NXP Semiconductors N.V.

Management’s Discussion and Analysis (MD&A) should be read in conjunction with our Consolidated Financial Statements and Notes and the MD&A in our Annual Report on Form 10-K for the year ended December 31, 2024, and the Financial Statements and the related Notes that appear elsewhere in this document.

Overview

Quarter in Focus

•Revenue was $2,926 million, down 6.4% year-on-year;

•GAAP gross margin was 53.4%, and GAAP operating margin was 23.5%;

•Non-GAAP gross margin was 56.5%, and non-GAAP operating margin was 32.0%;

•Cash flow from operations was $779 million, with net capital expenditures on property, plant and equipment of $83 million, resulting in non-GAAP free cash flow of $696 million;

•During the second quarter of 2025, NXP returned capital to shareholders with the payment of $257 million in cash dividends and the repurchase of $204 million of its common shares, for a total capital return of $461 million.

On April 23, 2025, Kurt Sievers, the CEO and President of the Company, provided notice that he would voluntarily retire as CEO and executive director of the Company on October 28, 2025. Following its CEO succession planning process, NXP’s board of directors has unanimously appointed Rafael Sotomayor to succeed as President, effective April 28, 2025. Furthermore, Mr. Sotomayor has been designated as CEO upon Mr. Sievers’s retirement from his CEO role. Mr. Sievers will remain a strategic advisor to NXP through December 31, 2025.

On June 17, 2025, NXP announced the acquisition of 100% of TTTech Auto for $766 million in cash ($679 million net of cash acquired). The acquisition is expected to enhance the NXP CoreRide platform by augmenting hardware proficiency with added software expertise. See Note 3 to the consolidated financial statements for further information regarding the acquisition of TTTech Auto.

Sequential Results

Q2 2025 compared to Q1 2025

Revenue for the three months ended June 29, 2025 was $2,926 million compared to $2,835 million for the three months ended March 30, 2025, an increase of $91 million or 3.2% quarter-on-quarter, in line with management's expectations. Within our end markets, the Automotive end market increased $55 million or 3.3%, the Industrial & IoT end market increased $38 million or 7.5%, the Communication Infrastructure & Other end market increased $5 million or 1.6%, and the Mobile end market decreased $7 million or 2.1%.

When aggregating all end markets together and reviewing sales channel performance, revenues through NXP's third party distribution partners was $1,636 million, an increase of $112 million or 7.3% compared to the previous period. Revenues through NXP's third party direct OEM and EMS customers was $1,257 million, a decrease of $27 million or 2.1% versus the previous period.

From a geographic perspective, revenue increased quarter-on-quarter in the Asia Pacific region by 5.6%, in the China region by 5.2%, and in the EMEA region by 4.8%, while revenue decreased in the Americas region by 8.8%.

Our gross profit percentage for the three months ended June 29, 2025 of 53.4% decreased compared with 55.0% for the three months ended March 30, 2025.

Operating income for the three months ended June 29, 2025 was $687 million compared to $723 million for the three months ended March 30, 2025, a decrease of $36 million or 5.0%. Higher restructuring charges was the main driver for the sequential decrease.