NXP Semiconductors (NXPI) slashed its quarterly revenue projections by nearly 10% as the coronavirus crisis dents chip demand.
While supply-chain disruptions to its operations in China have abated, NXP said, it has been hit with weakening demand across the rest of the world. This as the deadly virus escalates in countries ranging from Spain to the U.S.
The Eindhoven Netherlands, chipmaker is now forecasting a 3.5% drop in first-quarter revenue from the year-earlier period.
That compares with the 6.3% revenue increase for the quarter the chipmaker estimated a little less than five weeks ago, on March 2.
"The impact to our first-quarter results due to covid-19 were more significant than we anticipated," Chief Executive Richard Clemmer said in a statement.
In particular, car companies around the world have halted production during the crisis. The Big Three Detroit automakers temporarily suspended production in mid-March as efforts in the U.S. to contain the coronavirus escalated.
NXP has also seen its corporate customers in the industrial and mobile markets push out orders as they grapple with disruptions to production and demand on their end.
The semiconductor company, in turn, has decided to sit on $150 million in orders that it would ordinarily have shipped out to distribution channels "in order to maintain our normal channel inventory."
"The end-market demand trends in the rest of the world have started to significantly deteriorate," Clemmer said.
NXP said its balance sheet and liquidity continued strong. "We expect our cash balance to be $1.1 billion as of the end of March, and in addition we have an untapped revolving credit facility of $1.5 billion, should we need it," Chief Financial Officer Peter Kelly said in the statement.
Shares of the chipmaker at last check rose 0.6% to $87.46.