Item 1. Financial Statements

78K characters. Original on sec.gov · Markdown

Item 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

($ in millions, unless otherwise stated)


	For the three months ended		For the six months ended
	June 28, 2026	June 29, 2025	June 28, 2026	June 29, 2025
Revenue	3,496	2,926	6,677	5,761
Cost of revenue	(1,494)	(1,364)	(2,887)	(2,639)
Gross profit	2,002	1,562	3,790	3,122
Research and development	(604)	(573)	(1,192)	(1,120)
Selling, general and administrative	(291)	(278)	(575)	(559)
Amortization of acquisition-related intangible assets	(31)	(25)	(63)	(52)
Total operating expenses	(926)	(876)	(1,830)	(1,731)
Other income (expense)	(5)	1	616	19
Operating income (loss)	1,071	687	2,576	1,410
Financial income (expense):

Other financial income (expense)	(97)	(86)	(193)	(178)
Income (loss) before income taxes	974	601	2,383	1,232
Benefit (provision) for income taxes	(189)	(116)	(461)	(246)
Results relating to equity-accounted investees	(3)	(28)	(7)	(32)
Net income (loss)	782	457	1,915	954
Less: Net income (loss) attributable to non-controlling interests	15	12	26	19
Net income (loss) attributable to stockholders	767	445	1,889	935

Earnings per share data:
Net income (loss) per common share attributable to stockholders in $
Basic	3.04	1.76	7.48	3.69
Diluted	3.02	1.75	7.44	3.67

Weighted average number of shares of common stock outstanding during the period (in thousands):
Basic	252,415	252,418	252,562	253,057
Diluted	254,021	253,844	253,836	254,433

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 six months ended
	June 28, 2026	June 29, 2025	June 28, 2026	June 29, 2025
Net income (loss)	782	457	1,915	954
Other comprehensive income (loss), net of tax:
Change in fair value cash flow hedges	(5)	7	(9)	10
Change in foreign currency translation adjustment	(31)	136	(68)	179
Change in net actuarial gain (loss)	(1)	(2)	(2)	(2)

Total other comprehensive income (loss)	(37)	141	(79)	187
Total comprehensive income (loss)	745	598	1,836	1,141
Less: Comprehensive income (loss) attributable to non-controlling interests	15	12	26	19
Total comprehensive income (loss) attributable to stockholders	730	586	1,810	1,122

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

($ in millions, unless otherwise stated)


		June 28, 2026	December 31, 2025
ASSETS
Current assets:
	Cash and cash equivalents	3,222	3,267

	Accounts receivable, net	1,274	1,055
	Assets held for sale	92	372
	Inventories, net	2,557	2,577
	Other current assets	539	669
Total current assets		7,684	7,940
Non-current assets:
	Deferred tax assets	1,242	1,213
	Other non-current assets	3,195	2,584
	Property, plant and equipment, net of accumulated depreciation of $6,553 and $6,366 respectively	2,835	2,977
	Identified intangible assets, net of accumulated amortization of $812 and $820 respectively	1,441	1,547
	Goodwill	10,268	10,299
	Total non-current assets	18,981	18,620
Total assets		26,665	26,560

LIABILITIES AND EQUITY
Current liabilities:
	Accounts payable	984	997

	Restructuring liabilities-current	111	189
	Other current liabilities	1,672	1,445
	Short-term debt	999	1,250
Total current liabilities		3,766	3,881
Non-current liabilities:
	Long-term debt	9,977	10,972
	Restructuring liabilities	65	81
	Other non-current liabilities	1,096	1,175
Total non-current liabilities		11,138	12,228
Total liabilities		14,904	16,109
Equity:
	Non-controlling interests	362	395

