NXP forecast hints Apple might keep bucking China smartphone slump

NXP forecast hints Apple might keep bucking China smartphone slump

Technology

NXP forecast hints Apple might keep bucking China smartphone slump

(Reuters) - NXP Semiconductors (NXPI.O) Chief Executive Officer Kurt Sievers said that China's slumping smartphone market remains far from a rebound but that one major non-Android customer's chip orders are still comparing well with historical trends.

Netherlands-based NXP makes a near-field communications chip that goes into smartphones to help with mobile payments and other functions. Sievers did not discuss Apple Inc (AAPL.O) by name, but analysts believe the iPhone maker is a major customer.

Sievers' comments in an interview with Reuters came a day after the company gave a better-than-expected sales forecast based on a steady recovery in the automotive segment, sending its shares up 4.8% to $221.05 by midday Tuesday.

China's smartphone market has suffered as the country's growth has slowed, with Counterpoint Research reporting that sales declined 8% for the early June "618" shopping season in the country. But Apple has resisted the trend, with sales rising 8% during the shopping period, Counterpoint said.

NXP's forecast suggests that Apple's strength may continue. In an interview, Sievers said NXP expects mobile revenue to increase 23% in the current third quarter, up from $284 million in the just-ended second quarter.

While the Android portion of those mobile chip orders is growing slightly, Sievers said there is no rebound in sight.

"I would still say the (smartphone) build rates are below what they used to be in China. And we also don't see it jumping," he said.

Sievers said most of the 23% increase forecast for mobile chip sales is attributable to a large customer that NXP cannot name. Most analysts believe that the company is Apple.

"This increase in itself sequentially from Q2 to Q3 is quite good," Sievers said. "We also compare that seasonally to past years or more normal years. And I'd say that the sequential increase for that particular customer is on the better side."