NXP bounces back from pandemic with uncancellable chip contracts

April 29, 2021 // By Nick Flaherty
NXP bounces back from pandemic with uncancellable chip contracts
In a bid to avoid future supply problems, NXP is seeing customers placing long term, uncancellable chip supply contracts.

NXP has bounced back from the Covid-19 pandemic and snow closures of two fabs in Texas with long term contracts from customers that can’t be cancelled. This is a key step in avoiding the peaks and troughs of the semiconductor cycle.

The latest results Q1 saw a 27 percent boost over this time last year at the start of the pandemic, and the recent fab closures were all covered by insurance says the company.

“Our results were better than the midpoint of our guidance, with the contribution from the industrial and the communication infrastructure end markets, both stronger than planned,” said Kurt Sievers, CEO.

“At the same time, trends in the Mobile and Auto markets were generally in line with our expectations, with Automotive being just slightly impacted by the severe winter storms in Texas. Taken together, NXP delivered quarter one revenue of $2.57 billion, an increase of 27 percent year-over-year and $17m above the midpoint of our guidance.”

This comes after the automotive slowdown hit NXP's full year figures for 2020 and led to a shortage of key automotive chips.

“We were faced with the challenge to balance a very accelerated rate of customer orders versus a very tight, if not sold out wafer supply situation,” he said. “While our foundry partners have attempted to address our needs, it really has not been enough, and we were supply constrained in quarter one. This supply trend will continue through quarter two. And our current expectation is we will face a tight supply environment for at least the remainder of 2021.”

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