Item 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

($ in millions, unless otherwise stated)

			For the three months ended												For the nine months ended
			October 1, 2023						October 2, 2022						October 1, 2023						October 2, 2022
Revenue			3,434						3,445						9,854						9,893
Cost of revenue			(1,469)						(1,478)						(4,238)						(4,267)
Gross profit			1,965						1,967						5,616						5,626
Research and development			(601)						(548)						(1,767)						(1,608)
Selling, general and administrative			(294)						(289)						(848)						(805)
Amortization of acquisition-related intangible assets			(71)						(131)						(237)						(400)
Total operating expenses			(966)						(968)						(2,852)						(2,813)
Other income (expense)			(7)						2						(10)						4
Operating income (loss)			992						1,001						2,754						2,817
Financial income (expense):
Extinguishment of debt			—						—						—						(18)
Other financial income (expense)			(75)						(98)						(231)						(313)
Income (loss) before income taxes			917						903						2,523						2,486
Benefit (provision) for income taxes			(123)						(149)						(399)						(392)
Results relating to equity-accounted investees			(2)						(4)						(5)						5
Net income (loss)			792						750						2,119						2,099
Less: Net income (loss) attributable to non-controlling interests			5						12						19						34
Net income (loss) attributable to stockholders			787						738						2,100						2,065
Earnings per share data:
Net income (loss) per common share attributable to stockholders in $
Basic			3.06						2.81						8.12						7.86
Diluted			3.01						2.79						8.03						7.80
Weighted average number of shares of common stock outstanding during the period (in thousands):
Basic			257,488						262,180						258,744						262,620
Diluted			261,095						264,705						261,666						264,838

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

($ in millions, unless otherwise stated)

			For the three months ended												For the nine months ended
			October 1, 2023						October 2, 2022						October 1, 2023						October 2, 2022
Net income (loss)			792						750						2,119						2,099
Other comprehensive income (loss), net of tax:
Change in fair value cash flow hedges			(2)						(13)						(12)						(25)
Change in foreign currency translation adjustment			(45)						(78)						(24)						(165)
Change in net actuarial gain (loss)			—						1						—						—
Total other comprehensive income (loss)			(47)						(90)						(36)						(190)
Total comprehensive income (loss)			745						660						2,083						1,909
Less: Comprehensive income (loss) attributable to non-controlling interests			5						12						19						34
Total comprehensive income (loss) attributable to stockholders			740						648						2,064						1,875

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

($ in millions, unless otherwise stated)

						October 1, 2023						December 31, 2022
ASSETS
Current assets:
			Cash and cash equivalents			4,042						3,845
			Accounts receivable, net			939						960
			Inventories, net			2,140						1,782
			Other current assets			495						348
Total current assets						7,616						6,935
Non-current assets:
			Other non-current assets			2,236						1,942
			Property, plant and equipment, net of accumulated depreciation of $5,525 and $5,214			3,197						3,105
			Identified intangible assets, net of accumulated amortization of $1,565 and $1,883			1,010						1,311
			Goodwill			9,937						9,943
			Total non-current assets			16,380						16,301
Total assets						23,996						23,236
LIABILITIES AND EQUITY
Current liabilities:
			Accounts payable			959						1,185
			Restructuring liabilities-current			16						19
			Other current liabilities			1,990						2,066
			Short-term debt			999						—
Total current liabilities						3,964						3,270
Non-current liabilities:
			Long-term debt			10,173						11,165
			Restructuring liabilities			3						1
			Deferred tax liabilities			44						45
			Other non-current liabilities			1,014						1,015
Total non-current liabilities						11,234						12,226
Total liabilities						15,198						15,496
Equity:
			Non-controlling interests			310						291
			Stockholders’ equity:
			Common stock, par value €0.20 per share:			56						56
			Capital in excess of par value			14,398						14,091
			Treasury shares, at cost:
			17,569,471 shares (2022: 15,056,232 shares)			(3,281)						(2,799)
			Accumulated other comprehensive income (loss)			40						76
			Accumulated deficit			(2,725)						(3,975)
			Total stockholders’ equity			8,488						7,449
Total equity						8,798						7,740
Total liabilities and equity						23,996						23,236

