continuing as the supply of the electronic components still can’t meet all of the industry’s orders.

Like many other chipmakers, NXP doesn’t manufacture all of its semiconductors in-house, instead outsourcing production to suppliers such as Taiwan Semiconductor Manufacturing Co. Those foundries are swamped with orders they’re struggling to fill.

NXP, in its statement, cited continued strong demand in the markets for auto, industrial and connected devices.

In the period ended July 3, NXP reported sales increased 28% to $3.31 billion. Gross margin was 57.8%, minus certain items. The figures beat analysts’ estimates.

Shares of NXP were little changed in extended trading after closing at $174.13 in New York. The stock has lost 24% of its value this year in line with a slide in chip industry stocks.

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