26 April 2016 by lberuti
NXP ( NXP Semiconductors NV ) is a leading chip supplier for smartphones, but it is also a major supplier of chips for the auto industry following its recent acquisition of FSL (Freescale Semiconductor). These chips have a wide range of applications, from advanced driver assistance systems to “infotainment” or in-vehicle networking between different car systems. NXP’s strength in the auto industry is one of the reasons the company managed to surprise investors when it reported Q1 2016 numbers this morning, which were in line with analysts’ expectations. More importantly, even though management said the overall demand continues to be subdued, they also said that headwinds experienced last year should begin to subside in the coming quarter. This cautious optimism enabled them to present a Q2 outlook that came a touch ahead of consensus (revenues of $2.3-2.4bln vs a consensus of $2.3bln; gross margin at 49.5-50.5% vs a consensus of 49.8%). In an otherwise directionless session, NXP was rewarded with a 14bps tightening of its 5 year risk premium at 179bps.