According to ZhuoShuo Finance app, Europe-based automotive chip leader NXP Semiconductors (NXPI.US) fell over 7% in post-market trading in the US after releasing disappointing fourth-quarter revenue and profit expectations, mainly due to the continued sluggish demand for chips in the entire automotive industry, especially the electric vehicle segment. Since ASML and Taiwan Semiconductor kicked off a new round of chip company financial reporting season, the trend of 'polarization' has become more pronounced, with an explosive demand for AI-related chips while non-AI areas remain in a 'dark moment', with dismal performance expected without AI contributions.

The chip manufacturing giant headquartered in the Netherlands stated in its latest performance report on Monday that the overall revenue range for the fourth quarter is expected to be between 3 billion dollars and 3.2 billion dollars, indicating a possible year-on-year decrease of 6% to 12% in the fourth quarter. It also implies that NXP management expects no substantial signs of recovery in the automotive chip industry until the end of this year. According to the latest performance expectations, NXP's Q4 revenue is expected to show a decline from a quarter-on-quarter perspective.

NXP's performance outlook also indicates that, excluding certain special items, the non-GAAP profit could reach up to $3.33 per share (i.e. Q4 profit range expectation of $2.93 to $3.33). According to analysts' compiled data, analysts' average revenue expectation is $3.36 billion, with earnings per share at $3.62, falling short of analysts' general expectations as provided by NXP.

"Our outlook for the fourth quarter reflects a broader macro weakness, especially in Europe and the Americas," said Kurt Sievers, CEO of NXP Semiconductors, in the performance statement. "We focus on managing what we can control, enabling NXP to drive resilient profitability and earnings in a challenging environment of uncertain demand."

In terms of third-quarter performance data, NXP's overall revenue decreased by 5.4% year-on-year to $3.25 billion, slightly lower than analysts' average expectation of $3.26 billion. Excluding certain special items, NXP's third-quarter earnings per share under non-GAAP guidelines dropped to $3.45 compared to $3.70 in the same period last year, but better than the analysts' average expectation of $3.42. Non-GAAP operating profit decreased by 4% year-on-year to $1.153 billion.

The largest business division under NXP, the automotive chip division, saw a 3% year-on-year revenue decline to $1.829 billion, indicating sluggish demand for automotive chips and excess inventory. The performance of leading automotive chip player NXP can be described as a 'barometer' of the automotive chip industry, and its weak outlook data may indicate that the industry has not yet emerged from its 'dark moment', mainly due to the persistent weak demand for electric vehicles. Under the macro environment of persistently high interest rates maintained by central banks such as the Federal Reserve for a long time, global demand for electric vehicles has significantly cooled since last year, coupled with the gradual withdrawal of global government subsidies related to electric vehicles, further weakening the demand.

Following the release of lackluster performance and performance outlook data, nxp semiconductors saw its stock price in the post-market trading in the US market drop by 7.1% to $220.10. The stock closed at $236.90 during Monday's trading session in the US market.

Since 2023, semiconductor manufacturers focusing on the autos industry have been struggling to cope with the difficult situation of excess inventory of auto chips and sustained sluggish demand for their high-end auto chip product line in electric vehicles. One of nxp semiconductors' important competitors in the auto chip industry, stmicroelectronics (STM.US), unexpectedly provided a pessimistic sales outlook indicating a decline in revenue until the first quarter of next year, while US chip giant texas instruments (TXN.US) mentioned in October that the auto chip industry is still affected by excess inventory and weak demand.

Some analysts have pointed out that in certain Western countries where electric vehicle subsidies are ending, coupled with the Federal Reserve and the European Central Bank maintaining high interest rates for an extended period, consumers are generally reluctant to pay for electric cars. At the same time, the core customers of auto chip companies like nxp semiconductors, namely established auto manufacturers in Europe, are still fiercely competing with cheaper alternative products from the Chinese market. The European Commission has previously warned that some chip manufacturers in Europe may face the risk of losing a significant market share.

According to reports, energy consultancy firm BloombergNEF lowered its 2026 sales forecast in the updated annual electric vehicle outlook report by 14% compared to a year ago. This is mainly due to several of Europe's largest automakers, including Volkswagen and Mercedes-Benz, significantly scaling back their ambitions for electric transformation.

The latest semiconductor industry outlook data released by the World Semiconductor Trade Statistics (WSTS) organization indicates that AI-driven HBM, NAND memory chips, as well as GPUs and CPUs and other logic chips are the main driving forces behind the overall recovery of the chip industry. In contrast, WSTS' expectations for the market size covering analog and microchips in sectors like electric vehicles, industrial areas, IoT devices, and products like PS5, appear subdued. WSTS even predicts a negative growth in the analog chip market size for this year, but foresees a weak recovery in the analog and microchip market next year.

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

The third-quarter performance of the two core manufacturing forces in the global chip industry – ASML and Taiwan Semiconductor – showed that in this highest-end global industry chain worth as much as $530 billion, the actual performance gap between chip companies riding the unprecedented AI frenzy and those that have not fully caught up with this AI boom is getting bigger. It highlights that the market is betting heavily on listed chip companies related to AI, rather than those companies that mainly link their core business to non-AI areas.

"Without artificial intelligence, the entire semiconductor market would be very difficult." Christophe Fouquet, CEO of ASML, a lithography manufacturer from the Netherlands, stated during the third quarter earnings call. ASML's unexpected Q3 performance shortfall was mainly due to the continued softness in all chip demands outside of artificial intelligence, leading to a downward revision of the full-year sales expectations for 2025. Additionally, ASML's Q3 orders fell significantly below expectations due to sluggish demand in non-AI areas.

ASML's unexpected performance shortfall report has unveiled the latest dynamics in the global chip industry, namely: the AI boom is still unfolding, especially the demand for all types of AI chips focusing on B-end data centers remains very hot. However, in areas not related to AI, such as electric vehicles, industrial sectors, IoT devices, and a wide range of consumer electronics products, chip demand still remains weak or even significantly declining.