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

Quarterly Financial Highlights

•Revenue was $3,173 million, down 2.4% year-on-year;

•GAAP gross margin was 56.3%, and GAAP operating margin was 28.1%;

•Non-GAAP gross margin was 57.0%, and non-GAAP operating margin was 33.8%;

•Cash flow from operations was $585 million, with net capital expenditures on property, plant and equipment of $76 million, resulting in non-GAAP free cash flow of $509 million;

•During the third quarter of 2025, NXP returned capital to shareholders with the payment of $256 million in cash dividends and the repurchase of $54 million of its common shares, for a total capital return of $310 million.

On October 24, 2025, NXP closed the previously announced acquisition of 100% of Aviva Links for $243 million in cash, before closing adjustments. Aviva Links is a provider of Automotive SerDes Alliance (ASA) compliant in-vehicle connectivity solutions. The Aviva Links acquisition complements and expands NXP’s automotive networking solutions in the Automotive and Industrial & IoT end markets. We are currently evaluating the purchase price allocation for this transaction and expect to have our preliminary allocation completed in the fourth quarter of 2025.

On October 27, 2025, NXP closed the previously announced acquisition of 100% of Kinara, Inc. for $307 million in cash, before closing adjustments. Kinara is an industry leader in high performance, energy-efficient and programmable discrete neural processing units (NPUs). The Kinara acquisition complements and expands NXP’s solutions for AI-powered edge systems in the Industrial & IoT and Automotive end markets. We are currently evaluating the purchase price allocation for this transaction and expect to have our preliminary allocation completed in the fourth quarter of 2025.

See Note 3 to the consolidated financial statements for further information regarding NXP’s acquisition of TTTech Auto (acquired in Q2), Aviva Links, and Kinara, Inc.

Following the previous announcement on April 28, 2025, Kurt Sievers has voluntarily retired as CEO and executive director of the Company effective October 28, 2025. The Company’s Board of Directors has unanimously appointed Rafael Sotomayor to succeed Mr. Sievers as President and CEO and temporary executive director of the Company effective as of October 28, 2025.

Sequential Results

Q3 2025 compared to Q2 2025

Revenue for the three months ended September 28, 2025 was $3,173 million compared to $2,926 million for the three months ended June 29, 2025, an increase of $247 million or 8.4% quarter-on-quarter, in line with management's expectations. Within our end markets, the Automotive end market increased $108 million or 6.2%, the Mobile end market increased $99 million or 29.9%, the Industrial & IoT end market increased $33 million or 6.0%, and the Communication Infrastructure & Other end market increased $7 million or 2.2%.

When aggregating all end markets together and reviewing sales channel performance, revenues through NXP's third party distribution partners was $1,866 million, an increase of $230 million or 14.1% compared to the previous period. Revenues through NXP's third party direct OEM and EMS customers was $1,269 million, an increase of $12 million or 1.0% versus the previous period.

From a geographic perspective, revenue increased quarter-on-quarter in the China region by 13.0%, in the Americas region by 11.2%, in the Asia Pacific region by 7.7%, and in the EMEA region by 0.4%.

Our gross profit percentage for the three months ended September 28, 2025 of 56.3% increased compared with 53.4% for the three months ended June 29, 2025, driven mainly by lower restructuring costs.

Operating income for the three months ended September 28, 2025 was $893 million compared to $687 million for the three months ended June 29, 2025, an increase of $206 million or 30.0%. The sequential increase was mainly driven by higher revenue.