	Stockholders’ equity:
	Common stock, par value €0.20 per share:	56	56
	Capital in excess of par value	15,638	15,424
	Treasury shares, at cost:
	22,256,151 shares (2025: 21,664,934 shares)	(4,439)	(4,283)
	Accumulated other comprehensive income (loss)	134	213
	Accumulated deficit	10	(1,354)
	Total stockholders’ equity	11,399	10,056
Total equity		11,761	10,451
Total liabilities and equity		26,665	26,560

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

($ in millions, unless otherwise stated)


	For the six months ended
	June 28, 2026	June 29, 2025
Cash flows from operating activities:
Net income (loss)	1,915	954
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization	363	416
Share-based compensation	214	244
Amortization of discount (premium) on debt, net	1	1
Amortization of debt issuance costs	4	3
Net (gain) loss on sale of assets	(627)	(28)
(Gain) loss on equity security, net	—	3

Results relating to equity-accounted investees	7	32
Deferred tax expense (benefit)	(41)	(24)
Changes in operating assets and liabilities:
(Increase) decrease in receivables and other current assets	(101)	(135)
(Increase) decrease in inventories	53	(84)
Increase (decrease) in accounts payable and other liabilities	95	(77)
Decrease (increase) in other non-current assets	(230)	25
Exchange differences	7	13
Other items	(7)	1
Net cash provided by (used for) operating activities	1,653	1,344
Cash flows from investing activities:
Purchase of identified intangible assets	(79)	(62)
Capital expenditures on property, plant and equipment	(148)	(222)
Purchase of interests in businesses, net of cash acquired	—	(679)

Proceeds from disposals of property, plant and equipment	—	1

Proceeds from sale of interests in businesses, net of cash divested	878	—


Purchase of investments	(381)	(146)
Proceeds from sale of investments	1	—

Net cash provided by (used for) investing activities	271	(1,108)
Cash flows from financing activities:
Repurchase of long-term debt	(1,251)	(500)
Proceeds from the issuance of long-term debt	—	370
Cash paid for debt issuance costs	(3)	—
Proceeds from issuance of commercial paper notes	—	2,211
Repayment of commercial paper notes	—	(1,461)
Dividends paid to non-controlling interests	(29)	—
Dividends paid to common stockholders	(512)	(515)
Proceeds from issuance of common stock through stock plans	37	39
Purchase of treasury shares and restricted stock unit withholdings	(206)	(507)
Other, net	(1)	(1)
Net cash provided by (used for) financing activities	(1,965)	(364)
Effect of changes in exchange rates on cash positions	(4)	6
Increase (decrease) in cash and cash equivalents	(45)	(122)
Cash and cash equivalents at beginning of period	3,267	3,292
Cash and cash equivalents at end of period	3,222	3,170


Supplemental disclosures to the Condensed Consolidated Cash flows
Net cash paid during the period for:
Interest	175	150
Income taxes, net of refunds	382	263
Net gain (loss) on sale of assets:
Cash proceeds from the sale of assets	878	37
Non-cash consideration 1)	44	—
Book value of these assets and transaction costs	(295)	(9)
Non-cash investing activities:
Non-cash capital expenditures	64	103

Represents the fair value on the closing date of the earn-out receivable from the divestiture of our MEMS Sensors business

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	Accumu- lated other compre- hensive income (loss)	Accumu- lated deficit	Total stock- holders’ equity	Non- con- trolling interests	Total equity
Balance as of December 31, 2025	252,854	56	15,424	(4,283)	213	(1,354)	10,056	395	10,451
Net income (loss)						1,122	1,122	11	1,133
Other comprehensive income (loss)					(42)		(42)		(42)
Share-based compensation plans			113				113		113
Shares issued pursuant to stock awards	232			44		(8)	36		36
Treasury shares repurchased and retired	(461)			(102)			(102)		(102)
Dividends non-controlling interest								(59)	(59)
Dividends common stock ($1.014 per share)						(256)	(256)		(256)
Balance as of March 29, 2026	252,625	56	15,537	(4,341)	171	(496)	10,927	347	11,274
Net income (loss)						767	767	15	782
Other comprehensive income (loss)					(37)		(37)		(37)
Share-based compensation plans			101				101		101
Shares issued pursuant to stock awards	32			6		(5)	1		1
Treasury shares repurchased and retired	(394)			(104)			(104)		(104)
Dividends non-controlling interests
Dividends common stock ($1.014 per share)						(256)	(256)		(256)
Balance as of June 28, 2026	252,263	56	15,638	(4,439)	134	10	11,399	362	11,761


