Is NXP Semiconductors Stock a Buy?

1 min read

Life has been challenging for many semiconductor stocks over the last few years. Ongoing effects from the trade war between the U.S. and China paired with the pandemic have upset the applecart for many firms. NXP Semiconductor (NASDAQ: NXPI) is no exception. The chipmaker’s auto and smartphone markets were hit hard by the pandemic in 2020, and the stock’s 40% return over the last trailing-three-year stretch has underperformed the 115% return of the semiconductor industry overall, as measured by the iShares PHLX Semiconductor ETF (NASDAQ: SOXX).

However, while it may not be the best growth stock in the chip universe, NXP does pay a small dividend — and could be a solid bet in 2021 as the economy gradually recovers from COVID-19.

NXP is best known for making connectivity chips for the automotive industry, industrial applications (factory equipment and healthcare devices), and mobile communications (smartphones and communication network infrastructure). The auto and smartphone segments make up the lion’s share of sales, and autos in particular are a promising long-term market. Besides various connectivity solutions, NXP designs advanced driver-assist systems (ADAS) and battery management devices for electric vehicles. 

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