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Shares in NXP Semiconductors NV dropped in after-hours trading today despite the chipmaker beating estimates and raising its outlook.

For the quarter ending July 3, NXP reported non-generally accepted accounting principles earnings of $3.55 per share on revenue of $3.31 billion, up 78% and 27.6% year-over-year. Analysts had expected EPS of $3.39 on revenue of $3.27 billion.

Cash flow from operations in the quarter came in at $819 million, while non-GAAP free cash flow was $551 million. GAAP gross margin was 56.8% and the non-GAAP margin was 57.8%.

Highlights in the quarter included NXP announcing its new MCX portfolio of microcontrollers. Designed to advance innovation in smart homes, factories, cities and emerging applications, the portfolio includes four series of devices. The devices are built on a common platform and supported by the MCUXpresso suite of development tools and software.

In June, NXP announced two new processor families that extended the benefits of its S32 automotive platform. The S32Z and S32E processor families enable the automotive industry to accelerate the integration of real-time applications for domain and zonal control, safety processing and vehicle electrification.

“Notwithstanding the clear macro-economic cross currents, NXP continues to perform well. Customer demand within the Auto and Industrial & IoT end-markets continues to exceed our incrementally improving supply, even as we risk-adjust our long-term orders,” Kurt Sievers (pictured) NXP president and chief executive officer, said in a statement. “New design win commitments are remarkably strong across our focus end-markets, which underpins confidence that our investments are well aligned with the long-term market requirements.”

For the quarter ahead, NXP expects non-GAAP income of $1.19 billion to $1.29 billion on revenue of $3.35 billion to $3.5 billion. Analysts had expected revenue of $3.33 billion.

Given the earnings beat and revised outlook, it is somewhat surprising that NXP shares dropped after the quarterly earnings report was released. The only possible word of warning in the release was CEO Sievers also mentioning “clear macro-economic cross currents,” hinting at the precarious position of broader markets amid fears of a global recession. Sievers’ mention of risk-adjusting long-term orders could also be indicative of the company preparing for darker days ahead.

NXP, which has benefited from selling semiconductors for vehicles, also faces issues with manufacturing. As Bloomberg notes, NXP doesn’t manufacture all of its semiconductors and outsources production to suppliers such as Taiwan Semiconductor Manufacturing Co. Those foundries are struggling to keep up with orders.

Shares in NXP were down 2.66% to be sitting at $169.50 as of 7:04 p.m. EDT.

Photo: NXP Semiconductors

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