February 3, 2026 /SemiMedia/ — NXP Semiconductors said automotive demand grew more slowly than expected in the fourth quarter, but the company sees early signs that the sector is moving toward a recovery after a prolonged inventory correction.

The chipmaker said automotive revenue rose 4.8% year on year to $1.88 billion in the fourth quarter of 2025, slightly below analysts’ average estimate of $1.89 billion. The automotive segment remains NXP’s largest business, accounting for more than half of total revenue.

Despite the softer auto performance, NXP’s outlook for the first quarter came in slightly ahead of market expectations. The company forecast revenue of $3.05 billion to $3.25 billion for the quarter, with the midpoint above analysts’ consensus of $3.09 billion.

NXP mainly supplies mature-node processors and control chips used in vehicle safety systems, in-car connectivity and infotainment. Industry sources said demand recovery has been gradual as customers continue to work through excess inventories built up during earlier supply shortages.

Like peers STMicroelectronics and Texas Instruments, NXP has been affected by post-pandemic oversupply in automotive and consumer markets. Customers are still drawing down inventories, while broader trade uncertainty has added to caution across the supply chain.

NXP has previously said the inventory overhang may be nearing an end. Chief Executive Rafael Sotomayor, who took office in October 2025, said the company is beginning to see signs of a cyclical recovery in its automotive business.