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COVID-19 puts brakes on NXP growth

There were no real surprises from Q1 figures posted by NXP Semiconductors, which generates about half of its turnover from the automotive sector.

Top brass at the Dutch chipmaker had already warned that revenue would dip and margins shrink in the first quarter after adjusting previous guidance downwards because of "worse than anticipated impact" from COVID-19.

Q1 turnover was down 3%, to a shade over $2 billion, compared with the same period last year (not quite as bad as the 3.5% fall NXP was predicting earlier this month).

Margins took a hit too, more or less in line with revised guidance. Q1 2020 GAAP gross margin fell to 49.3% (51.2% a year ago). GAAP operating margin was 3.4%, up from 2.6% in Q1 2019, but mid-point guidance – before NXP's downward revisions – had envisioned an 8% margin performance here.

Q1 revenue from NXP's automotive unit fell by 4% year-on-year, while mobile and Industrial & IoT both increased by 2%. In Q2 the company is expecting an overall year-on-year revenue decline of between 14% and 22%.

"The decline in revenues is going to be predominantly felt in the automotive segment, but it looks like mobile has also been impacted," said Richard Windsor at Radio Free Mobile. "The real problem is that NXP has by its own admission very little visibility and so there is a significant possibility that reality is meaningfully outside of the range that the company has set."

Automotive accounted for 47% of NXP turnover during 2019, while Industrial & IoT made up 18% and mobile contributed 13%.

— Ken Wieland, contributing editor, special to Light Reading

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