	Outstanding number of shares (in thousands)	Common stock	Capital in excess of par value	Treasury shares at cost	Accumu- lated other compre- hensive income (loss)	Accumu- lated deficit	Total stock- holders’ equity	Non- con- trolling interests	Total equity
Balance as of December 31, 2024	254,324	56	14,962	(4,004)	(17)	(1,814)	9,183	348	9,531
Net income (loss)						490	490	7	497
Other comprehensive income (loss)					46		46		46
Share-based compensation plans			131				131		131
Shares issued pursuant to stock awards	238			54		(22)	32		32
Treasury shares repurchased and retired	(1,413)			(303)			(303)		(303)
Dividends common stock ($1.014 per share)						(257)	(257)		(257)
Balance as of March 30, 2025	253,149	56	15,093	(4,253)	29	(1,603)	9,322	355	9,677
Net income (loss)						445	445	12	457
Other comprehensive income (loss)					141		141		141
Share-based compensation plans			113				113		113
Shares issued pursuant to stock awards	70			16		(9)	7		7
Treasury shares repurchased and retired	(1,105)			(204)			(204)		(204)
Dividends non-controlling interests
Dividends common stock ($1.014 per share)						(255)	(255)		(255)
Balance as of June 29, 2025	252,114	56	15,206	(4,441)	170	(1,422)	9,569	367	9,936

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, 2025.

Use of estimates

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, 2025.

Segment reporting

NXP has one reportable segment representing the entity as a whole, aligning with our organizational structure and with the way our chief operating decision maker ("CODM"), the Chief Executive Officer, makes operating decisions, allocates resources, and manages the growth and profitability of the Company.

Our CODM regularly reviews income and expense items at the consolidated company (reporting segment) level and uses net income to evaluate income generated from total assets to evaluate whether and how to reinvest profits into the entity’s operations, shareholder return, acquisitions or otherwise. Net income is also used to monitor budget versus actual results, forecasted information and in competitive analysis. These interim income and expense items are included on the Condensed Consolidated Statements of Operations and in our notes to the Consolidated Financial Statements.

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, 2025. There have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended December 31, 2025.

Recent accounting standards

Accounting standards not yet adopted

In November 2024, the FASB issued Accounting Standards Update (ASU) 2024-03, Disaggregation of Income Statement Expenses. The standard requires disaggregated disclosure of income statement expenses. It requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. We are currently evaluating the effect of this new guidance on our Consolidated Financial Statements.

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

2026

On February 2, 2026, we completed the sale of our MEMS Sensors business, previously classified as held for sale, pursuant to the definitive agreement with STMicroelectronics International N.V. dated July 24, 2025. At closing, we received $878 million in cash, with the potential to receive an additional $50 million contingent upon the achievement of specified post‑closing technical milestones ("earn-out receivable"). The earn-out receivable was measured at fair value at closing and included in the consideration transferred, with subsequent changes in fair value recognized in earnings. This resulted in a gain on sale of $627 million recorded in "Other income (expense)" in the Condensed Consolidated Statements of Operations.

There were no material acquisitions during the first six months of 2026.

2025

TTTech Auto acquisition

On June 17, 2025, NXP announced the closing of the acquisition of 100% of TTTech Auto for $766 million in cash ($675 million net of cash acquired). TTTech Auto is a leader in innovating unique safety-critical systems and middleware for software-defined vehicles (SDVs). The TTTech Auto acquisition complements and expands NXP’s system and software offerings in the Automotive and Industrial & IoT end markets.

