Chip manufacturer NXP Semiconductors experienced a slightly more subdued growth rate in the automotive sector last quarter than expected, as the company continues its efforts toward a market recovery.

In a statement released on Monday, the Dutch semiconductor firm announced that its automotive revenue increased by 4.8% to $1.88 billion during the fourth quarter. This figure fell short of the average analyst estimate of $1.89 billion, with some forecasts having projected revenues as high as $1.97 billion, based on Bloomberg-compiled data.

Following the announcement of the results, the company's stock declined about 5% in post-market trading in the United States. Prior to the close, the share price had been up 6.5% for the year.

Worries regarding the speed of NXP's rebound cast a shadow over an otherwise positive sales outlook. NXP projected first-quarter revenue to land between $3.05 billion and $3.25 billion. The midpoint of this guidance range would surpass the average analyst prediction of $3.09 billion.

NXP is a major supplier of chips to the automotive industry, which accounts for over half of its total revenue. The company's processors utilize established technology to power essential functions including driver safety systems, vehicle connectivity, and in-car infotainment.

NXP, along with industry counterparts STMicroelectronics NV and Texas Instruments Inc., has been contending with the effects of a post-pandemic semiconductor oversupply. Automotive and consumer electronics clients, who had previously stockpiled chips amid pandemic-driven shortages, have been gradually reducing their excess inventories. Recovery efforts were further hampered by tariff threats from former US President Donald Trump.

Last year, NXP indicated that the supply glut might finally be easing and highlighted a "massive" acceleration in its automotive operations. CEO Rafael Sotomayor, who assumed the role in October, has stated that he observes "signs of a cyclical recovery."

For the fourth quarter of 2025, NXP reported total revenue of $3.34 billion, matching analyst projections. The company's adjusted operating margin for the period was 34.6%, slightly below the estimated 34.7%.

Recently, STMicroelectronics, a chip supplier to Apple Inc., projected first-quarter revenue that exceeded analyst expectations, driven by a resurgence in demand from consumer electronics customers. Nonetheless, its stock price declined after the analog chipmaker's report revealed an uneven recovery across various end markets. STMicro CEO Jean-Marc Chery remarked in an analyst call that the automotive market remains "not yet stable."

Another industry peer, Texas Instruments Inc., also provided an optimistic forecast for the current quarter last week.