(Adds outlook for business units, context)
By Eric Auchard
July 30 (Reuters) - NXP, set to become Europe’s largest chipmaker after buying U.S.-based Freescale, booked an 89 percent rise in second-quarter net income driven by strong sales of payment chips, but forecast weak third-quarter growth in its auto unit.
The Dutch company, formerly known as Philips Semiconductors, also said revenue for the fiscal second quarter ended July 5 rose 11.6 percent to $1.51 billion.
Revenue from its high-margin security chips used in “chip and pin” credit and debit cards and other payment systems rose 39 percent to $276 million, while revenue from automotive electronics rose 8 percent to $310 million.
Results this month from the biggest semiconductor producers paint a mixed picture of demand as global business conditions appear to be worsening heading into the second half of the year. Growth from computers, communications, and industrial markets are in decline or showing negligible growth, while demand for security and automotive electronics appear to remain healthy.
NXP forecast third-quarter revenue to rise to between $1.525 billion and $1.575 billion, roughly flat to up to 4 percent. That was shy of analysts’ consensus 5.6 percent, or $1.6 billion, based on I/B/E/S data.
The diversified chipmaker, the top supplier of security chips used in credit cards, government passports and building ID tags, said its autos revenue would be essentially flat whereas security chips would grow around 20 percent.
Net income rose 88.7 percent to $300 million, or $1.23 per share. Excluding one-time items, NXP earned $1.44 per share.
The results topped the adjusted profit of $1.38 per share which analysts, on average, had expected while reported revenue was squarely in line, according to Thomson Reuters I/B/E/S.
It said net profit, excluding one-time items, for the third quarter would be between $353 million and $377 million, with a midpoint of $364 million. The mean consensus among analysts was $362.23 million, up 22.6 percent from a year earlier.
NXP agreed in March to buy Freescale for $11.8 billion in cash and stock, excluding debt. To ease antitrust concerns, NXP sold an overlapping radio frequency amplifier business for $1.8 billion in May to China’s state-owned Jianguang Asset Management. Both deals are expected to close later this year.
The combination of NXP and Freescale will control about 13 percent of a $26 billion global auto electronics market, ahead of Renesas of Japan and Infineon of Germany.
Shares of NXP closed at $91.80 on Wednesday on the Nasdaq. (Additional reporting by Subrat Patnaik in Bengaluru; Editing by Leslie Adler)