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NXP downgrades Q1 estimate as COVID-19 hits demand

NXP Semiconductors downgraded its expected figures for the first quarter of 2020, providing an early signal for what lies in store for the mobile supply chain this year.

The semiconductor company is considerably more downbeat than it was only five weeks ago, conceding that the COVID-19 pandemic will have a "worse than anticipated impact" compared to its previous update on March 2.

At that time, NXP said it expected Q1 revenue to be around 3.3% lower on a quarterly basis, at $2.22 billion. This has subsequently been revised down to a quarterly drop of 12.2% to just over $2 billion. Year-on-year, the company is now forecasting a 3.5% revenue drop, compared to its earlier estimate of 6.3% revenue growth.

The company warned that the situation could still change. With regard to the mobile market, Richard Clemmer, CEO of NXP, said "customer demand trends have resulted in the push-out of orders." The company has also decided to sit on $150 million in orders that it would have shipped out to distribution channels "in order to maintain our normal channel inventory."


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Research company IDC has already indicated that COVID-19 could have a significant adverse effect on the semiconductor market this year, although it also said there are still too many variables to "immediately craft a single forecast."

At this time, IDC said it believes the most likely outcome will be a year-on-year revenue decline of 6% for the worldwide semiconductor market in 2020. "We give this scenario a 54% probability. Under this scenario, the supply chain will start to recover, and quarantines and travel bans will ease, over the summer. For the worldwide semiconductor market, the impact will be $25.8 billion," the company said.

The COVID-19 pandemic is certainly creating an unprecedented level of uncertainty for the technology sector, making reliable forecasting almost impossible at this time.

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— Anne Morris, contributing editor, special to Light Reading

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