The fair values of the assets acquired, and liabilities assumed in the TTTech Auto acquisition, by major class, were recognized as follows:


Cash			91
Other assets			75
Other liabilities			(52)
Identified intangible assets			347
Goodwill			305
Net assets acquired			766

Our valuation procedures related to the acquired assets and assumed liabilities were completed during the first quarter of 2026.

Goodwill arising from the TTTech Auto acquisition is attributed to the anticipated growth from new product sales, sales to new customers, the assembled workforce, and synergies expected from the combination. The goodwill recognized is non-deductible for income tax purposes.

The identified intangible assets assumed were recognized as follows:


	Fair value	Weighted Average Estimated Useful Life (in Years)
Software	267	11.5
Technology	25	11.5
Customer relationships	50	8.5
Order backlog	5	3.5
Total identified intangible assets	347	10.9

The income approach was applied to estimate the fair values of the intangible assets acquired. Software, technology, customer relationships, and order backlog were valued using the excess earnings method, which reflects the present values of the projected cash flows that are expected to be generated by the software, technology, customer relationships, and order backlog less charges representing the contribution of other assets to those cash flows.

Aviva Links acquisition

On October 24, 2025, NXP closed the previously announced acquisition of 100% of Aviva Links for $222 million in cash ($202 million net of cash acquired) and $26 million through the settlement of previously held investments in Aviva Links. 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.

The fair values of the assets acquired, and liabilities assumed in the Aviva Links acquisition, by major class, were recognized as follows:


Other assets			20
Other liabilities			(64)
In-Process R&D ("IPR&D")1			197
Goodwill			95
Net assets acquired			248

1Acquired IPR&D is an intangible asset classified as an indefinite lived asset until the completion or abandonment of the associated research and development effort. IPR&D will be amortized over an estimated useful life to be determined at the date the associated research and development effort is completed, or expensed immediately when, and if, the project is abandoned. Acquired IPR&D is not amortized during the period that it is considered indefinitely lived but rather is subject to annual testing for impairment or when there are indicators for impairment.

The purchase price allocation contains valuations related to certain assets and liabilities as some of the estimates and assumptions are subject to change within the measurement period as additional information becomes available.

Goodwill arising from the Aviva Links acquisition is attributed to the value related to new technological innovations from future product sales, sales to new customers, the assembled workforce, and synergies expected from the combination. The goodwill recognized is non-deductible for income tax purposes.

The excess earnings method, a variant of the income approach, was applied to estimate the fair value of the IPR&D acquired. The fair value represents the present value of the projected cash flows that are expected to be generated by the IPR&D, adjusted for contributory asset charges related to other acquired assets.

Kinara, Inc. acquisition

On October 27, 2025, NXP closed the previously announced acquisition of 100% of Kinara, Inc. for $284 million in cash ($283 million net of cash acquired). 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.

The fair values of the assets acquired, and liabilities assumed in the Kinara acquisition, by major class, were recognized as follows:


Other assets			8
Other liabilities			(59)
Identified intangible assets			254
Goodwill			81
Net assets acquired			284

Goodwill arising from the Kinara acquisition is attributed to the value related to new technological innovations from future product sales, sales to new customers, the assembled workforce, and synergies expected from the combination. The goodwill recognized is non-deductible for income tax purposes.

The identified intangible assets assumed were recognized as follows:


	Fair value	Weighted Average Estimated Useful Life (in Years)
Existing Technology	191	9.2
IPR&D1	56	N/A
Customer relationships	7	8.2
Total identified intangible assets	254	9.2

1 IPR&D is an intangible asset classified as an indefinite lived asset until the completion or abandonment of the associated research and development effort. IPR&D will be amortized over an estimated useful life to be determined at the date the associated research and development effort is completed, or expensed immediately when, and if, the project is abandoned. Acquired IPR&D is not amortized during the period that it is considered indefinitely lived but rather is subject to annual testing for impairment or when there are indicators for impairment.

