NXP Accelerated Growth as Industrial and Infrastructure Demand Climbed
The chip maker projected third-quarter revenue of $3.65 billion to $3.85 billion.
NXP Semiconductors (NXPI) accelerated its recovery in the second quarter as revenue rose 19% from a year earlier to $3.496 billion, led by stronger industrial and communications-infrastructure demand. Revenue increased 10% sequentially.
The semiconductor maker’s growth has improved for five consecutive quarters, from a 6% year-over-year decline in the second quarter of 2023 to gains of 7% in the fourth quarter, 12% in the first quarter of 2024 and 19% in the latest period. The sequential advance also reversed the first quarter’s 5% decline.
GAAP diluted earnings rose 72% from a year earlier to $3.02 a share, while falling 32% from the first quarter, when a $627 million gain from the MEMS Sensors divestiture lifted results. Non-GAAP diluted earnings increased 33% year over year and 18% sequentially to $3.61 a share.
Industrial & IoT revenue climbed 38% from a year earlier and 20% sequentially to $755 million, accelerating from 24% annual growth in the first quarter. Communications Infrastructure & Other revenue rose 41% year over year to $452 million, extending a turnaround from a 27% decline a year earlier.
Automotive, NXP’s largest end market, increased 12% from a year earlier and 9% sequentially to $1.938 billion, after growing 6% annually in the first quarter. Mobile remained the outlier, declining 10% sequentially to $351 million, though revenue was 6% above the year-earlier period.
Stronger sales carried through to underlying profitability. Non-GAAP operating margin widened to 35.1% from 33.1% in the first quarter and 32.0% a year earlier, while non-GAAP operating income rose 31% year over year to $1.228 billion. Free cash flow increased to $791 million from $714 million sequentially, and the cash-conversion cycle shortened to 129 days from 140 days.
At the midpoint of its third-quarter outlook, NXP expects revenue to grow 7% sequentially and 18% year over year to $3.75 billion. The company projects non-GAAP gross margin of 58.5% and non-GAAP operating margin of 36.9%, up from 58.0% and 35.1%, respectively, in the second quarter.
NXP returned $360 million to shareholders, including $104 million through buybacks, as the share of free cash flow returned declined to 45.5% from 50.1% in the first quarter. The company also identified data centers as an additional growth engine alongside software-defined vehicles and physical AI, broadening the drivers behind its improving trajectory.