NXPI Q3 2022 Earnings Report Release

NXP Semiconductors (NASDAQ: NXPI), the world’s second-largest automotive semiconductor manufacturer, announced its Q3 earnings report and financial results. Revenue increased by 20% to 3.44 billion, the gross profit margin was 58%, the operating profit margin was 36.9%, and the net profit increased by 42%. EPS of $2.79 was better than expected.

Due to the slowdown of the overall economy and the downturn in the consumer-side IoT business, the demand in the automotive and industrial markets is still resilient. Although the growth rate of the automotive sector, with the highest proportion, has slowed to 24%, it is mainly due to the gradual improvement of the supply chain. The slowing sectors include industry and IoT, and communication infrastructure is growing faster.
The overall environment is highly uncertain, and the company is cautious about the medium term.

Looking forward to the future, considering that it is still plagued by supply chain constraints and the general economic environment is full of uncertainties, the company is cautious about the medium-term trend.

Data

Strong automotive market

Is car demand so strong? As more than 60% of vehicles on the road have not yet installed Advanced Driver Assistance Systems (ADAS), it is expected that the future demand for environmental detection, power control, Internet of Vehicles, cockpit audio and video, and A.I. chips will significantly promote the growth of automotive semiconductors.

According to “McKinsey” estimates, the automotive chip market will grow from about US$50 billion in 2021 to about 150 billion in 2030, with a Compound Annual Growth Rate (CAGR) as high as 13%. The automotive field will be the largest in the semiconductor industry—the application category with the most robust growth momentum.

The two areas with the most robust growth are “automotive and industry,” which are the primary revenue drivers of NXPI, accounting for 73% of NXPI’s revenue.

In addition, to move towards the goal of “fully autonomous driving,” more substantial computing power is bound to be required to monitor road conditions in the future. Therefore, the demand for advanced manufacturing processes for automotive chips will increase. It will continue to grow at a CAGR of 24%.

However, investors who want to invest in the automotive market still have to pay attention. Although the research firm Gartner agrees that the chip supply situation may not be fully resolved until next year, it also points out that the demand in the automotive industry will fall from a high point in the next few months, echoing the As the Texas Instruments CFO said, corrections affecting other semiconductor markets will eventually affect the automotive sector as well.

Looking forward to the future Q4-2022

Revenue was 3.2-3.4 billion U.S. dollars, lower than the market consensus of 3.43 billion, an annual increase of about 8.6%, falling from the high point of Q3, and the growth momentum has slowed.

The gross profit margin is 57.3% to 58.3%, and the operating profit margin is 35.1% to 36.8%, both of which have fallen from the high point of Q3 but are still at a high level.