The excess earnings method, a variant of the income approach, was applied to estimate the fair values of the technology and IPR&D. The fair values represent the present values of the projected cash flows that are expected to be generated by the technology or IPR&D, adjusted for contributory asset charges related to other acquired assets. In addition, the existing customer relationships are valued using the distributor method, a variant of the income approach, in which a market-based distributor profit margin is used to allocate profits to this intangible asset.

Divestments

There were no material divestments during the first six months of 2025.

4 Assets Held for Sale

During the fourth quarter of 2025, NXP management committed to selling the buildings and land at our Oak Hill site in Austin, Texas. The carrying amount of the site of $76 million was classified as held for sale and continues to be presented within current assets, representing the majority of the assets classified as held for sale as of June 28, 2026. The asset is available for immediate sale, is being actively marketed, and management expects the sale to be completed within the next six months.

5 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 six months ended
	June 28, 2026	June 29, 2025	June 28, 2026	June 29, 2025
Distributors	2,072	1,636	3,934	3,160
Direct	1,375	1,257	2,657	2,541
Other	49	33	86	60
Total - Revenue	3,496	2,926	6,677	5,761

Depreciation, amortization and impairment


	For the three months ended		For the six months ended
	June 28, 2026	June 29, 2025	June 28, 2026	June 29, 2025
Depreciation of property, plant and equipment	114	143	223	286
Amortization of internal use software	14	8	27	16
Amortization of other identified intangible assets	56	56	113	114
Total - Depreciation, amortization and impairment	184	207	363	416

Financial income and expense


	For the three months ended		For the six months ended
	June 28, 2026	June 29, 2025	June 28, 2026	June 29, 2025
Interest income	29	39	60	74
Interest expense	(112)	(115)	(226)	(221)




Other financial income (expense)	(14)	(10)	(27)	(31)
Total - Financial income (expense)	(97)	(86)	(193)	(178)

Earnings per share

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


	For the three months ended		For the six months ended
	June 28, 2026	June 29, 2025	June 28, 2026	June 29, 2025
Net income (loss)	782	457	1,915	954
Less: net income (loss) attributable to non-controlling interests	15	12	26	19
Net income (loss) attributable to stockholders	767	445	1,889	935

Weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	252,415	252,418	252,562	253,057
Plus incremental shares from assumed conversion of:
Options 1)	—	80	2	87
Restricted Share Units, Performance Share Units and Equity Rights 2)	1,606	1,346	1,272	1,289
Dilutive potential common shares	1,606	1,426	1,274	1,376

Adjusted weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	254,021	253,844	253,836	254,433

EPS attributable to stockholders in $:
Basic net income (loss)	3.04	1.76	7.48	3.69
Diluted net income (loss)	3.02	1.75	7.44	3.67

There were no stock options to purchase shares of NXP’s common stock that were outstanding in Q2 2026 and YTD 2026 (Q2 2025 and YTD 2025: no stock options to purchase 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.
There were no unvested RSUs, PSUs and equity rights that were outstanding in Q2 2026 and YTD 2026 (Q2 2025 and YTD 2025: 0.1 million unvested RSU's, PSU's and equity rights) 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.

Balance Sheet Information

Cash and cash equivalents

At June 28, 2026, and December 31, 2025, our cash balance was $3,222 million and $3,267 million, respectively, of which $359 million and $361 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 2025, no dividend was paid by SSMC. During the first quarter of 2026, SSMC declared a dividend of $150 million, of which $75 million was paid in the first quarter, with 38.8% being paid to our joint venture partner and the remaining $75 million to be paid in Q3.

Inventories

Inventories are summarized as follows:


	June 28, 2026	December 31, 2025
Raw materials	98	92
Work in process	1,887	1,778
Finished goods	572	707
	2,557	2,577

The amounts recorded above are net of allowance for obsolescence of $122 million as of June 28, 2026 (December 31, 2025: $152 million).

