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What changed in NXP Semiconductors's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NXP Semiconductors's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+292 added−302 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

Top changes in NXP Semiconductors's 2024 10-K

292 paragraphs added · 302 removed · 199 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

55 edited+19 added−30 removed76 unchanged
Biggest changeWe believe that pay decisions should be made on three factors: external market conditions, employee performance/contributions and internal equity. NXP utilizes third-party data to formulate compensation and benefits programs that are fair, equitable and competitive. We perform pay reviews twice a year, alongside NXP's rewards processes, to ensure we are delivering pay decisions with an appropriate focus on fairness.
Biggest changeWe perform pay reviews twice a year, alongside NXP's rewards processes, to ensure we are delivering pay decisions with an appropriate focus on fairness, reflecting our commitment to making compensation-related decisions based only on performance, tenure and skill related factors. We empower leaders to recognize both individual and team accomplishments.
In addition to obtaining our own patents and other intellectual property rights, we have entered into licensing agreements and other arrangements authorizing us to use intellectual property rights, confidential 11 technical information, software and other technology owned by third parties.
In addition to obtaining our own patents and other intellectual property rights, we have entered into licensing agreements and other arrangements authorizing us to use intellectual property rights, confidential technical 11 information, software and other technology owned by third parties.
Nearly all of our security products consist of multi-functional solutions comprised of passive RF connectivity devices facilitating information transfer from the user document to reader infrastructure; secure, tamper-proof microcontroller devices in which information is securely encrypted (“secure element”); and secure real-time operating system software products to facilitate the encryption-decryption of data, and the interaction with the reader infrastructure systems.
Nearly all of our security products consist of multi-functional solutions comprised of passive RF connectivity devices facilitating information transfer from the user document to reader infrastructure; secure, tamper-proof microcontroller devices in which information is securely 7 encrypted (“secure element”); and secure real-time operating system software products to facilitate the encryption-decryption of data, and the interaction with the reader infrastructure systems.
The i.MX RT series offers the high performing Arm Cortex-M core, real-time functionality, and MCU usability at an affordable price. Our new MCX MCU family of Arm Cortex-M based MCUs, builds on the strength of our Kinetis and LPC portfolio. The MCX series also integrates our machine learning neural processing unit for machine learning applications.
The i.MX RT series offers the high performing Arm Cortex-M core, real-time functionality, and MCU usability at an affordable price. Our new MCX MCU family of Arm Cortex-M based MCUs, builds on the strength of our Kinetis and LPC portfolio. The MCX series also integrates our machine learning neural processing unit for machine learning applications. ii.
Our i.MX family of processors are designed in conjunction with a broad suite of additional products including power management solutions, audio codecs, touch sensors and accelerometers to 6 provide full systems solutions across a wide range of operating systems and applications. Our i.MX 8 and 9 families are the latest generations of our general purpose application processors.
Our i.MX family of processors are designed in conjunction with a broad suite of additional products including power management solutions, audio codecs, touch sensors and accelerometers to provide full systems solutions across a wide range of operating systems and applications. Our i.MX 8 and 9 families are the latest generations of our general purpose application processors.
Wireless infrastructure applications and many general wireless applications are served with III-V technology LNAs. Advanced SiGe 7 technology is utilized in LNAs designed for wireless communication, cellular, consumer, automotive and industrial applications. vii. Security Controllers NXP is the market leader in security controller ICs.
Wireless infrastructure applications and many general wireless applications are served with III-V technology LNAs. Advanced SiGe technology is utilized in LNAs designed for wireless communication, cellular, consumer, automotive and industrial applications. vii. Security Controllers NXP is the market leader in security controller ICs.
We stay informed about changes in global legislation, by tracking current discussions, timelines and the likelihood of new implementations, and include these potential legislative requirements when we plan for new product introductions.
We stay informed about changes in global legislation, by tracking current discussions, timelines and the likelihood of new implementations, and include these potential legislative requirements when we plan for new 14 product introductions.
We generate demand for our products by delivering product solutions to our customers, and supporting their system design-in activities by providing application architecture expertise and local field application engineering support. Our sales and marketing teams are organized into five regions, which are EMEA (Europe, the Middle East and Africa), the Americas, Japan, South Korea, and China and Asia Pacific.
