AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 18/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · — · Design-in support and proprietary assets identify plausible mechanisms, but the passages do not establish a durable advantage over alternatives.
durability · — · Neither accounting useful lives nor anticipated acquisition benefits establish sustained competitive durability.
customer dependency · — · Engineering integration is disclosed, but customers' dependence on NXP and the cost of switching suppliers remain unestablished.
erosion resilience · — · Operating recovery is demonstrated, but protection against technological substitution and competitive erosion cannot be established from the supplied evidence.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · NXP reports 2023 average selling price increases equal to 8.1% of revenues from passing supplier inflation to customers, alongside stable gross margin. This demonstrates substantial realized pass-through in that period; its persistence into 2026 is unestablished.
retention · 2/4 · Assessed indirectly: continuing design-in support and the 2026 revenue recovery support ongoing demand, while historical order changes show limited demand predictability. These do not establish customer-level retention or repeat design-win rates.
margin resilience · 2/4 · Gross margin held at 56.9% in 2022–2023 during cost pass-through, fell from 56.4% in 2024 to 54.7% in 2025, and recovered to 57.3% in Q2 2026. Resilience is mixed; the latest improvement is attributed mainly to volume and mix.
contractual freedom · 1/4 · Disclosed distributor price protection, discounts and contractual return rights constrain commercial discretion. Potential inability to collect cancellation fees on custom products adds exposure. These terms support a weak assessment, although their full economic scope is not quantified.
Predictability84
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 50.00
- Revenue growth volatility (pp)
- 9.62
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 1.81
Financial strength58
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 42.23
- netDebtEbitGrade
- 41.22
- interestCoverageGrade
- 50.35
- currentRatioGrade
- 100.00
- Debt / FCF (x)
- 5.04
- Net debt / operating income (x)
- 2.94
- Interest coverage (x)
- 6.54
- Current ratio (x)
- 2.05
Capital allocation93
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 20.18
- 3-year average dilution (%)
- -1.18
- 3-year average SBC / revenue (%)
- 3.51
- cashConversionGrade
- 97.76
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Actual cash generation, distributions and long-term share-count reduction support discipline. However, net debt increased in 2025 before declining in 2026, and substantial capacity commitments and ongoing investment contributions create obligations whose ultimate returns remain unproven.
incentive alignment · 3/4 · Actual 2025 PSU grants link awards to three-year relative shareholder returns; annual incentives use revenue and gross margin, with an operating-margin threshold for sustainability payouts. An adopted clawback policy and contractual ownership requirements strengthen alignment. Ownership compliance and final PSU outcomes are unavailable.
execution · 2/4 · Assessed partly from indirect operating evidence: Q2 2026 revenue rose 19.5% year over year in line with expectations, and margins recovered. This follows acknowledged 2025 performance below expectations. Acquisition returns and sustained competitive execution remain unproven.
governance · 3/4 · Disclosed independent standing committees, an adopted related-party review policy, no qualifying non-compensation related-party transactions and an adopted clawback policy support strong governance structures. These disclosures do not establish exceptional oversight effectiveness; conditional 2026 board appointments are excluded.
Evidence
We generate demand for our products by delivering product solutions to our customers, and supporting their system design-in activities by providing application architecture expertise and local field application engineering support.
Sales and marketing: customer system design-in support · Filed 19/02/2026
Such customers have in the past, and may in the future, vary order levels significantly from period to period, request postponements to scheduled delivery dates, modify their orders or reduce lead times.
Risk factors: historical customer order changes · Filed 19/02/2026
If customers do not purchase products made specifically for them, we may not be able to resell such products to other customers or may not be able to require the customers who have ordered these products to pay a cancellation fee.
Risk factors: custom products and cancellation fees · Filed 19/02/2026
Our success and future revenue growth depends, in part, on our ability to protect our proprietary technology, our products, our proprietary designs and fabrication processes, and other intellectual property against misappropriation by others.
Risk factors: proprietary technology, designs and processes · Filed 19/02/2026
The identified intangible assets assumed were recognized as follows: Fair value Weighted Average Estimated Useful Life (in Years) Software 267 11.5 Technology 25 11.5 Customer relationships 50 8.5 Order backlog 5 3.5 Total identified intangible assets 347 10.9 The income approach was applied to estimate the fair values of the intangible assets acquired.
Acquisitions: TTTech Auto identified intangible assets and estimated useful lives · Filed 28/07/2026
The TTTech Auto acquisition complements and expands NXP’s system and software offerings in the Automotive and Industrial & IoT end markets.