Equity Investments

At June 28, 2026, and December 31, 2025, the total carrying value of investments in equity securities is summarized as follows:


	June 28, 2026	December 31, 2025
Marketable equity securities	5	1
Non-marketable equity securities	158	118
Equity-accounted investments	1,142	826
	1,305	945

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


	June 28, 2026			December 31, 2025
	Shareholding %		Amount	Shareholding %		Amount
VisionPower Semiconductor Manufacturing Company Pte. Ltd. (VSMC)	40.00	%	934	40.00	%	623
European Semiconductor Manufacturing Company (ESMC) GmbH 1)	10.00	%	184	10.00	%	180


Others	—		24	—		23
			1,142			826
1) NXP accounts for its investment in ESMC under the equity method due to our ability to exercise significant influence over ESMC’s operations, primarily through representation on ESMC’s shareholders’ committee and other operational arrangements.

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


	For the three months ended		For the six months ended
	June 28, 2026	June 29, 2025	June 28, 2026	June 29, 2025
Company's share in income (loss)	(3)	(2)	(7)	(6)
Other results 1)	—	(26)	—	(26)
	(3)	(28)	(7)	(32)
1) For the three- and six-months periods ending June 29, 2025, other results include the impairment of our equity method investment SigmaSense.

Other current liabilities

Other current liabilities at June 28, 2026, and December 31, 2025, consisted of the following:


	June 28, 2026	December 31, 2025
Accrued compensation and benefits	491	393
Dividend payable	256	256
Customer programs	112	57
Income taxes payable	174	83
Other	639	656
	1,672	1,445

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, 2025	247	2	(36)	213
Other comprehensive income (loss) before reclassifications	(68)	(8)	(2)	(78)
Amounts reclassified out of accumulated other comprehensive income (loss)	—	(3)	—	(3)
Tax effects	—	2	—	2
Other comprehensive income (loss)	(68)	(9)	(2)	(79)
As of June 28, 2026	179	(7)	(38)	134

Cash dividends

The following dividends were declared during the first six months of 2026 and 2025 under NXP’s quarterly dividend program:


	Fiscal Year 2026		Fiscal Year 2025
	Dividend per share	Amount	Dividend per share	Amount
First quarter	1.014	256	1.014	257
Second quarter	1.014	256	1.014	256

The dividend declared in the second quarter (not yet paid) is classified in the Condensed Consolidated Balance Sheet in other current liabilities as of June 28, 2026, and was subsequently paid on July 9, 2026.

6 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 2026:


			As of January 1, 2026						Additions						Utilized						Released						Other changes						As of June 28, 2026
Restructuring liabilities			270						3						(85)						(9)						(3)						176

The total restructuring liability as of June 28, 2026, of $176 million is classified in the Consolidated Balance Sheet under current liabilities ($111 million) and non-current liabilities ($65 million).

The Company has ongoing restructuring initiatives aimed at streamlining manufacturing capacity, reducing costs, and aligning resources with strategic priorities. These initiatives primarily consist of workforce reductions, facility consolidations, and other cost‑saving measures. During the first six months ended June 28, 2026, the restructuring provision decreased by $94 million, primarily reflecting the execution of previously announced involuntary restructuring programs of $85 million and a release for earlier programs of $9 million. The restructuring charges for the six-month period ending June 29, 2025, primarily consist of $86 million for personnel related costs for specific targeted actions, offset by a $5 million release for an earlier program.

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 six months ended
	June 28, 2026	June 29, 2025	June 28, 2026	June 29, 2025
Cost of revenue	—	61	(1)	65
Research and development	(4)	3	(2)	10
Selling, general and administrative	(4)	3	(3)	6

Net restructuring charges	(8)	67	(6)	81

7 Income Tax

Our provision for income taxes for 2026 is based on our EAETR of 19.7%, which is lower than the Netherlands statutory tax rate of 25.8%, primarily due to tax benefits from the Netherlands and foreign tax incentives.