We generate demand for our products by delivering product solutions to our customers, and supporting their system design-in activities by providing application architecture expertise and local field application engineering support. Our sales and marketing teams are organized into six regions, which are EMEA (Europe, the Middle East and Africa), the Americas, Japan, South Korea, China and South Asia Pacific.
We believe this strategy allows us to preserve the advantages of our products and technologies, and helps us to improve the return on our investment in research and development. We have a broad portfolio of approximately 9,500 patent families (each patent family includes all patents and patent applications originating from the same invention).
We believe this strategy allows us to preserve the advantages of our products and technologies, and helps us to improve the return on our investment in research and development. We have a broad portfolio of approximately 9,600 patent families (each patent family includes all patents and patent applications originating from the same invention).
In Automotive, our S32x Automotive Processing Platform offers scalability across products and multiple application domains based on Arm Cortex-A, Cortex-R, and Cortex-M cores with Automotive Safety Integrity Level (ASIL-D) capabilities with software compatibility from the MCU’s to SoC’s. iii.
In Automotive, our S32x Automotive Processing Platform offers scalability across products and multiple application domains based 6 on Arm Cortex-A, Cortex-R, and Cortex-M cores up to Automotive Safety Integrity Level (ASIL-D) capabilities with software compatibility from the MCU’s to SoC’s. iii.
Our direct grants include those awarded under the European 2nd Important Project of Common European Interest on Microelectronics and Communication Technologies (“IPCEI ME/CT”). During the fourth quarter of 2023, the Company was granted IPCEI ME/CT government assistance in multiple EU member states. The duration of the IPCEI ME/CT grants is planned to run until the end of 2029.
Our direct grants include those awarded under the European 2nd Important Project of Common European Interest on Microelectronics and Communication Technologies (“IPCEI ME/CT”). During 2023 and 2024, the Company was granted IPCEI ME/CT government assistance in multiple EU member states. The duration of the IPCEI ME/CT grants is planned to run until the end of 2029.
Our dedicated R&D teams across the involved member states under the IPCEI/MT program seek to innovate in core technologies across automotive, industrial and cybersecurity. This includes 5nm, advanced driving assistance and battery management systems in automotive, 6G and Ultra-Wideband as well as artificial intelligence (AI), RISC-V and post-quantum cryptography.
Our dedicated R&D teams across the involved member states under the IPCEI ME/CT program seek to innovate in core technologies across automotive, industrial and cybersecurity. This includes 5nm, advanced driving assistance and battery management systems in automotive, 6G and Ultra-Wideband as well as artificial intelligence (AI), RISC-V and post-quantum cryptography.
Our sales and marketing strategy focuses on key defined verticals in Automotive, Industrial & IoT, Communication Infrastructure, and Mobile deepening our relationship with our top OEMs and electronic manufacturing service customers, expanding our reach to our mass market customers, startups and our distribution partners and becoming their preferred supplier, which we believe assists us in reducing sales volatility in challenging markets.
Our sales and marketing strategy focuses on key defined verticals in Automotive, Industrial & IoT, Communication Infrastructure, and Mobile deepening our relationship with our top OEMs and EMSs, expanding our reach to our mass market customers, startups and our distribution partners and becoming their preferred supplier, which we believe assists us in reducing sales volatility in challenging markets.
In the past few years, and going forward, we believe the later will be the most important driver for growth in the automotive semiconductor market, while the stagnation of global vehicle sales will make the former less relevant.
In the past few years, and going forward, we believe the latter will be the most important driver for growth in the automotive semiconductor market, while the stagnation of global vehicle sales and production will make the former less relevant.
Our products focus on consumer devices, industrial applications and automotive applications, like driver information systems, ADAS and vehicle networking that require processing and multimedia capabilities. We provide highly integrated ARM-based i.MX application processors with integrated audio, video and graphics capability that are optimized for low-power and high-performance applications.
Our products focus on consumer devices, industrial applications and automotive applications, like driver information systems, ADAS and vehicle networking. We provide highly integrated Arm-based i.MX application processors with integrated audio, video and graphics capability that are optimized for low-power and high-performance applications.
Item 1. Business Company Overview NXP Semiconductors N.V. is a global semiconductor company and a long-standing supplier in the industry, with over 70 years of innovation and operating history. For the year ended December 31, 2023, we generated revenue of $13,276 million, compared to $13,205 million for the year ended December 31, 2022.
