Intelliz's financial APP learned that, according to institutional compiled equity data, as of the third quarter of September 30, 2024, Wall Street financial giant JPMorgan Chase executed a major trade, significantly increasing its stake in the European auto chip industry leader NXP Semiconductors (NXPI.US) through US stock market block orders, with the latest increase reaching 1,389,210 shares. This latest strategic move has increased JPMorgan's total shareholding in NXP Semiconductors to 20,140,077 shares, significantly higher than the holdings shown as of June 30, highlighting the giant's bet on long-term sluggish demand for auto chips and global electric vehicle demand, possibly heralding the beginning of demand recovery.

Headquartered in the Netherlands, the automotive chip giant NXP Semiconductors became one of the strong entities in the global semiconductor industry after acquiring Freescale Semiconductor in 2015. The company is globally renowned for its high-performance industrial and electric vehicle MCUs, as well as analog and mixed-signal chip products. In the global automotive chip field, especially in the emerging global category of electric vehicle chips, it has significant influence, providing essential electric vehicle components for electric car manufacturers like Tesla.

According to the latest data, NXP Semiconductors' total market value is around $59 billion, with a PE ratio of 22.10x. Financial results over the past few quarters have shown continued robust financial fundamentals, but the stock is slightly overvalued in the US and European chip sectors.

Since the Fed's rate hike cycle in 2022, global auto chip manufacturers have been struggling to address the issue of global oversupply caused by the slowdown in electric vehicle demand. This long-standing severe problem has been a major hindrance to the revenue growth trend of auto chip giants like On Semiconductor, NXP Semiconductors, STMicroelectronics, and Renesas Electronics, causing their stock prices to lag behind the industry benchmark - the PHLX Semiconductor Index. They have also been unable to compete with chip giants benefiting from the AI boom such as Nvidia and Taiwan Semiconductor Corporation this year.

From ASML's recently announced significantly lower-than-expected third-quarter order data and performance outlook, it is even more evident that industrial analog chips, electric vehicle chips, and a wide range of consumer electronics SoC chips are still in a phase of weak demand. In other words, the global enterprise, including global government agencies, is still investing in the AI boom, but this AI boom has not yet driven the entire chip industry, including industrial end chips, auto chips, power chips and components, and most consumer electronics core chips including smartphones, into a 'prosperity cycle'.

However, JPMorgan's significant increase in block orders for NXP Semiconductors in the third quarter indicates that this largest Wall Street financial institution is very bullish on the imminent entry of electric vehicle chips into a new cycle of demand recovery. GuruFocus's latest transaction insight data shows that in the third quarter, JPMorgan massively increased its stake in the company at an average price of $240.01 per share, reflecting an increase in its investment portfolio's strategic exposure to NXP Semiconductors.

jpmorgan has decided to increase its shareholding in nxp semiconductors, which is also consistent with the broader investment philosophy of the financial giant, favoring cutting-edge technology companies as well as top global medical care companies.

According to GuruFocus data, after this additional shareholding transaction, jpmorgan's stake in nxp semiconductors currently accounts for 0.4% of its total US stock investment portfolio, holding a total stake of up to 7.90% in nxp semiconductors, significantly higher than the 5.75% stake as of June 30.

As of the U.S. stock market's close on Thursday, nxp semiconductors' stock price fell slightly by 0.19%, closing at $232.280, lower than jpmorgan's most recent average purchase price. Since the beginning of this year, nxp's U.S. stock price has only risen by 2%. In comparison, the PHLX semiconductor index has surged by 25% this year, nvidia, the AI chip leader, has skyrocketed by over 176% this year, while taiwan semiconductor, the 'king of chip making,' has seen its U.S. stock price rise over 100% this year.

The latest semiconductor industry outlook data released by the World Semiconductor Trade Statistics Organization (WSTS) shows that AI-driven HBM, NAND storage chips, GPU, CPU, and other logic chips are the main drivers behind the recovery of the entire chip industry. In contrast, WSTS's expectations for the analog and microchip market sizes covering electric cars, industrial sectors, IoT devices, as well as more widespread consumer electronics such as PS5, Switch, appear subdued. WSTS even forecasts a negative growth in the analog chip market size for this year, but predicts a potential recovery in the analog and microchip market next year.

WSTS forecasts that the analog chip market, which plays a significant role in chips required for electric vehicles (EVs), remains sluggish. The market size is expected to contract by 2.7% in 2024 following an 8.7% contraction in 2023, but WSTS predicts an overall expansion of 6.7% in the analog chip market size in 2025, indicating a slow start to the recovery process of analog chips next year and possibly continuing until 2025. Analog chips play an essential role in various key functional modules and systems in electric vehicles, including power management, battery management, sensor interfaces, audio and video processing, and core control systems for electric motors.