NXP Semiconductors NV Q3 2025 Earnings Call Transcript

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

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : Thank you very much. My first question is on maybe, your comment, Rafael. You said that you think inventories are, I mean, low, in automotive, for example, and things are getting better, broad-based. But you do not expect to increase inventories in the channel. I mean, or even, sorry, not in channel but in the direct, channel. So I was wondering if we look at Q1, in terms of seasonality, I think you are done. I think digit percentage quarter on quarter for Q1. Should I read this comment as, today, with your visibility you are comfortable with seasonality assuming there is no stockpiling and demand is stabilizing is that the right way to look at it?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : Yeah, if you want, so like in a way directionally based on what you just said, like, are you comfortable with the seasonal trend?

Question: Francois-Xavier Bouvignies - Ubs Inc - Analyst : Very clear. Thank you, gentlemen.

Question: Joe Moore - Morgan Stanley. - Analyst : Great. Thank you. I also wanted to touch on automotive customers kind of view on inventories, and I guess can you just talk to us a little bit about what those conversations are like, understanding there's not much overlap between you and Nexperia at this point. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 28, 2025 / 12:00PM, NXPI.OQ - Q3 2025 NXP Semiconductors NV Earnings Call I would think stuff like that is a reason to want to hold more inventory, and kind of buffer yourself from these geopolitics issues. Just are you seeing any indications that that is happening or will happen?

Question: Joe Moore - Morgan Stanley. - Analyst : Okay, and is there any impact potentially on automotive production from all of that on the negative side that you could see, if they have shortages of other components that it slows productions?

Question: Stacy Rasgon - Sanford C Bernstein & Co LLC - Analyst : Hi guys. Thanks for taking my questions. My first one, I wanted to drill into the gross margins a little more. So you are guiding it up sequentially, but it's flat year over year even on a pretty decent, revenue increase. I guess that's mixed, but I'm struggling to see where the mix issue is. It looks like your industrial mix is higher, auto looks about the same, like what is going on with gross? What it sounds like utilizations? I'm not even sure. They don't sound like they're lower year over year. Like why aren't we getting more gross margin leverage like on a year over year basis? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 28, 2025 / 12:00PM, NXPI.OQ - Q3 2025 NXP Semiconductors NV Earnings Call

Question: Stacy Rasgon - Sanford C Bernstein & Co LLC - Analyst : But I guess is the decrease the inventory so also helps that the depreciate the distribution stuff is higher margin as well.

Question: Stacy Rasgon - Sanford C Bernstein & Co LLC - Analyst : Got it thanks. For my follow-up, I just wanted to, the level set. So, sounds like there is some duty filling in Q4. So if it's, if I say half a week, I guess, is that, do I just like roughly think of that as $50 million of income on the in impact into the Q4 right? And you said Q1 you were comfortable with seasonal, but does that incremental channel filling Q4 influence how we might think about Q1 seasonality? You sort of implicitly assuming that you are going to be putting more into the channel in Q1 before seasonal die.

Question: Stacy Rasgon - Sanford C Bernstein & Co LLC - Analyst : We use a lot of a scenario in the guidance. But you must have a scenario that's baked into guidance for Q4. Right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 28, 2025 / 12:00PM, NXPI.OQ - Q3 2025 NXP Semiconductors NV Earnings Call

Question: Tom O'Malley - Barclays Services Corp - Analyst : Hey guys, thanks for taking my questions. The industrial IT business seems very strong to close the year, kind of particularly versus where expectations were. You guys have been helpful in the past about kind of laying out where you're seeing that strength, whether it's the core industrial side or more on that IoT side. Could you give us a little bit of a feel of what's moving into your into your Q4?

Question: Tom O'Malley - Barclays Services Corp - Analyst : Helpful. And then a similar question, just on the automotive side because it's useful to kind of see what's moving here is just on the S32 portfolio like you've seen some really strong growth trends. And like part of the reason, many think that you guys have handled this a lot better is just the growing portion of your business that is levered to processors. So maybe again, what happened in the quarter, maybe the processor business versus the rest of auto and then into the fourth quarter. Any kind of color on if there's a divergence there how we should be thinking about just the entire auto business with those two pieces. Thank you.