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

($ in millions, unless otherwise stated)

			For the nine months ended
			October 1, 2023						October 2, 2022
Cash flows from operating activities:
Net income (loss)			2,119						2,099
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization			837						948
Share-based compensation			304						267
Amortization of discount (premium) on debt, net			2						2
Amortization of debt issuance costs			6						5
Net (gain) loss on sale of assets			(1)						(2)
(Gain) loss on equity security, net			(1)						6
(Gain) loss on extinguishment of debt			—						18
Results relating to equity-accounted investees			5						(5)
Deferred tax expense (benefit)			(170)						(196)
Changes in operating assets and liabilities:
(Increase) decrease in receivables and other current assets			(118)						(165)
(Increase) decrease in inventories			(359)						(392)
Increase (decrease) in accounts payable and other liabilities			(220)						545
Decrease (increase) in other non-current assets			(49)						(325)
Exchange differences			15						(2)
Other items			6						16
Net cash provided by (used for) operating activities			2,376						2,819
Cash flows from investing activities:
Purchase of identified intangible assets			(135)						(122)
Capital expenditures on property, plant and equipment			(652)						(830)
Purchase of equipment leased to others			—						(5)
Proceeds from disposals of property, plant and equipment			1						2
Purchase of interests in businesses, net of cash acquired			—						(27)
Purchase of investments			(93)						(9)
Proceeds from sale of investments			—						12
Proceeds from return of equity investment			—						2
Net cash provided by (used for) investing activities			(879)						(977)
Cash flows from financing activities:
Repurchase of long-term debt			—						(917)
Proceeds from the issuance of long-term debt			—						1,496
Cash paid for debt issuance costs			—						(13)
Dividends paid to common stockholders			(745)						(594)
Proceeds from issuance of common stock through stock plans			70						58
Purchase of treasury shares and restricted stock unit withholdings			(619)						(920)
Other, net			(2)						(1)
Net cash provided by (used for) financing activities			(1,296)						(891)
Effect of changes in exchange rates on cash positions			(4)						(22)
Increase (decrease) in cash and cash equivalents			197						929
Cash and cash equivalents at beginning of period			3,845						2,830
Cash and cash equivalents at end of period			4,042						3,759

Supplemental disclosures to the condensed consolidated cash flows
Net cash paid during the period for:
Interest			178						217
Income taxes, net of refunds			698						432
Net gain (loss) on sale of assets:
Cash proceeds from the sale of assets			1						2
Non-cash investing activities:
Non-cash capital expenditures			167						176

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

($ in millions, unless otherwise stated)

						Outstanding number of shares (in thousands)						Common stock						Capital in excess of par value						Treasury shares at cost						Accumulated other comprehensive income (loss)						Accumulated deficit						Total stock- holders’ equity						Non- controlling interests						Total equity
Balance as of December 31, 2022						259,463						56						14,091						(2,799)						76						(3,975)						7,449						291						7,740
Net income (loss)																																				615						615						8						623
Other comprehensive income (loss)																														22												22												22
Share-based compensation plans																		101																								101												101
Shares issued pursuant to stock awards						309																		61												(28)						33												33
Treasury shares repurchased and retired						(37)																		(7)																		(7)												(7)
Dividends common stock ($1.014 per share)																																				(264)						(264)												(264)
Balance as of April 2, 2023						259,735						56						14,192						(2,745)						98						(3,652)						7,949						299						8,248
Net income (loss)																																				698						698						6						704
Other comprehensive income (loss)																														(11)												(11)												(11)
Share-based compensation plans																		99																								99												99
Shares issued pursuant to stock awards						71																		13												(12)						1												1
Treasury shares repurchased and retired						(1,681)																		(302)																		(302)												(302)
Dividends common stock ($1.014 per share)																																				(262)						(262)												(262)
Balance as of July 2, 2023						258,125						56						14,291						(3,034)						87						(3,228)						8,172						305						8,477
Net income (loss)																																				787						787						5						792
Other comprehensive income																														(47)												(47)												(47)
Share-based compensation plans																		107																								107												107
Shares issued pursuant to stock awards						299																		59												(23)						36												36
Treasury shares and restricted stock unit withholdings						(1,474)																		(306)																		(306)												(306)
Dividends common stock ($1.014 per share)																																				(261)						(261)												(261)
Balance as of October 1, 2023						256,950						56						14,398						(3,281)						40						(2,725)						8,488						310						8,798

