A：NXP's overall performance in the fourth quarter was solid with all end markets performing either in line or better than expected. Revenues were $3.34 billion, an increase of 5% year on year and 5% sequentially, and non-GAAP operating margin was about 35%, 40 basis points above the same period a year ago.

A：Highlights of NXP's performance include automotive revenue of $7.1 billion which was flat year on year, with performance aligning to the group's long-term growth outlook due to lower inventory digestion in the first half. The industrial and I/O market revenue was $2.3 billion, flat year on year with strong growth in physical AI, and mobile business revenue of $1.6 billion, up 6% year on year. The communication infrastructure market revenue was $1.3 billion, down 24% year on year.

A：The forecast for the first quarter of 2026 is for revenue of $3.15 billion, up 11% versus the year ago period and seasonally down 6% sequentially compared to 90 days ago. The forecast includes $25 million or one month of revenue contribution from the Marbella Center business.

A：NXP's first quarter revenue guidance is segmented as follows: Automotive is expected to be up in the mid single-digit range versus Q1 2025 and down in the mid single-digit percent range versus Q4 2025; Industrial and IoT is expected to be up in the low 20% range year on year and down in the mid single-digit range versus Q4 2025; Mobile is expected to be up in the mid-teen percent range year on year and down in the 20% range sequentially; and Communication Infrastructure is expected to be up in the mid-teen percent range versus Q1 2025 and up 10% versus Q4 2025.

A：NXP's approach to investing and returning value to shareholders involves disciplined investment and portfolio enhancements to drive profitable growth, maintaining control over factors that can influence capital allocation, investing in growth targeted mergers and acquisitions to strengthen the portfolio, and returning excess cash to shareholders through dividend buybacks within the company's long-term model.

A：Q4 had strong execution with revenue, gross profit, and operating profit all above the midpoint of guidance. Non GAAP earnings per share were $3.35, which was 7 cents better than the midpoint of guidance. Non GAAP gross profit was $1.91 billion with a 57.4% non GAAP gross margin. Non GAAP operating expenses were $756 million, or 22.7% of revenue. Non GAAP operating profit was $1.15 billion with a non GAAP operating margin of 34.6%. The company also had non GAAP interest expense of $99 million, taxes of $109 million, and noncontrolling interest expense of $13 million.

A：The company ended Q4 with total debt at $12.2 billion and cash of $3 billion. Uses of cash included capital returns, acquisitions, joint venture investments, and CapEx. Net debt was $8.96 billion, and net debt to adjusted EBITDA was 1.9 times. The adjusted EBITDA interest coverage ratio was 14.7 times.

A：The company returned $338 million through buybacks and $254 million in dividends in Q4. Over the last 10 years, it has returned over $23 billion to shareholders, representing 95% of free cash flow and a reduction of diluted share count by 27%. After Q4, the company repurchased an additional $36 million under its buyback program, and it received the $500 million March 2026 notes with its cash on hand.

A：Non GAAP financial expense is expected to be about $92 million, the non GAAP tax rate is projected to be 18%, and the controlling interest expense will be $11 million with joint venture start-up losses of about $3 million. Stock-based compensation, which is not included in non GAAP guidance, is expected to be about $108 million.

A：The expected use of cash in Q1 is approximately 3% of revenue, with significant transactions including a capacity access fee payment of $190 million and an equity investment into ESCAPE of $210 million.

A：The company decided that its RF power business no longer aligns with its long-term strategic direction. Consequently, it will incur a restructuring charge of approximately $90 million and focus its R&D resources on software-defined vehicles and physical AI.

A：The closure of NXP Semiconductors' memory center business acquisition resulted in a one-time gain of approximately $630 million, which is reflected in the company's first quarter GAAP guidance.

A：The company is shifting its geographic revenue reporting to headquarters-based regions instead of grouping them by function. This change better reflects how the business is managed internally, with customer engagement and design win awards being more relevant at the headquarters level.

A：The company has moved from a nine-week channel restock to its long-term target of 11 weeks due to an increased demand environment. Despite finishing Q4 with about 10 weeks, the company is aligning with its long-term plan and target, indicating a strategy to ensure product availability and meet demand.

A：While the company is moving away from RF and digital networking, the strength in the communication business is attributed to the need for some strength from the Si business. The specific moving pieces and contributors to this strength were not detailed in the transcript.

A：The three business segments that comprise CNI are the secure car digital network, and power. It is suggested that these businesses can move differently, with the secure car digital network benefiting from normalization in the digital network business and growth from the secure card, which is expected to benefit CNI through 2026.

A：Recent trends in customer ordering over the past few months have seen an improvement across internal signals such as increased distribution backlog and customer escalations, as well as an increase in short-term orders. The company is experiencing high levels of activity and has not seen this kind of demand in a while, which gives them confidence in their long-standing business model for 2020 and possibly beyond.

A：The second half of 2025 has seen a true acceleration in growth rates, reaching close to the strong growth rates the company had presented at their analyst day. The company is optimistic that this momentum will continue as they progress through 2026 and believes they are past the trough of the business cycle.

A：The first half of 2025 was characterized by the process of inventory digestion, which masked the true dynamics of the company's business. Despite a flat auto market, the company still grew, and the acceleration was driven by their SD efforts, radar, and productivity. For the full year, the auto accelerated drivers were slightly below the model's expectations, growing at about 10% while the industry was flat.