Item 1. Business Company Overview NXP Semiconductors N.V. is a global semiconductor company and a long-standing supplier in the industry, with over 70 years of innovation and operating history. For the year ended December 31, 2024, we generated revenue of $12,614 million, compared to $13,276 million for the year ended December 31, 2023.
The following table shows selected key information with respect to our major front-end and back-end facilities: Site Ownership Wafer sized used Line widths used (vm) Technology/Products (Microns) Front-end Singapore (SSMC)¹⁾ 61.2 % 8” 0.14-0.25 CMOS, eNVM, Power, BCDMOS, RF Nijmegen, the Netherlands 100 % 8” 0.14-1.00 CMOS, BCDMOS, RF, Power MOSFET Austin (Oak Hill), United States 100 % 8” 0.25-1.50 CMOS, Sensors, RF, Power MOSFET Chandler, United States 100 % 8” 0.18-0.50 CMOS, eNVM, BCDMOS Chandler RF, United States 100 % 6” 0.25-0.40 GaN Austin (Ed Bluestein), United States 100 % 8” 0.09-0.18 CMOS, eNVM, BCDMOS, Radar Back-end Kaohsiung, Taiwan 100 % — — NFC, Automotive Car-access, In-Vehicle Networking, Micro-controllers, ADAS (Radar), Analog, Mixed-Signal and Power Bangkok, Thailand 100 % — — Automotive In-Vehicle Networking and Sensors, Analog, RFID, Banking and e-Passport modules, Power Management Kuala Lumpur, Malaysia 100 % — — Micro-processors, ADAS/Radar, Micro-controllers, Advanced Audio Processor, Sensors, Power Management, Analog and Mixed Signal, RF devices Tianjin, China 100 % — — Micro-processors, Micro-controllers, Power Management, Battery Management, Analog and Mixed Signal 1) Joint venture with TSMC.
Most of our assembly and test activities are maintained in-house. 8 The following table shows selected key information with respect to our major operating front-end and back-end facilities: Site Ownership Wafer sized used Line widths used (vm) Technology/Products (Microns) Front-end Singapore (SSMC)¹⁾ 61.2 % 8” 0.14-0.25 CMOS, eNVM, Power, BCDMOS, RF Nijmegen, the Netherlands 100 % 8” 0.14-1.00 CMOS, BCDMOS, RF, Power MOSFET Chandler, United States 100 % 8” 0.18-0.50 CMOS, eNVM, BCDMOS Chandler RF, United States 100 % 6” 0.25-0.40 GaN Austin (Ed Bluestein), United States 100 % 8” 0.09-0.18 CMOS, eNVM, BCDMOS, Radar Back-end Kaohsiung, Taiwan 100 % — — NFC, Automotive Car-access, In-Vehicle Networking, Micro-controllers, ADAS (Radar), Analog, Mixed-Signal and Power Bangkok, Thailand 100 % — — Automotive In-Vehicle Networking and Sensors, Analog, RFID, Banking and e-Passport modules, Power Management Kuala Lumpur, Malaysia 100 % — — Micro-processors, ADAS/Radar, Micro-controllers, Advanced Audio Processor, Sensors, Power Management, Analog and Mixed Signal, RF devices Tianjin, China 100 % — — Micro-processors, Micro-controllers, Power Management, Battery Management, Analog and Mixed Signal 1) Joint venture with TSMC.
DL are those team members directly involved in manufacturing our products, while IDL consists of individual contributors, managers and executives in other functions such as research and development (R&D) and selling, general and administrative roles (SG&A). At December 31, 2023, we had approximately 34,200 employees, which includes approximately 1,500 employees in our joint venture.
DL are those team members directly involved in manufacturing our products, while IDL consists of individual contributors, managers and executives in other functions such as research and development (R&D) and selling, general and administrative roles (SG&A). At December 31, 2024, we had approximately 33,100 employees, which includes approximately 1,400 employees in our joint venture.
We expect that carbon emissions reduction efforts (e.g., global net zero emission commitments) will also be a key growth driver with large transformations expected of our energy systems. Factories, buildings and homes will need to rely much more on renewable energy (e.g., solar, wind) and increase efficient use of energy.
