NXP Semiconductors NXPI comes up with the new S32J family of high-performance safe and secure Ethernet switches and network controllers, thus extending the recently unveiled NXP CoreRide platform.
S32J shares a common switch core with NXP S32 processing devices to accelerate software reuse and simplify network configuration and integration.
The S32J provides 80Gbps bandwidth with ports ranging from 10Mb to 10Gb, and powerful dual Arm Cortex-R52 cores to address a wide variety of requirements of new vehicle architectures.
The combination of the S32J family within the NXP CoreRide platform provides production-grade networking solutions with pre-combined software and tooling.
NXP Semiconductors N.V. Price and Consensus
NXP Semiconductors N.V. price-consensus-chart | NXP Semiconductors N.V. Quote
Portfolio Expansion to Aid NXPI’s Prospects
NXPI is gaining momentum across its end markets with its recent product launches.
NXPI marks a significant development by unveiling the Trimension SR250, the industry’s maiden single-chip solution that combines on-chip processing capabilities with both short-range UWB radar and secure ranging.
It facilitates a variety of new user experiences based on location, presence, or motion detection across consumer or industrial IoT applications.
Strong Partner Base Bodes Well for NXPI
NXP Semiconductors teamed up with ZF Friedrichshafen AG for the next-generation SiC-based traction inverter solutions for electric vehicles (EVs).
NXP's GD316x high-voltage isolated gate drivers’ family is integrated into ZF’s next-generation 800-V SiC-based traction inverter solutions for EVs to maximize the safety, efficiency, range and performance of EVs.
The formation of a 60:40 manufacturing joint venture between Vanguard International Semiconductor and NXPI is a noteworthy development. TSMC is Vanguard’s largest shareholder with whom NXPI already has partnerships in Europe and Singapore.
This new joint venture, VisionPower Semiconductor Manufacturing Company, will develop a 300 mm fab in Singapore, which will produce 55,000 wafers per month in phase 1.
NXP Semiconductors is expected to invest $2.8 billion between 2024 and 2028, with the peak investment period being in 2025. This investment is expected to help NXPI generate $4 billion of incremental annual revenues.
Weak Automotive & Communication End Markets Hurt NXPI
Despite NXP Semiconductors’ innovative product launches, it is facing significant challenges in two of its key markets — Automotive and Communication Infrastructure.
In the second half of 2024, NXPI expects the inventory digestion process at select direct Tier1 auto customers to extend, making its prospects in the automotive market bleak for 2024.
Weak demand for NXPI’s semiconductor products from EV car makers in China is expected to hurt top-line growth in 2024. Stricter export policies in China are acting as a major headwind.
For third-quarter 2024, Automotive revenues are expected to decline in the low single digits on a year-over-year basis. Communication Infrastructure and other end markets are expected to decline in the mid-20% range on a year-over-year basis and mid-single digit sequentially.
NXPI Suffers From Stiff Competition
NXP Semiconductors is facing stiff competition from leading players in the semiconductor space, including Analog Devices ADI, Semtech SMTC and MACOM Technology Solutions MTSI.
Year to date, NXPI shares have returned 1.1%, underperforming ADI, SMTC and MTSI’s return of 14.4%, 100.6% and 21.2%, respectively.
NXPI’s Q3 Guidance Dull
For the third quarter of 2024, NXP Semiconductors expects revenues between $3.15 billion and $3.35 billion, indicating a year-over-year decline of 5% at the midpoint but an increase of 4% sequentially.
The Zacks Consensus Estimate for third-quarter 2024 revenues is pegged at $3.25 billion, suggesting a year-over-year decline of 5.32%.
NXPI expects the non-GAAP gross margin to be 58.5% (+/-50 bps). The non-GAAP operating margin is anticipated to be 35.1% at the midpoint.
NXP Semiconductors anticipates non-GAAP earnings between $3.21 per share and $3.63 per share. The consensus mark for earnings stands at $3.43 per share, which remained unchanged over the past 60 days and suggests a 7.3% year-over-year decline.
Out of the trailing four quarters, NXPI’s earnings beat the Zacks Consensus Estimate thrice and matched once, with the average surprise being 1.79%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Zacks Rank and Valuation
NXP Semiconductors stock is not cheap, as suggested by a Value Score of D.
NXPI carries a Zacks Rank #4 (Sell), which implies that investors should stay away from the stock at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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