NXP sees automotive and industrial chip demand recovering, lifts outlook

NXP Semiconductors gave investors a sharper signal that the long slump in automotive and industrial chips may be easing. The Netherlands-based chipmaker said Tuesday that second-quarter revenue should land between $3.35 billion and $3.55 billion, above Wall Street’s $3.27 billion forecast, while adjusted profit is projected at $3.29 to $3.72 per share, also ahead of the $3.17 consensus. Shares jumped about 15% in extended trading as the market embraced a forecast that points to recovery in two of the most cyclical corners of the semiconductor industry.

The company’s first quarter was already firmer than expected. Revenue rose 12% from a year earlier to $3.18 billion for the period ended March 29, topping estimates, while non-GAAP diluted earnings reached $3.05 per share and non-GAAP operating margin held at 33.1%. NXP said automotive revenue came in at $1.78 billion and industrial and IoT revenue at $628 million, with communications infrastructure at $380 million and mobile at $391 million. Management said new orders in automotive and industrial chips were picking up as customers worked through excess inventory built up during the pandemic, a sign that the rebound is being driven by replenishment rather than a short-lived bounce.

That matters because NXP sits near the center of the industrial economy. Auto production, factory automation and connected devices all feed its core business, so a return of demand in those markets can signal that carmakers and manufacturers are again placing fresh orders rather than living off old stock. Chief executive Rafael Sotomayor said momentum was expected to accelerate through the rest of 2026, with growth increasingly extending across the core of the business. NXP also said “company-specific growth drivers” were increasing, led by automotive and industrial products tied to software-defined vehicles and physical AI.

The outlook fits a wider pattern in the chip sector. Texas Instruments also posted a stronger-than-expected quarter last week, with revenue of $4.83 billion and second-quarter sales guidance of $5.00 billion to $5.40 billion, helped by industrial and data-center demand. For NXP, the data-center push is becoming a larger piece of the story too: revenue in that segment was about $200 million in 2025 and is expected to exceed $500 million in 2026. The company generated $793 million in cash from operations and $714 million in free cash flow in the first quarter, returned $358 million to shareholders, and paid a $1.014 interim dividend on April 9 after completing the sale of its MEMS Sensors business on February 2. Together, those figures suggest the rally rests on more than enthusiasm. It reflects an industry that may finally be moving from destocking back to real demand.