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

($ in millions, unless otherwise stated)

						Outstanding number of shares (in thousands)						Common stock						Capital in excess of par value						Treasury shares at cost						Accumulated other comprehensive income (loss)						Accumulated deficit						Total stock- holders’ equity						Non- controlling interests						Total equity
Balance as of December 31, 2021						264,950						56						13,727						(1,932)						48						(5,371)						6,528						242						6,770
Net income (loss)																																				657						657						9						666
Other comprehensive income (loss)																														(22)												(22)												(22)
Share-based compensation plans																		92																								92												92
Shares issued pursuant to stock awards						256																		51												(23)						28												28
Treasury shares repurchased and retired						(2,653)																		(552)																		(552)												(552)
Dividends common stock ($0.845 per share)																																				(222)						(222)												(222)
Balance as of April 3, 2022						262,553						56						13,819						(2,433)						26						(4,959)						6,509						251						6,760
Net income (loss)																																				670						670						13						683
Other comprehensive income (loss)																														(78)												(78)												(78)
Share-based compensation plans																		85																								85												85
Shares issued pursuant to stock awards						57																		11												(11)						—												—
Treasury shares repurchased and retired						(15)																		(2)																		(2)												(2)
Dividends common stock ($0.845 per share)																																				(222)						(222)												(222)
Balance as of July 3, 2022						262,595						56						13,904						(2,424)						(52)						(4,522)						6,962						264						7,226
Net income (loss)																																				738						738						12						750
Other comprehensive income																														(90)												(90)												(90)
Share-based compensation plans																		92																								92												92
Shares issued pursuant to stock awards						295																		60												(30)						30												30
Treasury shares and restricted stock unit withholdings						(2,501)																		(401)																		(401)												(401)
Dividends common stock ($$0.845 per share)																																				(222)						(222)												(222)
Balance as of October 2, 2022						260,389						56						13,996						(2,765)						(142)						(4,039)						7,106						279						7,385

See accompanying notes to the Condensed Consolidated Financial Statements

NXP SEMICONDUCTORS N.V.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

All amounts in millions of $ unless otherwise stated

1 Basis of Presentation and Overview

We prepared our interim condensed consolidated financial statements that accompany these notes in conformity with U.S. generally accepted accounting principles, consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended December 31, 2022.

We have made estimates and judgments affecting the amounts reported in our condensed consolidated financial statements and the accompanying notes. The actual results that we experience may differ materially from our estimates. The interim financial information is unaudited, but reflects all normal adjustments that are, in our opinion, necessary to provide a fair statement of results for the interim periods presented. This interim information should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022.

2 Significant Accounting Policies and Recent Accounting Pronouncements

Significant Accounting Policies

For a discussion of our significant accounting policies see, “Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – “Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended December 31, 2022.

Accounting standards recently adopted

In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. ASU 2022-04, which require that a buyer in a supplier finance program to disclose sufficient information about the program, is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. ASU 2022-04 became effective for us on January 1, 2023. We have assessed our current positions and the interrelation to the amendments and the adoption of this update did not have a material impact on the Company's consolidated financial statements and related disclosures.

No other new accounting pronouncements were issued or became effective in the period that had, or are expected to have, a material impact on our Consolidated Financial Statements.

3 Acquisitions and Divestments

2023

There were no material acquisitions or divestments during the first nine months of 2023.

2022

On July 19, 2022, we acquired PL Sense for a total consideration of $22.1 million, net of closing adjustments. There were no material divestments during 2022.