Question: Tom O'Malley - Barclays Services Corp - Analyst : Thank you guys.

Question: Vivek Arya - BofA Securities. - Analyst : Thanks for taking my question, and best wishes to both, Rafael and Kurt. So Rafael, let's say, if '26 plays out the way '25 did with China, OEMs and EVs growing, but the rest of the world, not growing or flattish. What does it mean for NXP? So, in an overall flattish auto production environment, what kind of lift can content provide, net of any pricing movement like can your autos be conceptually within your long-term model for next year?

Question: Vivek Arya - BofA Securities. - Analyst : And for my follow-up, bill on gross margins, is it just volume that takes you from the kind of the lower end of the 57 to 63 range, right towards the middle of the range, or are there any new products, any new kind of mixing up of your portfolio that can provide benefits on top of any, volume benefits?

Question: Chris Caso - Wolfe Research LLC - Analyst : Yes, thanks. Good morning. I wanted to go back to, some what you said with inventory levels, particularly at your direct automotive customers. Where do those inventory levels stand now, and you quantified a bit on what the impact would be as the distribution channel increased in increased inventory? Is there any -- what I mean, help us with the magnitude of what would happen if those direct auto customers, finally decided that they did indeed need to restock?

Question: Chris Caso - Wolfe Research LLC - Analyst : I do thanks. I want to come to your comment on buybacks that you mentioned you prepared remarks. Could you give us a little more detail on what the intention is going forward and what we should expect now that you're resuming the buybacks?

Question: Blayne Curtis - Jefferies - Analyst : Hey guys. Thanks for taking my question. I just want to ask on, the kind of cyclical tailwinds for seasonality. I mean, I guess if you look at December, it's really just industrial that maybe you could argue is above typical seasonality, and then I think you said just soft guidance for March normal. I think a lot of people have talked about the slowing down of the single recovery. I mean, your comments were pretty positive, Rafael. I'm just kind of curious, if you can just kind of assess. If you're just looking at seasonality, I guess is there is the seasonal, the sickle tailwind slowing, and I guess maybe you can look at the different markets and if you feel differently about them.

Question: Blayne Curtis - Jefferies - Analyst : Thanks. And then I wanted to ask you on mobile. I mean, if I have my numbers right, it might be a record. I'm just kind of curious the drivers behind that.

Question: Blayne Curtis - Jefferies - Analyst : Okay. Thank you.

Question: Joshua Buchalter - TD Cowen and Company LLC - Analyst : Hey guys, thank you for taking my question and congrats to both Rafael and Kurt and good luck. I know it's still early in earning season, but you -- your comments and outlook on the industrial IT segment, we're certainly better than your peers who have mainly talked about decelerating trends. We've kind of touched on it a little bit, and I realize you're not going to comment on peers, but would you say the difference in what you're seeing versus peers is because of inventory management or more product cycle driven and what gives you confidence in the sustainability of sort of the upcycle that you're starting to see signs of with orders still coming in in late and with the lead time? thank you.

Question: Joshua Buchalter - TD Cowen and Company LLC - Analyst : Understood. Helpful caller. Thank you. And I was maybe also hoping that you could provide some color on the China auto market what you saw there in your quarter and your expectations into 4Q. I believe a good amount of that is actually served by the DT so our inventory levels there, lean as well. Thank you.

Question: Joshua Buchalter - TD Cowen and Company LLC - Analyst : Thank you both.

Question: William Stein - Truist Securities. - Analyst : Oh great. Thanks for taking my questions. First, I'm hoping you can remind us about the strategic, purpose of the recent acquisitions. I think TTTech closed, recently, but then you have the two new ones as well. Can you just frame that as it relates to the rest of the auto business and then I have a follow-up? Thank you.

Question: William Stein - Truist Securities. - Analyst : And then the follow-up, there's been some discussion about some elevated competitive dynamics in the infotainment, part of your auto's business. Can you remind us how big that is in your auto's business and maybe update us on that competitive situation? Thank you.