Acquisitions: issuer description of expanded system and software offerings · Filed 28/07/2026
We may have difficulty obtaining patents and other intellectual property rights to protect our proprietary products, technology and intellectual property, and the patents and other intellectual property rights we receive may be insufficient to provide us with meaningful protection or commercial advantage.
Risk factors: potentially insufficient intellectual property protection · Filed 19/02/2026
In turn, historically demand for older technology falls, causing the price at which such products can be sold to drop, in some cases precipitously.
Risk factors: historical older-technology demand and price declines · Filed 20/02/2025
Goodwill arising from the TTTech Auto acquisition is attributed to the anticipated growth from new product sales, sales to new customers, the assembled workforce, and synergies expected from the combination.
Acquisitions: anticipated benefits underlying TTTech Auto goodwill · Filed 28/07/2026
The higher average selling prices at 8.1% of revenues or the year-ended December 31, 2023, were a result of increased inflationary input costs from NXP suppliers which were passed along to end customers.
MD&A: 2023 realized average selling price increases and input-cost pass-through · Filed 22/02/2024
Our gross profit percentage for 2023 and 2022 remained flat at 56.9%, as both revenue and cost of revenue were impacted by inflationary effect of increased input costs which were passed along to end customers.
MD&A: 2022–2023 gross margin and realized input-cost pass-through · Filed 22/02/2024
53 The following are reconciliations of our most comparable US GAAP measures to our non-GAAP measures presented: ($ in millions) Three months ended Full-year December 31, 2025 September 28, 2025 December 31, 2024 2025 2024 GAAP gross profit $ 1,807 $ 1,787 $ 1,678 $ 6,716 $ 7,119 PPA effects (7) (6) (11) (28) (47) Restructuring (14) — (21) (79) (28) Share-based compensation (14) (15) (15) (59) (59) Other incidentals (71) (2) (64) (84) (79) Non-GAAP gross profit $ 1,913 $ 1,810 $ 1,789 $ 6,966 $ 7,332 GAAP Gross Margin 54.2 % 56.3 % 53.9 % 54.7 % 56.4 % Non-GAAP Gross Margin 57.4 % 57.0 % 57.5 % 56.8 % 58.1 % GAAP research and development $ (665) $ (575) $ (612) $ (2,360) $ (2,347) Restructuring (89) (1) (50) (100) (57) Share-based compensation (58) (57) (60) (237) (234) Other incidentals (4) (2) (5) (14) (6) Non-GAAP research and development $ (514) $ (515) $ (497) $ (2,009) $ (2,050) GAAP selling, general and administrative $ (359) $ (286) $ (323) $ (1,204) $ (1,164) PPA effects — (1) — (1) (2) Restructuring (74) (2) (41) (82) (40) Share-based compensation (28) (46) (42) (166) (168) Other incidentals (15) (14) (12) (64) (45) Non-GAAP selling, general and administrative $ (242) $ (223) $ (228) $ (891) $ (909) GAAP operating income (loss) $ 744 $ 893 $ 675 $ 3,047 $ 3,417 PPA effects (41) (38) (39) (151) (185) Restructuring (177) (3) (112) (261) (125) Share-based compensation (100) (118) (117) (462) (461) Other incidentals (92) (19) (122) (143) (181) Non-GAAP operating income (loss) $ 1,154 $ 1,071 $ 1,065 $ 4,064 $ 4,369 GAAP Operating Margin 22.3 % 28.1 % 21.7 % 24.8 % 27.1 % Non-GAAP Operating Margin 34.6 % 33.8 % 34.2 % 33.1 % 34.6 % GAAP Income tax benefit (provision) $ (131) $ (148) $ (77) $ (525) $ (545) Income tax effect 59 25 87 129 141 Non-GAAP Income tax benefit (provision) $ (190) $ (173) $ (164) $ (654) $ (686) ($ in millions) Three months ended Full-year December 31, 2025 September 28, 2025 December 31, 2024 2025 2024 Net cash provided by (used for) operating activities $ 891 $ 585 $ 391 $ 2,820 $ 2,782 Net capital expenditures on property, plant and equipment (98) (76) (99) (395) (693) Non-GAAP free cash flow $ 793 $ 509 $ 292 $ 2,425 $ 2,089 54 ($ in millions) Three months ended Full-year December 31, 2025 September 28, 2025 December 31, 2024 2025 2024 Long-term debt $ 10,972 $ 10,971 $ 10,354 $ 10,972 $ 10,354 Short-term debt 1,250 1,264 500 1,250 500 Total debt 12,222 12,235 10,854 12,222 10,854 Less: cash and cash equivalents (3,267) (3,454) (3,292) (3,267) (3,292) Less: short-term deposits — (500) — — — Net debt $ 8,955 $ 8,281 $ 7,562 $ 8,955 $ 7,562 55 Item 7A.