4 Supplemental Financial Information

Statement of Operations Information:

Disaggregation of revenue

The following table presents revenue disaggregated by sales channel:

			For the three months ended												For the nine months ended
			October 1, 2023						October 2, 2022						October 1, 2023						October 2, 2022
Distributors			1,947						1,876						5,117						5,385
Original Equipment Manufacturers and Electronic Manufacturing Services			1,463						1,525						4,653						4,378
Other			24						44						84						130
Total			3,434						3,445						9,854						9,893

Depreciation, amortization and impairment

			For the three months ended												For the nine months ended
			October 1, 2023						October 2, 2022						October 1, 2023						October 2, 2022
Depreciation of property, plant and equipment			163						156						485						447
Amortization of internal use software			5						3						14						9
Amortization of other identified intangible assets			105						162						338						492
Total - Depreciation, amortization and impairment			273						321						837						948

Financial income and expense

			For the three months ended												For the nine months ended
			October 1, 2023						October 2, 2022						October 1, 2023						October 2, 2022
Interest income			49						21						134						29
Interest expense			(109)						(109)						(329)						(319)
Total other financial income/ (expense)			(15)						(10)						(36)						(41)
Total			(75)						(98)						(231)						(331)

Earnings per share

The computation of earnings per share (EPS) is presented in the following table:

			For the three months ended												For the nine months ended
			October 1, 2023						October 2, 2022						October 1, 2023						October 2, 2022
Net income (loss)			792						750						2,119						2,099
Less: net income (loss) attributable to non-controlling interests			5						12						19						34
Net income (loss) attributable to stockholders			787						738						2,100						2,065
Weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)			257,488						262,180						258,744						262,620
Plus incremental shares from assumed conversion of:
Options 1)			182						275						193						297
Restricted Share Units, Performance Share Units and Equity Rights 2)			3,425						2,250						2,729						1,921
Dilutive potential common shares			3,607						2,525						2,922						2,218
Adjusted weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)			261,095						264,705						261,666						264,838
EPS attributable to stockholders in $:
Basic net income (loss)			3.06						2.81						8.12						7.86
Diluted net income (loss)			3.01						2.79						8.03						7.80

1. There were no stock options to purchase shares of NXP’s common stock that were outstanding in Q3 2023 and YTD 2023 (Q3 2022 and YTD 2022: no shares) that were anti-dilutive and were not included in the computation of diluted EPS because the exercise price was greater than the average fair market value of the common stock or the number of shares assumed to be repurchased using the proceeds of unrecognized compensation expense and exercise prices were greater than the weighted average number of shares underlying outstanding stock options.

2. There were no unvested RSUs, PSUs and equity rights that were outstanding in Q3 2023 and YTD 2023 (Q3 2022 and YTD 2022: 0.3 million shares) that were anti-dilutive and were not included in the computation of diluted EPS because the number of shares assumed to be repurchased using the proceeds of unrecognized compensation expense were greater than the weighted average number of outstanding unvested RSUs, PSUs and equity rights or the performance goal has not been met yet.

Balance Sheet Information

Cash and cash equivalents

At October 1, 2023 and December 31, 2022, our cash balance was $4,042 million and $3,845 million, respectively, of which $225 million and $227 million was held by SSMC, our consolidated joint venture company with TSMC. Under the terms of our joint venture agreement with TSMC, a portion of this cash can be distributed by way of a dividend to us, but 38.8% of the dividend will be paid to our joint venture partner. During both first nine months of 2023 and 2022, no dividends were declared by SSMC.

Inventories

The portion of finished goods stored at customer locations under consignment amounted to $10 million as of October 1, 2023 (December 31, 2022: $8 million).

Inventories are summarized as follows:

			October 1, 2023						December 31, 2022
Raw materials			121						151
Work in process			1,664						1,308
Finished goods			355						323
			2,140						1,782

The amounts recorded above are net of allowance for obsolescence of $153 million as of October 1, 2023 (December 31, 2022: $125 million).

Equity Investments

At October 1, 2023 and December 31, 2022, the total carrying value of investments in equity securities is summarized as follows:

			October 1, 2023						December 31, 2022
Marketable equity securities			12						9
Non-marketable equity securities			55						18
Equity-accounted investments			102						71
			169						98

The total carrying value of investments in equity-accounted investees is summarized as follows:

			October 1, 2023												December 31, 2022
			Shareholding %						Amount						Shareholding %						Amount
SMART Growth Fund, L.P.			8.41		%				41						8.41		%				38
SigmaSense, LLC			10.64		%				34						—						—
Others			—						27						—						33
									102												71

Results related to equity-accounted investees at the end of each period were as follows:

			For the three months ended												For the nine months ended
			October 1, 2023						October 2, 2022						October 1, 2023						October 2, 2022
Company's share in income (loss)			(2)						(5)						(5)						3
Other results			—						1						—						2
			(2)						(4)						(5)						5

Other current liabilities

Other current liabilities at October 1, 2023 and December 31, 2022 consisted of the following:

			October 1, 2023						December 31, 2022
Accrued compensation and benefits			477						467
Customer programs			408						432
Income taxes payable			187						296
Dividend payable			261						219
Other			657						652
			1,990						2,066

We have reclassified certain amounts related to customer programs previously presented in “Accounts payable” to “Other current liabilities” as of December 31, 2022 to conform to current period presentation as follows:

			December 31, 2022
Accounts payable:
As reported			1,617
Reclassification - customer programs			(432)
Adjusted			1,185
Other current liabilities:
As reported			1,634
Reclassification - customer programs			432
Adjusted			2,066

Accumulated other comprehensive income (loss)

Total comprehensive income (loss) represents net income (loss) plus the results of certain equity changes not reflected in the condensed consolidated statements of operations. The after-tax components of accumulated other comprehensive income (loss) and their corresponding changes are shown below:

			Currency translation differences						Change in fair value cash flow hedges						Net actuarial gain/(losses)						Accumulated Other Comprehensive Income (loss)
As of December 31, 2022			135						(1)						(58)						76
Other comprehensive income (loss) before reclassifications			(24)						(26)						—						(50)
Amounts reclassified out of accumulated other comprehensive income (loss)			—						10						—						10
Tax effects			—						4						—						4
Other comprehensive income (loss)			(24)						(12)						—						(36)
As of October 1, 2023			111						(13)						58						40

Cash dividends

The following dividends were declared during the first three quarters of 2023 and 2022 under NXP’s quarterly dividend program:

			Fiscal year 2023												Fiscal year 2022
			Dividend per share						Amount						Dividend per share						Amount
First quarter			1.014						263						0.845						222
Second quarter			1.014						263						0.845						222
Third quarter			1.014						261						0.845						221

The dividend declared in the third quarter (not yet paid) is classified in the condensed consolidated balance sheet in other current liabilities as of October 1, 2023 and was subsequently paid on October 5, 2023.

5 Restructuring

At each reporting date, we evaluate our restructuring liabilities, which consist primarily of termination benefits, to ensure that our accruals are still appropriate.

The following table presents the changes in restructuring liabilities in 2023:

			As of January 1, 2023						Additions						Utilized						Released						Other changes						As of October 1, 2023
Restructuring liabilities			20						21						(13)						(7)						(2)						19

The total restructuring liability as of October 1, 2023 of $19 million is classified in the consolidated balance sheet under current liabilities ($16 million) and non-current liabilities ($3 million).

The restructuring charges for the nine month period ending October 1, 2023 consist of $21 million for personnel related costs for a new restructuring program, offset by a $7 million release for an earlier program. There were no significant restructuring costs incurred for the nine month period ended October 2, 2022 and the utilization of the restructuring liabilities mainly reflects the execution of ongoing restructuring programs the Company initiated in earlier years.

These restructuring charges recorded in operating income, for the periods indicated, are included in the following line items in the statement of operations:

			For the three months ended												For the nine months ended
			October 1, 2023						October 2, 2022						October 1, 2023						October 2, 2022
Cost of revenue			—						—						(2)						(3)
Research and development			(4)						—						10						(2)
Selling, general and administrative			—						—						6						—
Net restructuring charges			(4)						—						14						(5)

6 Income Tax

			For the three months ended												For the nine months ended
			October 1, 2023						October 2, 2022						October 1, 2023						October 2, 2022
Benefit (provision) for income taxes			(123)						(149)						(399)						(392)
Effective tax rate			13.4		%				16.5		%				15.8		%				15.8		%
Statutory income tax rate in the Netherlands			25.8		%				25.8		%				25.8		%				25.8		%

Beginning with the first quarter of 2023, NXP was in a position to make a reliable estimate of its annual effective tax rate. This estimated annual effective tax rate ("EAETR") is then applied to the year-to-date Income (loss) before income taxes excluding discrete items, to determine the year-to-date benefit (provision) for income taxes. The income tax effects of any discrete items are recognized in the interim period in which they occur. As the year progresses, the Company continually refines the EAETR based upon actual events and the apportionment of our earnings (loss). This continual estimation process periodically may result in a change to our EAETR for the year. When this occurs, we adjust on an accumulated basis the benefit (provision) for income taxes during the quarter in which the change occurs.