A：The company's auto exposure is shifting towards a more structural position and away from cycles. The roadmap towards circular trends is transforming the architectures of all, and the company feels quite optimistic about the future in this area.

A：The company's core thesis around growth drivers remains intact, and the company is stronger in their belief that their roadmap is addressing the user market.

A：The divestiture of the MEMS business is expected to reduce revenue by approximately $300 million annually. A significant impact was recognized in the first quarter, with the recognition of $25 million. The company is no longer investing in next-generation products for the divested business, which is expected to persist for at least the next two years. The RF business is anticipated to attract similar revenue reductions as experienced in the digital networking business divestiture eight years ago. The company expects to allocate resources to other growth initiatives rather than these divested areas.

A：The company has not seen memory issues impacting customer orders despite discussions on the subject matter. There has been no visible impact on customer demand due to supply disruptions such as shortages in DDR4. The company is not experiencing weaker demand or an incentive to build inventory to address these issues. The auto business is expected to perform in line with the model for 2026, with strong growth drivers continuing to execute.

A：The company expects to operate within their target model in 2026, which is in line with achieving the 6% to 10% long-term CAG from 2026 to 2027. They are confident that the performance in the first half of 2025, despite inventory issues, sets a solid foundation for an acceleration in the second half, which aligns with their long-term goals.

A：While there were some capacity builds at the end of the year that boosted utilization rates, the company is entering a better cycle and should see continued improvement in utilization rates as they progress. The exact trajectory of utilization rates is not detailed, but it is implied that they will align with the company's broader cyclical recovery.

A：Strategies to improve gross margins over time include portfolio mixing through new product introductions, focusing on the go to market for the long tail which has a richer mix, and maintaining high internal front end utilizations.

A：Inventory consolidation efforts are expected to reduce pre-buddha delivery times from 7 days to about 15 to 20 days by the end of 2026. Net inventory days are expected to be reduced throughout the year as operational focus and control are maintained.

A：The industrial and IoT segment is expected to continue strong growth in 2026, with a year-on-year growth of 20% in Q1 and a broad base of growth anticipated for the year.

A：Seasonality outlook suggests a continuation of the positive momentum from Q4 and into 2026, with broad-based growth and structural strength rather than just cyclical trends. There is optimism for the second half of the year due to improved order visibility and continued strong engagement with customers.

A：The recent acquisitions, notably TT Tech Auto, are significant for accelerating software-defined vehicle architecture and the delivery of a system around Sonos towards the end of the year. These acquisitions also bring a new level of middleware engagement.

A：Customers show high interest in NXP's products, especially in the combination of ignora NPO and the Imx family. This interest is expected to result in strong design wins in 2026.

A：Geographically, the demand pattern in the fourth quarter for the automotive segment showed year-on-year growth, with Q4 finishing at 1% below the prior year's peak.指引预计Q1将实现同比增长，且Q1仅包含传感器业务的一个月数据。通常情况下，Q1会有季节性波动，但中国市场的重要性增加以及多代产品支持的市场需求对公司增长有积极影响。

A：The improved accd growth drivers and accelerated growth in 2025 are attributed to the inventory digestion process that occurred in the first half of the year, which had been a major reason for the slower growth. Once inventory was addressed, the accelerated growth drivers were able to grow again.

A：Operating margins are typically higher in the first half of the year as expenses as a percentage of revenue are usually higher due to the seasonal revenue profile and timing effects such as the start of new year benefits. In contrast, margins are expected to be below the 23% model in the second half, leading to a full year model of about 23% or below.

A：The sale of the Men Center business is expected to have a minimal impact on gross margin, with a potential improvement of only 10 to 20 basis points. There may also be a corporate restructuring impact related to this sale.

A：In guiding operations for the coming year, the company said it would not provide guidance for 2026 for reasons not specified. However, the company has not changed its strategy in terms of capital allocation and will continue to make share buybacks as long as the net leverage ratio is less than 2x. In Q4, the company's net leverage ratio was 1.9 times, indicating that there is a current possibility of increasing share buybacks. In addition, the company plans to increase dividend payments in the future as business performance improves.

A：The change in reporting on geography reflects the way the company is managed internally, including resource allocation and sales organization focus. Decisions related to the majority of product receipts and design wins are made in the U.S., which justifies the realignment of internal reporting and strategy to address these changes.

A：The majority of investments are expected to start ramping in 2027 and be in full load by 2028.

A：The speaker identifies content per vehicle as the real accelerator of automotive growth, and references an increase in vehicle sales and market share gains of Chinese Oems as contributing factors to this growth.

A：The anticipated revenue growth in the auto segment is projected to be in the low single digits in the long term, with an expectation of growing to 9% to 12% after 2027. Influences include market share gains and content per vehicle.

A：The forecasted car production for the year 2026 is almost 9.3 million cars, which represents a year-over-year increase.

A：The speaker views the recent regulatory changes in China positively, as they incentivize high-end vehicle production and improve vehicle quality and resilience. These initiatives are seen as beneficial and are expected to contribute positively to the company's results, especially for NXP in the auto segment, in 2026.

A：The speaker indicates that data center AI contributes to the rapid growth area in semiconductors, which is included within the industrial segment revenue. The speaker mentions through processors for data center infrastructure support and highlights the presence of high-performance products like power supplies and cooling systems for data centers, as well as security solutions such as PQC. This segment is expected to grow and contribute to the industrial momentum in 2026.