ON Semiconductor Falls 5%, NXP Drops 4% on Automotive Chip Demand Concerns

Shares in major automotive semiconductor suppliers came under pressure on 28 October 2026, after NXP Semiconductors issued a fourth-quarter revenue outlook slightly below market expectations, prompting investors to reassess demand prospects across the automotive chip sector.

ON Semiconductor (onsemi) recorded the largest decline among the companies tracked in the report, falling approximately 5% to $75 during afternoon trading. NXP Semiconductors slipped around 4% to $245, while Texas Instruments and Qualcomm each declined approximately 1%.

Skyworks Solutions, which has greater exposure to smartphone radio-frequency components, moved in the opposite direction, gaining around 1% to $87.

The declines followed NXP's third-quarter financial results, released on 27 October, which showed strong revenue and earnings growth but a more moderate outlook for the final three months of the year.

NXP Reports 19% Revenue Growth but Cautious Fourth-Quarter Outlook

NXP reported third-quarter revenue of $3.79 billion, an increase of 19% compared with the same period in 2025 and above analysts' expectations of approximately $3.76 billion.

Non-GAAP diluted earnings per share reached $4.20, exceeding the market consensus of around $4.12.

The company also reported a non-GAAP gross margin of 58.6% and generated $1.21 billion in free cash flow during the quarter.

However, attention shifted to NXP's fourth-quarter forecast.

The company expects revenue between $3.75 billion and $3.95 billion, with a midpoint of $3.85 billion. That figure was slightly below analysts' consensus estimate of approximately $3.86 billion.

Although the difference was relatively small, the midpoint suggests annual revenue growth of around 15%, compared with 19% in the third quarter.

Investors interpreted the outlook as a potential indication that growth in certain semiconductor markets, particularly automotive applications, could moderate.

Automotive Revenue Grows 13%, Behind Other Business Segments

NXP's automotive business generated $2.07 billion in third-quarter revenue, an increase of 13% year on year and 7% compared with the preceding quarter.

Automotive products accounted for more than half of total company sales, making the segment an important measure of demand for vehicle electronics.

However, its growth was slower than several other NXP businesses.

Industrial and Internet of Things revenue increased 39% to $802 million, while communications infrastructure and other revenue climbed 54% to $503 million.

Mobile revenue declined 4% year on year to $411 million, although it improved sequentially.

The figures indicate that automotive semiconductor demand continued to grow during the quarter, but at a slower rate than some of NXP's other markets.

The concern for investors is whether growth in vehicle-related semiconductor demand will be sufficient to support current expectations for suppliers with substantial automotive exposure.

ON Semiconductor Faces Pressure Over Electric Vehicle Exposure

ON Semiconductor experienced a sharper share-price decline than NXP despite not releasing new quarterly results on 28 October.

The company's exposure to automotive power semiconductors, particularly silicon carbide (SiC) devices used in electric vehicle powertrains, made it vulnerable to concerns about demand from vehicle manufacturers.

SiC power semiconductors are used in electric vehicle traction inverters, charging systems and other power conversion applications where efficiency and thermal performance are important.

Demand for these components is influenced by electric vehicle production volumes, powertrain architectures and the pace at which manufacturers adopt higher-voltage electrical systems.

The sell-off reflected investor concerns that slower automotive growth could affect semiconductor suppliers with significant exposure to vehicle electrification.

However, NXP's results alone do not establish a decline in ON Semiconductor's customer orders or future revenue.

In its second-quarter results announced on 3 August 2026, ON Semiconductor reported revenue of $1.604 billion, representing 9% annual growth, alongside a non-GAAP gross margin of 39.3%.

The company's next earnings announcement will provide further evidence of demand conditions across its automotive and industrial power semiconductor businesses.

Skyworks Gains While Qualcomm and Texas Instruments Decline

Semiconductor shares did not move uniformly during the trading session.

Skyworks Solutions gained approximately 1%, reflecting a different revenue mix from companies more heavily exposed to vehicle electronics.

Skyworks supplies radio-frequency components used in smartphones and other wireless devices, with Apple representing an important customer.

Its share-price performance contrasted with the declines recorded by automotive semiconductor suppliers.

Meanwhile, Qualcomm fell approximately 1% to $182, while Texas Instruments declined around 1% to $305 during the afternoon session.

Texas Instruments has substantial exposure to analogue and embedded semiconductor products used across industrial, automotive and other markets.

The different movements suggest that investors were distinguishing between suppliers according to their end-market exposure rather than treating the semiconductor sector as a single market.

The iShares Semiconductor ETF gained approximately 1% during the same period, indicating that weakness was not widespread across semiconductor shares.

NXP Expands Share Buyback Programme

Alongside its quarterly results, NXP announced an additional $5 billion share repurchase authorisation, supplementing approximately $1.3 billion remaining under its previous programme.

The decision follows strong cash generation during the third quarter.

NXP reported cash flow from operations of $1.26 billion, while capital expenditure remained relatively modest at $50 million.

The company returned $359 million to shareholders during the quarter through dividends and share repurchases.

Rafael Sotomayor, President and Chief Executive Officer of NXP, attributed the company's quarterly performance to growth across automotive, industrial and data centre infrastructure applications.

NXP continues to invest in semiconductor technologies supporting software-defined vehicles, industrial systems and computing infrastructure.

The company's latest results also highlighted its manufacturing investments in Asia, including an assembly and test expansion in Malaysia and the opening of the VSMC 300 mm wafer fabrication facility in Singapore.

Automotive Semiconductor Outlook Remains Under Scrutiny

The latest market reaction highlights concerns about the relationship between automotive production and semiconductor demand.

Vehicle manufacturers are incorporating more chips into electric drivetrains, advanced driver assistance systems, connectivity platforms and digital vehicle architectures.

However, higher semiconductor content per vehicle does not eliminate the effects of changing vehicle production volumes, inventory adjustments or fluctuations in component demand.

For suppliers such as NXP, ON Semiconductor and Texas Instruments, maintaining growth will depend partly on the pace of automotive production and the adoption of more advanced electronic systems.

The situation is also relevant to Asian semiconductor manufacturers and suppliers, particularly those involved in automotive power devices, analogue chips, packaging and testing.

Changes in automotive demand can influence manufacturing utilisation, inventory management and investment decisions across the semiconductor supply chain.

NXP's third-quarter figures show that automotive semiconductor revenue remains higher than a year earlier. The market's concern is therefore not an established contraction, but whether growth could slow further into 2027.

ON Semiconductor's next quarterly results, together with updated forecasts from other automotive chip suppliers, will provide a clearer indication of whether the recent share-price declines reflect a broader change in market conditions.