Our provision for income taxes for 2023 is based on our EAETR of 16.1%, which is lower than the Netherlands statutory tax rate of 25.8%, primarily due to tax benefits from the Netherlands and foreign tax incentives.

The effective tax rate of 13.4% for the third quarter of 2023 was lower than the EAETR due to the income tax benefit for discrete items of $12 million. The discrete items are primarily related to changes in estimates for previous years, and the impact of foreign currency on income tax related items. Compared to prior quarters, the EAETR was lower due to a recapture of $13 million tax benefit in the third quarter primarily as a result of new guidance released by the Internal Revenue Service to clarify the treatment of specified research and experimental expenditures under Section 174.

For the first nine months of 2023 the effective tax rate of 15.8% was lower than 16.1% due to the net result of favorable discrete items of $8 million.

The effective tax rate of 15.8% for the first nine months of 2022 was equal to the current period of 15.8%.

7 Identified Intangible Assets

Identified intangible assets as of October 1, 2023 and December 31, 2022, respectively, were composed of the following:

			October 1, 2023												December 31, 2022
			Gross carrying amount						Accumulated amortization						Gross carrying amount						Accumulated amortization
In-process R&D (IPR&D) 1)			70						—						70						—
Customer-related			788						(341)						788						(307)
Technology-based			1,717						(1,224)						2,336						(1,576)
Identified intangible assets			2,575						(1,565)						3,194						(1,883)
1) IPR&D is not subject to amortization until completion or abandonment of the associated research and development effort.

The estimated amortization expense for these identified intangible assets for each of the five succeeding years is:

2023 (remaining)			101
2024			291
2025			168
2026			88
2027			61
Thereafter			301

All intangible assets, excluding IPR&D and goodwill, are subject to amortization and have no assumed residual value.

The expected weighted average remaining life of identified intangibles is 4 years as of October 1, 2023 (December 31, 2022: 4 years).

8 Debt

The following table summarizes the outstanding debt as of October 1, 2023 and December 31, 2022:

									October 1, 2023												December 31, 2022
			Maturities						Amount						Interest rate						Amount						Interest rate
Fixed-rate 4.875% senior unsecured notes			Mar, 2024						1,000						4.875						1,000						4.875
Fixed-rate 2.7% senior unsecured notes			May, 2025						500						2.700						500						2.700
Fixed-rate 5.35% senior unsecured notes			Mar, 2026						500						5.350						500						5.350
Fixed-rate 3.875% senior unsecured notes			Jun, 2026						750						3.875						750						3.875
Fixed-rate 3.15% senior unsecured notes			May, 2027						500						3.150						500						3.150
Fixed-rate 4.40% senior unsecured notes			Jun, 2027						500						4.400						500						4.400
Fixed-rate 5.55% senior unsecured notes			Dec, 2028						500						5.550						500						5.550
Fixed-rate 4.3% senior unsecured notes			Jun, 2029						1,000						4.300						1,000						4.300
Fixed-rate 3.4% senior unsecured notes			May, 2030						1,000						3.400						1,000						3.400
Fixed-rate 2.5% senior unsecured notes			May, 2031						1,000						2.500						1,000						2.500
Fixed-rate 2.65% senior unsecured notes			Feb, 2032						1,000						2.650						1,000						2.650
Fixed-rate 5.00% senior unsecured notes			Jan, 2033						1,000						5.000						1,000						5.000
Fixed-rate 3.25% senior unsecured notes			May, 2041						1,000						3.250						1,000						3.250
Fixed-rate 3.125% senior unsecured notes			Feb, 2042						500						3.125						500						3.125
Fixed-rate 3.25% senior unsecured notes			Nov, 2051						500						3.250						500						3.250
Floating-rate revolving credit facility (RCF)			Aug, 2027						—						—						—						—
Total principal									11,250												11,250
Unamortized discounts, premiums and debt issuance costs									(78)												(85)
Total debt, including unamortized discounts, premiums, debt issuance costs and fair value adjustments									11,172												11,165
Current portion of long-term debt									(999)												—
Long-term debt									10,173												11,165

9 Related-Party Transactions

The Company's related parties are the members of the board of directors of NXP Semiconductors N.V., the executive officers of NXP Semiconductors N.V. and equity-accounted investees.