MD&A: 2024–2025 GAAP and non-GAAP results, cash flow and debt reconciliation · Filed 19/02/2026
Our gross profit percentage for the three months ended June 28, 2026, of 57.3% increased compared to 56.2% for the three months ended March 29, 2026, driven mainly by higher sales volumes and favorable product mix.
MD&A: Q2 2026 gross margin improvement attributed mainly to volume and mix · Filed 28/07/2026
22 Results of operations The following table presents operating results for each of the three- and six-month periods ended June 28, 2026, and June 29, 2025, respectively: ($ in millions, unless otherwise stated) Q2 2026 % of Revenue Q2 2025 % of Revenue YTD 2026 % of Revenue YTD 2025 % of Revenue Revenue 3,496 2,926 6,677 5,761 % nominal growth 19.5 (6.4) 15.9 (7.9) Gross profit 2,002 1,562 3,790 3,122 Gross margin 57.3 % 53.4 % 56.8 % 54.2 % Research and development (604) 17.3 % (573) 19.6 % (1,192) 17.9 % (1,120) 19.4 % Selling, general and administrative (291) 8.3 % (278) 9.5 % (575) 8.6 % (559) 9.7 % Amortization of acquisition-related intangible assets (31) 0.9 % (25) 0.9 % (63) 0.9 % (52) 0.9 % Other income (expense) (5) 0.1 % 1 — % 616 9.2 % 19 0.3 % Operating income (loss) 1,071 30.6 % 687 23.5 % 2,576 38.6 % 1,410 24.5 % Financial income (expense) (97) 2.8 % (86) 2.9 % (193) 2.9 % (178) 3.1 % Benefit (provision) for income taxes (189) 5.4 % (116) 4.0 % (461) 6.9 % (246) 4.3 % Results relating to equity-accounted investees (3) 0.1 % (28) 1.0 % (7) 0.1 % (32) 0.6 % Net income (loss) 782 22.4 % 457 15.6 % 1,915 28.7 % 954 16.6 % Less: Net income (loss) attributable to non-controlling interests 15 0.4 % 12 0.4 % 26 0.4 % 19 0.3 % Net income (loss) attributable to stockholders 767 21.9 % 445 15.2 % 1,889 28.3 % 935 16.2 % Diluted earnings per share 3.02 1.75 7.44 3.67 23 Revenue Q2 2026 Overview Q2 2026 compared to Q2 2025 Revenue for the three months ended June 28, 2026, was $3,496 million compared to $2,926 million for the three months ended June 29, 2025, an increase of $570 million or 19.5%, in line with management’s expectations.
MD&A: Q2 and first-half 2026 operating results and performance versus expectations · Filed 28/07/2026
Variable consideration is estimated and includes the impact of discounts, price protection, product returns and distributor incentive programs.
Revenue recognition: discounts, price protection, returns and distributor incentives · Filed 19/02/2026
For some sales to distributors, contractual arrangements are in place which allow these distributors to return products if certain conditions are met.
Revenue recognition: contractual distributor return rights · Filed 19/02/2026
•During 2025, NXP returned capital to shareholders with the payment of $1,025 million in cash dividends and the repurchase of $899 million of its common shares, for a total capital return of $1,924 million.
MD&A: actual 2025 dividends and share repurchases · Filed 19/02/2026
In addition, NXP has an agreed purchase commitment with VSMC that over the lifetime of the factory the minimal loading will be between 80% - 90%, resulting in a total purchase commitment of approximately $14,096 million that is expected to be purchased over 37 years once wafer production starts.