	For the three months ended				For the six months ended
	June 28, 2026		June 29, 2025		June 28, 2026		June 29, 2025
Tax benefit (provision) calculated at EAETR	(189)		(112)		(469)		(231)
Discrete tax benefit (provision) items	—		(4)		8		(15)
Benefit (provision) for income taxes	(189)		(116)		(461)		(246)

Effective tax rate	19.4	%	19.3	%	19.3	%	20.0	%

The effective tax rate of 19.4% for the second quarter of 2026 was lower than the EAETR due to a recapture tax benefit effect.

For the first six months ended June 28, 2026, the effective tax rate of 19.3% was lower than 19.7% due to the income tax benefit for discrete items of $8 million. The discrete items are primarily related to the impact of foreign currency on income tax related items and changes in estimates for previous years.

The effective tax rate for the first six months of 2026 was 19.3% compared to 20.0% for the same period in 2025, with discrete items in the respective periods impacting the rates accordingly. Excluding discrete items, the EAETR increased to 19.7% in 2026 from 18.8% in 2025, mainly as a result of a taxable capital gain and non-deductible goodwill associated with the divestiture of the MEMS Sensors business in the first quarter of 2026.

8 Identified Intangible Assets

Identified intangible assets as of June 28, 2026, and December 31, 2025, respectively, were composed of the following:


	June 28, 2026		December 31, 2025
	Gross carrying amount	Accumulated amortization	Gross carrying amount	Accumulated amortization
In-process R&D (IPR&D) 1)	277	—	276	—

Customer-related	833	(453)	835	(428)
Technology-based	1,143	(359)	1,256	(392)
Identified intangible assets	2,253	(812)	2,367	(820)

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:


2026 (remaining)			141
2027			256
2028			201
2029			135
2030			126
Thereafter			582

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 7 years as of June 28, 2026 (December 31, 2025: 7 years).

9 Debt

Commercial Paper

We have a $2 billion Commercial Paper Program to support general corporate purposes. As of June 28, 2026, we had no commercial paper notes outstanding (December 31, 2025: no notes outstanding).

Debt issuance and redemption

On April 20, 2026, we repaid the $750 million aggregate principal amount of outstanding 3.875% senior unsecured notes due June 18, 2026, at par using available cash.

Long-term debt

The following table summarizes the outstanding debt as of June 28, 2026, and December 31, 2025:


		June 28, 2026		December 31, 2025
	Maturities	Amount	Interest rate	Amount	Interest rate
Fixed-rate 5.35% senior unsecured notes	Mar, 2026	—	5.350	500	5.350
Fixed-rate 3.875% senior unsecured notes	Jun, 2026	—	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 4.30% senior unsecured notes	Aug, 2028	500	4.300	500	4.300
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 4.85% senior unsecured notes	Aug, 2032	300	4.850	300	4.850
Fixed-rate 5.0% senior unsecured notes	Jan, 2033	1,000	5.000	1,000	5.000
Fixed-rate 5.25% senior unsecured notes	Aug, 2035	700	5.250	700	5.250
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	499	3.125	500	3.125
Fixed-rate 3.25% senior unsecured notes	Nov, 2051	500	3.250	500	3.250

Fixed-rate 4.45% EIB Facility A Loan	Dec, 2030	670	4.450	670	4.450
Fixed-rate 4.709% EIB Facility B Loan	Feb, 2031	370	4.709	370	4.709
Total principal		11,039		12,290

Unamortized discounts, premiums and debt issuance costs		(63)		(68)
Total debt, including unamortized discounts, premiums, debt issuance costs and fair value adjustments		10,976		12,222
Current portion of long-term debt		(999)		(1,250)
Long-term debt		9,977		10,972

10 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 six months ended
	June 28, 2026	June 29, 2025	June 28, 2026	June 29, 2025
Revenue and other income	1	1	2	2
Purchase of goods and services	—	—	1	1

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


	June 28, 2026	December 31, 2025
Receivables	—	1
Payables	2	3

Driven by our investment in VSMC, NXP has committed to contribute $1,200 million to support the long-term capacity infrastructure, and in exchange NXP secures a capacity commitment over the lifetime of the factory. NXP has contributed $243 million during the six months ended June 28, 2026, and $1,098 million to-date, which is recorded in other non-current assets.