The following table presents the amounts related to revenue and other income and purchase of goods and services incurred in transactions with these related parties:

			For the three months ended												For the nine months ended
			October 1, 2023						October 2, 2022						October 1, 2023						October 2, 2022
Revenue and other income			2						2						3						7
Purchase of goods and services			1						1						2						3

The following table presents the amounts related to receivable and payable balances with these related parties:

			October 1, 2023						December 31, 2022
Receivables			1						1
Payables			7						3

10 Fair Value Measurements

The following table summarizes the estimated fair value of our financial instruments which are measured at fair value on a recurring basis:

									Estimated fair value
			Fair value hierarchy						October 1, 2023						December 31, 2022
Assets:
Money market funds			1						3,056						2,817
Marketable equity securities			1						12						9
Derivative instruments-assets			2						1						8
Liabilities:
Derivative instruments-liabilities			2						(20)						(6)

The following methods and assumptions were used to estimate the fair value of financial instruments:

Assets and liabilities measured at fair value on a recurring basis

Investments in money market funds (as part of our cash and cash equivalents) and marketable equity securities (as part of other non-current assets) have fair value measurements which are all based on quoted prices in active markets for identical assets or liabilities. For derivatives (as part of other current assets or accrued liabilities) the fair value is based upon significant other observable inputs depending on the nature of the derivative.

Assets and liabilities recorded at fair value on a non-recurring basis

We measure and record our non-marketable equity securities, equity method investments and non-financial assets, such as intangible assets and property, plant and equipment, at fair value when an impairment charge is required.

Assets and liabilities not recorded at fair value on a recurring basis

Financial instruments not recorded at fair value on a recurring basis include non-marketable equity securities and equity method investments that have not been remeasured or impaired in the current period and debt.

As of October 1, 2023, the estimated fair value of current and non-current debt was $9.6 billion ($9.8 billion as of December 31, 2022). The fair value is estimated on the basis of broker-dealer quotes, which are Level 2 inputs. Accrued interest is included under accrued liabilities and not within the carrying amount or estimated fair value of debt.

11 Commitments and Contingencies

Purchase Commitments

The Company maintains purchase commitments with certain suppliers, primarily for raw materials, semi-finished goods and manufacturing services and for some non-production items. Purchase commitments for inventory materials are generally restricted to a forecasted time-horizon as mutually agreed upon between the parties. This forecasted time-horizon can vary for different suppliers. As of October 1, 2023, the Company had purchase commitments of $3.9 billion, which are due through 2044. Our long-term obligations increased substantially in 2021 as we locked in long-term supply with our key manufacturing partners.

Legal Proceedings

We are regularly involved as plaintiffs or defendants in claims and litigation relating to a variety of matters such as contractual disputes, personal injury claims, employee grievances and intellectual property litigation. In addition, our acquisitions, divestments and financial transactions sometimes result in, or are followed by, claims or litigation. Some of these claims may possibly be recovered from insurance reimbursements. Although the ultimate disposition of asserted claims cannot be predicted with certainty, it is our belief that the outcome of any such claims, either individually or on a combined basis, will not have a material adverse effect on our consolidated financial position. However, such outcomes may be material to our condensed consolidated statement of operations for a particular period. The Company records an accrual for any claim that arises whenever it considers that it is probable that it is exposed to a loss contingency and the amount of the loss contingency can be reasonably estimated. The Company does not record a gain contingency until the period in which all contingencies are resolved and the gain is realized or realizable. Legal fees are expensed when incurred.

Impinj Patent Litigation

We are involved in a dispute with Impinj, Inc. (“Impinj”) regarding the infringement of IP rights. Impinj has initiated a number of lawsuits alleging infringement of their IP rights by certain of our products and we have initiated a lawsuit and countersuit alleging infringement of our IP rights by certain products of Impinj. Specifically, on June 6, 2019, Impinj filed a complaint against us in the U.S District Court for the Northern District of California (the “Court”) alleging that certain of our products (NXP’s UCODE8 and UCODE 9 integrated circuits) infringed 26 Impinj patents. The case was subsequently narrowed to two patents: U.S. patent nos. 9,633,302 (the “’302 patent”) and 8,115,597 (the “’597 patent”), seeking damages and injunctive relief. Before trial, the Court granted summary judgment of infringement on the ‘302 patent. At trial, on July 14, 2023, the jury returned a verdict finding that NXP infringed the asserted claims of the ‘597 patent. The jury awarded approximately $19 million in damages. The Court subsequently issued its judgment on October 3, 2023, reducing the award to approximately $13 million, ordering a new trial on the ‘302 patent, and denying Impinj’s request for an injunction based on infringement of the

‘597 patent. NXP intends to appeal the judgment to the United States Court of Appeals for the Federal Circuit. On May 25, 2021, Impinj initiated a lawsuit in the United States District Court for the Western District of Texas (Waco) alleging that certain of our products infringe 9 Impinj patents. NXP countersued alleging that certain products of Impinj infringe 9 patents owned or licensed by NXP. This case commenced into trial beginning October 30, 2023. We dispute Impinj’s claims and intend to continue to pursue available defenses and appeals. We are unable to make a reasonable estimate of losses in excess of the currently accrued amounts given recent developments and future proceedings.

Motorola Personal Injury Lawsuits

The Company is currently assisting Motorola in the defense of personal injury lawsuits due to indemnity obligations included in the agreement that separated Freescale from Motorola in 2004. The multi-plaintiff Motorola lawsuits are pending in the Circuit Court of Cook County, Illinois. These claims allege a link between working in semiconductor manufacturing clean room facilities and birth defects in 22 individuals. The Motorola suits allege exposures between 1980 and 2005. Each claim seeks an unspecified amount of damages for the alleged injuries; however, legal counsel representing the plaintiffs has indicated they will seek substantial compensatory and punitive damages from Motorola for the entire inventory of claims which, if proven and recovered, the Company considers to be material. A portion of any indemnity due to Motorola will be reimbursed to NXP if Motorola receives an indemnification payment from its insurance coverage. Motorola has potential insurance coverage for many of the years indicated above, but with differing types and levels of coverage, self-insurance retention amounts and deductibles. We are in discussions with Motorola and their insurers regarding the availability of applicable insurance coverage for each of the individual cases. Motorola and NXP have denied liability for these alleged injuries based on numerous defenses.

Legal Proceedings Related Accruals and Insurance Coverage

The Company reevaluates at least on a quarterly basis the claims that have arisen to determine whether any new accruals need to be made or whether any accruals made need to be adjusted based on the most current information available to it and based on its best estimate. Based on the procedures described above, the Company has an aggregate amount of $114 million accrued for potential and current legal proceedings pending as of October 1, 2023, compared to $58 million accrued at December 31, 2022 (without reduction for any related insurance reimbursements). The accruals are included in “Other current liabilities” and in “Other non-current liabilities”. As of October 1, 2023, the Company’s related balance of insurance reimbursements was $67 million (December 31, 2022: $43 million) and is included in “Other non-current assets”.

The Company also estimates the aggregate range of reasonably possible losses in excess of the amount accrued based on currently available information for those cases for which such estimate can be made. The estimated aggregate range requires significant judgment, given the varying stages of the proceedings, the existence of multiple defendants (including the Company) in such claims whose share of liability has yet to be determined, the numerous yet-unresolved issues in many of the claims, and the attendant uncertainty of the various potential outcomes of such claims. Accordingly, the Company’s estimate will change from time to time, and actual losses may be more than the current estimate. As at October 1, 2023, the Company believes that for all litigation pending its potential aggregate exposure to loss in excess of the amount accrued (without reduction for any amounts that may possibly be recovered under insurance programs) could range between $0 and $100 million. Based upon our past experience with these matters, the Company would expect to receive additional insurance reimbursement of up to $70 million on certain of these claims that would partially offset the potential aggregate exposure to loss in excess of the amount accrued.