NXP Semiconductors NV at UBS Global Technology and AI Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : So let me start, maybe, Rafael with the first question or Bill actually, one of you on the short term. So if you look at the next quarter which is something that you guided for revenues up 4% for quarter to quarter in Q4 seasonality is flat to up. So you are above seasonal which is kind of better than most of the peers that are more in line and some even below. I won't name anybody. But can you explain maybe the drivers of this outperformance and why you are standing out here?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : And I think -- what is standing out when you speak to many of your peers in the industry is that there is still a lack of visibility still. I mean we all sit on the companies that sit on a lot of inventories on their balance sheet, your customers, they know that. So I guess the lead times are quite strong still. But still, you are still very optimistic versus your peers. So it's why I'm turning to you a little bit as to where is it coming from, if we have no visibility. So it's very interesting to hear from you.

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : Makes sense. And maybe if I move, it's a good transition for my question on '26 as a whole. We talked about more short-term Q1 But you mentioned that content is an important driver. So if we look at '26 right now, what are the main content drivers for NXP that you think will help? You can maybe some design wins, ADAS components, infotainment, electrification BMS. I mean, you can name a few drivers -- key drivers that you see for '26 for NXP?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : Very clear. Thank you for all these details. Gross margin, Bill, I guess it's for you this one because obviously, top line is an important driver, but gross margin is also key. And I have to say, again, you have been standing out on the gross margin side in this down cycle. Of course, you're have much less volatility, very steady gross margin. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 3:15PM, NXPI.OQ - NXP Semiconductors NV at UBS Global Technology and AI Conference As we came out of this down cycle as you seem to allude to. How should we think about your gross margin? Do you think you have a lot of operating leverage in line with this top line story? And what are the drivers?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : Very clear. Rafael, on the China side, I wanted to ask, obviously, it's a very important topic in the industry. We all see China trying to localize as much as possible. It's a threat potentially to share, but also pricing, the economics in that region. Can you remind us, first, what is your percentage of China business right now? How much was the growth maybe or is the growth in '25 or in China? And what do you see for the China business in the short term and medium term for you?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : And is EV very important for you in China?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : So what was your growth in China in '25? Or what is your current performance there?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : More on the top line actually.

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : And growing this year?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : Yeah, yeah. And you expect to grow as well in '26, it would be --

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : Yes. Maybe moving to more long term. I mean, NXP targets $16 billion in '27. You mentioned a bit the building blocks, Bill. So that's a 6% to 10% revenue CAGR. But based on '25 numbers, if I take the consensus and your guidance actually midpoint, it implies a 14% CAGR, '25 to '27. So you have actually -- it's a guidance that is more H2 loaded for the reason that we know. Are you still very confident? I mean, is there any risk to this guidance? Because obviously, it's a bit of a hockey stick right now. So I just want to have a view on that?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : Makes sense. Thank you, Rafael. Bill, on the gross margin side, I forgot to ask you about the China business, we talked about the top line drivers. But is it accretive to the China business or group average? I mean, how is the profitability in China?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : Rafael, I mean, you did not recently joined NXP. But as CEO, it's recently new. So maybe can you tell us about your experience, what's your strategy as a CEO. Now you have been a few months into the job. Do you want to do something differently? Anything you could bring to the company as a fresh idea?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : Okay. And when you say accelerating, you have been through -- you did a few M&As recently. Is it what you mean by accelerating? Or is there anything concretely that you mean by accelerating like R&D, CapEx, more M&A coming just to get more ideas on that?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : And maybe moving more to the longer term on the gross margin side, Bill, I mean, 57% to 63% is your target for '27, which is a very nice target to have. Now if you think about more longer term for the company, can you go into this high 60s, mid-60s at some point? And what would be the, I mean -- LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 3:15PM, NXPI.OQ - NXP Semiconductors NV at UBS Global Technology and AI Conference

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : It's a good teaser. For your divestments strategies, I mean, obviously, you have been very agile as well in the way you run the business in terms of divesting some business that you believe are not fitting anymore your targets. So is this still the case today, you feel like you have some portfolios that you might adjust?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : And you mentioned about accelerating the business, Rafael mentioned it. Is there any impact on the capital allocation that NXP will have? Maybe you can remind the capital ratio policy and how you think about that?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : Rafael, maybe a very important topic is AI. Many of your peers start talking about data centers, AI tractions. Can you maybe lay out the opportunities there for data centers, AI more specifically? And how do you intend to capture some growth there?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : Great. Thank you. We're running out of time. And thank you all for listening, and thank you for being with us today.