Refer to Note 5 – Supplemental Financial Information for information on the total carrying value of investments in equity-accounted investees, and to Note 12 – Commitments and Contingencies for NXP’s related party commitments.

11 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	June 28, 2026	December 31, 2025
Assets:

Money market funds	1	1,886	1,757
Marketable equity securities	1	5	1
Derivative instruments-assets	2	3	9
Earn-out receivable	3	44	—

Liabilities:



Derivative instruments-liabilities	2	(13)	(11)

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

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. The earn-out receivable is related to our previously divested MEMS sensor business and is measured at fair value using Level 3 inputs.

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 June 28, 2026, the estimated fair value of current and non-current debt was $10.2 billion ($11.6 billion as of December 31, 2025). The fair value is estimated on the basis of broker-dealer quotes and other observable inputs, which are Level 2 inputs. Accrued interest is included under accrued liabilities and not within the carrying amount or estimated fair value of debt.

12 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 June 28, 2026, other than foundry joint venture commitments, the Company had purchase commitments of $2,908 million, which are due through 2044.

Foundry Joint Venture Commitments

Driven by our investment in VSMC, NXP has committed to invest an additional $653 million in equity through 2027. NXP has committed to contribute an additional $102 million to support the long-term capacity infrastructure that is expected to be paid through 2026. In addition, NXP has an agreed purchase commitment with VSMC that over the lifetime of the factory the

minimal loading will be between 80% - 90%, resulting in a total purchase commitment of approximately $14,096 million that is expected to be purchased over 37 years once wafer production starts.

Related to our investment in ESMC, NXP has committed to invest an additional $379 million in equity through 2029.

Lease Commitments

The Company has operating and finance lease arrangements related to buildings (corporate offices, research and development and manufacturing facilities and datacenters), land, machinery and installations and other equipment (vehicles and certain office equipment). As of June 28, 2026, amounts related to future lease payments for operating lease obligations totaled $670 million (December 31, 2025: $519 million), which are due through 2048. The increase from December 31, 2025, is primarily attributable to the execution of new relocation lease agreements during 2026.

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.

Motorola Personal Injury Lawsuits

The Company has assisted Motorola in the defense of personal injury lawsuits pursuant to indemnity obligations under the agreement that separated Freescale from Motorola in 2004. All pending cases were settled as of the end of the first quarter and subsequently paid in the second quarter of 2026. As a result, there are no remaining pending lawsuits related to these matters. Accordingly, the Company does not anticipate any further financial impact arising from these claims now that they have been settled.

Legal Proceedings Related Accruals and Insurance Coverage

The Company reevaluates at least on a quarterly basis, claims that have arisen to determine whether accruals need to be established, adjusted or released based on the most current information available to it and based on its best estimate of potential loss. As of June 28, 2026, the Company had accrued $1 million for potential and current legal proceedings, compared to $75 million as of December 31, 2025 (without reduction for any related insurance reimbursements), reflecting the resolution of previously accrued matters. The related insurance reimbursement receivable, which was $56 million as of December 31, 2025, and included in "Other current assets" was collected during the six months ended June 28, 2026, with no balance remaining at period end.

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. Given that the known pending legal proceedings with a potentially material aggregate exposure of possible losses were paid during the quarter, the Company does not reasonably anticipate any additional potential aggregate exposure of possible loss in excess of the amount accrued.

Previous: Cover and table of contents · Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations