• NXP’s汽车部门越过54亿美元的收入s in 2021, surpassing the previous high of $4.5 billion in 2018. The segment will continue to gain traction as “chips per vehicle” increase along with electrification. NXP’s leadership in products related to sensing and processing applications will enable it to witness continuous momentum.
• The semiconductor shortages are expected to ease from 2023 onwards, hence supply-demand mismatch will remain for the rest of this year. But NXP has taken steps to ensure additional capacity expansion is in place to future-proof its supply capabilities. Furthermore, the non-cancelable, non-returnable (NCNR) concept is proving to be helpful on this front. The capex will reach $1.03 billion to account for 8.3% of total revenues in 2022.
• For 2022, the company is aiming for 12.7% YoY revenue growth to cross $12.4 billion. For the first quarter, the target is 21% YoY growth at $3.1 billion.

NXP, a leading player in secure connectivity solutions for embedded applications, had a stellar performance in 2021. The company’s revenues increased 28.5% YoY to reach a record $11.06 billion. This was possible due to strong customer demand and significant design wins across its end markets despite supply chain challenges. In particular, NXP’s automotive segment did well by catering to solutions revolving aroundin-vehicle networking, advanced driver assistance systems (ADAS), and battery management in EVs. Gross profit for 2021 stood at $6.06 billion, an increase of 37% YoY.

Note: As of January 1, 2019, revenues and costs associated with Manufacturing Service Agreements were consolidated under “Other Income & Expense” and not reported as revenue.

Automotive

NXP’sautomotivesegment revenue stood at $5.4 billion in 2021 with 43.6% YoY growth. It managed to capture 50% of the total revenue of the company, an increase of 5% share from the previous year. Products centered around the evolving needs of the automotive industry, such as domain and zonal processors, electrification, and radar systems are helping the company increase revenue and industry-wide collaborations. As the automotive segment is moving towards xEVs, electric and hybrid electric vehicles, thesemiconductorcontent in cars is increasing. In addition to this, the Level 2 and Level 3 autonomy efforts are getting more traction. This will help NXP position itself in the radar and related networking processors space and drive long-term growth. For example,Fordwill use NXP’s i.MX 8 series processors and S32G2 vehicle networking processors across its fleet globally to support new vehicle architecture and deliver upgraded services, experiences, and new data monetization avenues.Densowill use NXP’s 5^th一代雷达1-Chip SoC拥有领先-edge technology nodes and state-of-the-art 77GHz RFCMOS performance.

Industrial & IoT

The industrial andIoTsegment is NXP’s second-largest revenue generator after automotive, accounting for 21.8% of the 2021 revenue. The segment grew 31.3% YoY to $2.4 billion in 2021. NXP is focused on solutions related to fast-growing segments such as smart homes andwearables在物联网领域和工厂盟tomation, building and energy, and healthcare within the industrial segment.

Its leadership in longtail and large OEM partnerships along with a broad connectivity portfolio (MCU and application processors, BLE, Zigbee, Wi-Fi, etc.) for the intelligent edge is helping the company with client stickiness. Some customer examples includeSchneider Electricin factory automation andChargePointin electric vehicle charging. Further, in Q4 2021, the company released its i.MX 93 applications processor and i.MX 8XLiteSoCto cover a range of applications, including industrial and IoT.

Communication Infrastructure & Other

The third highest revenue-generating segment accounted for a 15.8% share. It witnessed an increase of just 2.6% YoY to reach $1.7 billion. As the telecom industry embraces the 5G supercycle, NXP’s antenna-to-processor portfolio is in place to address its 5G configuration and infrastructure needs.

NXP’s infrastructure-focused portfolio includes theLayerscape Accessfamily of software-defined baseband processors for applications operating in mmWave and sub-6GHz frequencies,AirFastfamily of RF power solutions/multi-chip modules for 5G cellular base stations, and theLayerscape scalable seriesof 64-bit ARM-based SoCs forFWA, small cells, premises, etc. These products, which are future-proof and scalable, help customers with fast time-to-market and optimized solutions.

Mobile

NXP’smobilesegment, which holds the smallest revenue share at 12.8%, posted a YoY growth of 13.1% to cross $1.4 billion in revenues. The Q4 revenue, however, declined 8.6% YoY to reach $374 million. Specific areas where NXP has the expertise and industry-wide technical collaborations are mobile NFC Wallet, UWB technology, and ready-to-use systems solutions (i.e. end-to-end security and software).

UWB secure access solutions are gaining traction insmartphones, IoT devices, and automobiles. NXP is aiming to increase the UWB market share through its leadership in mobile wallet/car access and ecosystem knowledge.

CAPEX Overview and Expansion

The capex stood at 4.6% ($392 million) and 6.9% ($762 million) of 2020 and 2021 revenues respectively. Given the strong underlying demand, this share will increase in 2022. It is estimated to be at the higher end of NXP’s target of 6-8%, with the company planning to expand its internal back-end capacity and run its front-end fabs to the maximum to clear the order backlog and prepare for future orders. Furthermore, it is expanding its testing and packaging operations. It has also invested $4 billion in advance payments to ensure a steady production supply from foundries in the long term.

Future Guidance

Against the backdrop of strong customer demand, NXP, in 2022, aims to achieve a higher yearly revenue growth than its long-term target of 8-12%. It has also indicated strong guidance for the first quarter — 21% YoY growth at $3.1-billion revenue. However, the sequential growth will remain flat at around 2%. The automotive segment will lead with the highest growth in the mid-20s range YoY. This segment’s product demand is bolstered by the growing digitization and electrification of cars and is primarily driven by OEMs and Tier 1s that are focused on strengthening their supply chains and rebuilding inventory.

As the market reels under a supply-demand mismatch and inventory is lean across all end markets for NXP, the company is focused on minimizing the supply chain constraints by increasing capex and building more supply capabilities. Another concept that is proving helpful for the company by providing transparency and stability is the non-cancelable, non-returnable (NCNR) orders, especially relevant for the automotive segment. Having a direct and close relationship with OEMs provides a clear view of what products/equipment to focus on and prioritize in the short to medium term.

Future growth enablers which will lead to accelerated revenue growth for NXP include:

• Proliferation of xEVs (BEVs/PHEVs) and higher-level autonomous cars (L2+)/radar systems, which require more semiconductor content per car.
• UWB secure access solutions.
• RF Power for 5G infrastructure.
• Secure connected edge solutions.

Conclusion

Capitalizing on the aforementioned growth drivers will be the company’s focus in the near future. Specifically, theautomotive segmentwill benefit the most as the industry moves towards software-oriented vehicles with OEMs adopting next-generation network architectures. This transformation within vehicles will help NXP with continuous orders for its flagship product, the S32G2 gateway chip, which the company is ramping up as well. Furthermore, continuous innovations in its portfolio, along with increased collaboration with auto players, will enable it to capture a larger share of the automotive semiconductor market.Another application that has the potential to see immense growth isUltra-wideband technology. UWB is seeing increased use cases in mobiles, cars, IoT devices, and more, and the company is at the forefront to capitalize on that with its expertise in mobile NFC wallet and car access applications. NXP is bullish on revenues from the UWB segment, expecting ~80% CAGR during 2021-2024 and overall revenues of $15 billion, growing at a CAGR of 8-12% for the same period.