NXP Semiconductors N.V. (NASDAQ: NXPI) reported its financial results for the third quarter of 2024, with revenues of $3.250 billion, in line with the company’s forecasts. However, the company anticipates weaker performance in the fourth quarter due to macroeconomic weakness in Europe and the Americas, which will particularly impact its industrial and IoT sectors.
NXP’s President and CEO, Kurt Sievers, highlighted the strength of the Communication Infrastructure, Automotive, and Mobile segments, although he acknowledged challenges in the industrial and IoT areas. “Our focus is on managing what is within our control, allowing NXP to maintain resilient profitability in an uncertain demand environment,” Sievers stated.
Key Results for the Third Quarter of 2024
- Revenue: $3.250 billion, representing a 5% year-over-year decline.
- GAAP Gross Margin: 57.4%, and Non-GAAP Gross Margin: 58.2%.
- GAAP Operating Income: 30.5% operating margin, and Non-GAAP Operating Margin: 35.5%.
- Operating Cash Flow: $779 million, with net capital expenditures of $186 million, resulting in Non-GAAP free cash flow of $593 million.
Segment Performance
The Automotive segment recorded revenue of $1.829 billion, reflecting a 3% decline year-over-year, but a 6% increase compared to the previous quarter. The Industrial and IoT area, on the other hand, showed a 7% year-over-year decrease, reaching $563 million. The mobile devices segment, driven by increased demand, rose 8% year-over-year and 18% quarter-over-quarter, generating $407 million.
Capital Return and Strategic Alliances
NXP continued executing its capital return policy, allocating $259 million to cash dividend payments and $305 million to share repurchase. These actions represent 95% of its Non-GAAP free cash flow for the third quarter. Additionally, a $2 billion increase for the repurchase program was approved, bringing the repurchases balance to $2.640 billion at the end of the quarter.
Regarding its expansion and collaboration efforts, NXP participated in the groundbreaking of a semiconductor plant in Dresden, Germany, along with partners such as TSMC, Bosch, and Infineon. The company also officially established the joint venture VisionPower Semiconductor Manufacturing Company, focused on producing 300 mm wafers to strengthen its manufacturing capacity.
New Technological Innovations
During the quarter, NXP launched the Trimension® SR250, a unique chip in the industry that combines UWB radar and processing functions for IoT and industrial applications. Additionally, it introduced the MC33777, the first IC for electric vehicle battery packs that integrates key battery management functions, as well as the new i.MX RT700 microcontroller family designed for smart devices with AI capabilities.
Outlook for the Fourth Quarter of 2024
NXP projects fourth-quarter revenues between $3.000 billion and $3.200 billion, representing a year-over-year decline of up to 12%, reflecting the impact of the global economic slowdown on its markets. The company expects a GAAP gross margin of up to 56.9% and a GAAP operating income of up to 29.3%.
NXP Semiconductors remains committed to innovation in key sectors such as automotive, IoT, and communication infrastructure, along with capital return strategies for its shareholders, despite the macroeconomic challenges facing the global technology industry.
source: NXP