NXP’s Upbeat Revenue Forecast Fails to Impress Investors

The headquarters of NXP Semiconductors NV in Eindhoven, Netherlands.

NXP Semiconductors NV struggled to impress investors with a generally upbeat forecast for the current period, the latest sign of deepening concern about the chip sector.

Third-quarter revenue is set to rise about 18% from a year ago to roughly $3.75 billion, the Dutch chipmaker said in a statement on Tuesday. That compares with an average analyst estimate of $3.71 billion, according to data compiled by Bloomberg.

Though Chief Executive Officer Rafael Sotomayor touted growth in all the company’s industries, including vehicles and AI, investors took a skeptical view of the report. The shares fell 6% to $243 in late US trading.

A broader selloff has rocked chip stocks this week, triggered by signs that China is growing more competitive in the industry.

Read More: Chip Stock Rout Deepens on AI Debt Jitters, China Competition

Though NXP shares had advanced 19% this year through the close, that was well below the performance of many chip peers. The benchmark Philadelphia Stock Exchange Semiconductor Index is up 56% over that time frame.

NXP, which makes most of its revenue from customers in the automotive industry, has been working to bounce back from a prolonged slump. Sotomayor said in April that the industry was recovering and he expected the momentum “to accelerate through the remainder of 2026.”

The company’s second-quarter sales rose 19% to $3.5 billion, topping the $3.46 billion estimate. Earnings rose to $3.61 a share, excluding some items. Analysts projected $3.54 on average.

Competitor Texas Instruments Inc. also received a tepid reaction to its latest results, even as the company pointed to gains in the auto segment. Franco-Italian peer STMicroelectronics NV, meanwhile, reported stronger-than-expected automotive demand and said revenue from that industry is set to grow as much as 14% this year.

Read More: Texas Instruments Gets Lukewarm Reaction to Upbeat Forecast

Rising demand from Chinese electric vehicle manufacturers could boost NXP, Morgan Stanley analyst Nicole Kozhukhov said in a note before the results. NXP builds products for software-defined vehicles, including automotive processors, imaging radar chips and high-speed automotive Ethernet that allows electronic systems in cars to quickly communicate with one another.