Commitments: VSMC minimum loading and lifetime purchase obligation · Filed 19/02/2026
The following are reconciliations of our most comparable US GAAP measures to our non-GAAP measures presented: ($ in millions) For the three months ended June 28, 2026 March 29, 2026 June 29, 2025 GAAP gross profit $ 2,002 $ 1,788 $ 1,562 PPA effects (5) (6) (7) Restructuring — 1 (61) Share-based compensation (12) (13) (14) Other incidentals (9) (9) (8) Non-GAAP gross profit $ 2,028 $ 1,815 $ 1,652 GAAP Gross Margin 57.3 % 56.2 % 53.4 % Non-GAAP Gross Margin 58.0 % 57.1 % 56.5 % GAAP research and development $ (604) $ (588) $ (573) Restructuring 4 (2) (3) Share-based compensation (54) (57) (58) Other incidentals (4) (11) (7) Non-GAAP research and development $ (550) $ (518) $ (505) GAAP selling, general and administrative $ (291) $ (284) $ (278) Restructuring 4 (1) (3) Share-based compensation (39) (39) (45) Other incidentals (12) (4) (15) Non-GAAP selling, general and administrative $ (244) $ (240) $ (215) GAAP operating income (loss) $ 1,071 $ 1,505 $ 687 34 ($ in millions) For the three months ended June 28, 2026 March 29, 2026 June 29, 2025 GAAP operating income (loss) $ 1,071 $ 1,505 $ 687 PPA effects (36) (38) (32) Restructuring 8 (2) (67) Share-based compensation (105) (109) (117) Other incidentals (i) (24) 602 (32) Non-GAAP operating income (loss) $ 1,228 $ 1,052 $ 935 GAAP Operating Margin 30.6 % 47.3 % 23.5 % Non-GAAP Operating Margin 35.1 % 33.1 % 32.0 % GAAP Income tax benefit (provision) $ (189) $ (272) $ (116) Income tax effect 16 (99) 32 Non-GAAP Income tax benefit (provision) $ (205) $ (173) $ (148) (i) For the three months ended March 29, 2026, Other Incidentals includes the gain on sale of the MEMS Sensors business ($ in millions) For the three months ended June 28, 2026 March 29, 2026 June 29, 2025 Net cash provided by (used for) operating activities $ 860 $ 793 $ 779 Net capital expenditures on property, plant and equipment (69) (79) (83) Non-GAAP free cash flow $ 791 $ 714 $ 696 ($ in millions) For the three months ended June 28, 2026 March 29, 2026 June 29, 2025 Long-term debt $ 9,977 $ 10,974 $ 9,479 Short-term debt 999 750 1,999 Total debt 10,976 11,724 11,478 Less: cash and cash equivalents (3,222) (3,708) (3,170) Net debt $ 7,754 $ 8,016 $ 8,308 35 Item 3.
MD&A: 2026 cash generation, capital expenditure and debt reconciliation · Filed 28/07/2026
Since 2016, the Company has returned $22.7 billion to shareholders through previously announced share repurchases and dividend payments, reducing our diluted share count by approximately 27 percent, or 93.3 million shares
Capital return: historical distributions and diluted share-count reduction · Filed 27/04/2026
While the Company made important progress against several strategic priorities during the year, overall financial performance declined on a year‑over‑year basis and did not meet our expectations.
Executive compensation discussion: 2025 performance below expectations · Filed 27/04/2026
PSUs: For all grants made under our 2025 LTI program, the number of shares earned will be contingent upon NXP’s relative total shareholder return ("RTSR") performance versus the Peer Group from October 28, 2025, through October 27, 2028.
Executive compensation: actual 2025 PSU grants and relative-return performance period · Filed 27/04/2026
•1H Revenue •1H Non-GAAP Gross Margin •2H Revenue •2H Non-GAAP Gross Margin •Annual Sustainability Scorecard The HRCC approved a Non-GAAP Operating Margin threshold for 2025 so that no payment related to the sustainability scorecard portion of the AIP would be made if Non-GAAP Operating Margin did not meet or exceed 34%.
Executive compensation: 2025 incentive metrics and sustainability payout threshold · Filed 27/04/2026
In 2023, NXP adopted a Dodd-Frank compliant Clawback Policy.
Executive compensation: adopted clawback policy · Filed 27/04/2026
All members of the Audit, Human Resources and Compensation, and Nominating, Governance and Sustainability Committees are independent directors, as defined in the applicable Nasdaq listing standards, applicable SEC rules and the Rules of Procedure, which includes the requirements of the DCGC.
Corporate governance: independence of standing committee members · Filed 27/04/2026
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Related Party Transactions There were no transactions or series of similar transactions, since January 1, 2025, to which we were a party or will be a party other than compensation arrangements which are described under “Executive Compensation,” in which: •the amount involved exceeded or will exceed $120,000; and •a director or director nominee, executive officer, holder of more than 5% of our ordinary shares or any immediate family member of a director, director nominee or executive officer had or will have a direct or indirect material interest.
Related-party transactions: disclosed absence above the stated threshold, excluding compensation · Filed 27/04/2026
Statement of Policy Regarding Transactions with Related Persons The Board has adopted a written policy that requires our Audit Committee to review and approve or ratify all related party transactions that involve a value of $120,000 or more (excluding employment relationships).
Corporate governance: adopted related-party transaction review policy · Filed 27/04/2026
The agreements also outline share ownership requirements as well as non-competition and non-solicitation requirements.
Executive employment agreements: share ownership requirements · Filed 27/04/2026
- Purchase of investments of $381 million (driven primarily by the capital contributions of $316 million into VSMC)
Investing cash flows: actual first-half 2026 investment contributions · Filed 28/07/2026
