NXP Tumbles After Auto Industry Slump Weighs on Its Forecast

(Bloomberg) -- NXP Semiconductors NV fell in late trading after giving a disappointing forecast for fourth-quarter sales and earnings, hurt by a slowdown in the automotive industry. 

Revenue will be $3 billion to $3.2 billion in the fourth quarter, the Dutch chipmaker said in a statement on Monday. Profit will top out at $3.33 a share excluding some items, NXP said. Analysts had estimated $3.36 billion in revenue and $3.62 a share in earnings, according to data compiled by Bloomberg.

Chipmakers that rely on carmakers have struggled this year with an inventory glut and low demand for the electric vehicles that use their products. NXP’s peer, STMicroelectronics NV, last week gave a pessimistic sales outlook through the first quarter, while US chipmaker Texas Instruments Inc. said in October that automotive chips are still suffering from a glut of inventory.

NXP shares fell as much as 7.1% to $220.10 in extended trading on Monday after the results were released. The stock closed earlier at $236.90. 

Consumers have balked at the expense of electric vehicles, and carmakers in Europe are struggling to compete with cheaper alternatives from China. Beijing has also been ramping up its homegrown semiconductor market, and the European Commission has previously warned that the region’s chipmakers are at risk of losing substantial market share.

For their part, Chinese carmakers have been hit with sanctions against their products in the US and are facing increasing restrictions in Europe. Last week, the European Union imposed higher tariffs on electric vehicles from the country in escalating tensions that the bloc’s carmakers have said could hurt their sales in China. 

BloombergNEF’s annual Electric Vehicle Outlook cut sales projections through 2026 by 14% from its outlook a year ago. Several of the world’s largest car manufacturers — including Volkswagen AG and Mercedes-Benz Group AG — have recently scaled back ambitions. 

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