(Reuters) -NXP Semiconductors on Monday forecast third-quarter revenue below analysts’ expectations as the company battles sluggish demand from auto customers and rising geopolitical risks, sending its shares down about 8 in extended trading. % will decrease.
According to LSEG data, the company posted its worst quarterly sales decline in four years in the second quarter and auto sales fell the most in more than three years.
The Dutch company expects revenue between $3.15 billion and $3.35 billion, compared to the average analyst estimate of $3.36 billion.
Customers in the automotive industry – NXP’s largest segment – have withdrawn orders due to tepid demand, as customers await an improved macroeconomic environment and interest rate cuts by global central banks.
Auto segment sales fell 7% to $1.73 billion in the second quarter, while total sales of $3.13 billion were in line with estimates.
Chipmakers are also gauging the impact of China’s strained trade ties with the U.S. and the European Union.
As export restrictions have tightened, Chinese companies have invested heavily in expanding production of older chips, known as legacy chips, Reuters reported earlier in July.
Increased competition in the market could negatively impact NXP’s sales to China, which will be the largest contributor to revenue in 2023, accounting for approximately 33% of total annual revenue.
Declines in the automotive sector offset growth in the company’s mobile segment. The division posted a 21% increase in revenue to $345 million as upgrades linked to artificial intelligence fueled a revival in demand from the smartphone industry.
The company expects third-quarter adjusted earnings to average $3.42 per share, missing estimates of $3.61.
NXP has made significant investments to diversify its manufacturing base outside China, putting $1.6 billion into a 40% stake in a joint venture with TSMC-backed Vanguard to produce silicon wafers in Singapore.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Sriraj Kalluvila)