Carbon emissions reduction efforts (global net zero emission commitments) will also be a key growth driver with large transformations expected of our energy systems. Factories, buildings and homes will need to rely much more on renewable energy (e.g., solar, wind) and increase efficient use of energy. The way we generate and store energies will likely be more distributed.
Information about our Executive Officers The names, ages and positions as of February 22, 2024, of our executive officers, including our chief executive officer, Mr.
Information about our Executive Officers The names, ages and positions as of February 20, 2025, of our executive officers, including our Chief Executive Officer, Mr.
We purchase most of our raw materials on the basis of fixed price contracts. 9 Over the past two years, semiconductor supply chains have been constrained. As a result, there has been a tendency towards longer term supply contracts with suppliers in exchange for capacity.
We purchase most of our raw materials on the basis of fixed price contracts. In recent years, as a result of constraints in the semiconductor supply chains, there has been a tendency towards longer term supply contracts with suppliers in exchange for capacity.
The Industrial & IoT market is highly fragmented with a diverse collection of products and applications such as factory automation, smart home, smart appliances, home entertainment, smart retail, power and energy and medical electronics.
The Industrial & IoT market is highly fragmented with a diverse collection of products and applications such as factory automation, home and building automation, appliances, home entertainment, power and energy and healthcare solutions.
We expect such consumer demands will lead to new vehicle architectures and eventually to software defined vehicles (SDV). Semiconductor content per vehicle continues to increase due to government regulation of safety and emissions, standardization of higher-end options across a greater number of vehicle classes as well as consumer demand for greater fuel efficiency, advanced safety, multimedia applications and connectivity.
Semiconductor content per vehicle continues to increase due to government regulation of safety and emissions, standardization of higher-end options across a greater number of vehicle classes as well as consumer demand for greater fuel efficiency, advanced safety, multimedia applications and connectivity.
The increase in productivity with real-time insights and efficient processes for factory automation, the enhancement in consumer convenience, security and comfort for smart homes, the reduction of resource consumption and better energy efficiency for smart factories and cities, the increase in performance of rich media content in smart consumer devices and the need for better health prevention and monitoring solutions (wearables, smart patches and smart drug delivery devices) to help ensure the future health of millions of people are some of the key use-cases driving growth in Industrial & IoT.
The need for productivity increase requiring real-time insights and efficient processes for factory automation, the reduction of resource consumption and better energy efficiency for smart factories and buildings, the enhancement in consumer convenience security and comfort for smart homes, the increase in performance requirements for processing content in smart consumer devices, the need for better health prevention and monitoring solutions, are some of the key use-cases and trends driving growth in Industrial & IoT.
We have long-standing customer relationships with most of our customers. Our 10 largest OEM end customers, some of whom are supplied by distributors, in alphabetical order, are Apple, Aptiv, Bosch, Continental, Denso, Hyundai, LGE Automotive, Samsung, Visteon, and Vitesco. We also have a strong position with our distribution partners, including our three largest, Arrow, Avnet and WT Micro.
We have long-standing customer relationships with most of our customers. Our 10 largest OEM end customers, some of whom are supplied by distributors, in alphabetical order, are Apple, Aptiv, Bosch, Continental, Denso, Harman Auto, Hyundai, LGE Automotive, Samsung and Visteon.
The increase of the average semiconductor content is being driven by the proliferation of electronic features throughout the vehicle, especially for driver assistance (ADAS), and by the increasing penetration of electrified vehicles, which have much higher semiconductors content.
The increase of the average semiconductor content is being driven by the proliferation of electronic features throughout the vehicle, especially for driver assistance (ADAS), and by the increasing penetration of electrified vehicles, which have much higher semiconductors content. We believe three mega-trends will drive the semiconductor content increase in the future: Autonomous driving, electrification and the software defined vehicle.
Due to the scalability of our portfolio we are able to help future-proof our customer’s products as their systems evolve, becoming more complex or requiring greater processing capabilities over time. For automotive applications, our microcontrollers deliver the required reliability, security and functional safety to address current and future automotive challenges.
Due to the scalability of our portfolio we are able to help future-proof our customer’s products as their systems evolve, becoming more complex or requiring greater processing capabilities over time.
NXP has a strong focus on mobile wallet, Ultra-Wideband (UWB) and specialty custom analog solutions. The demand for faster speeds, improved battery life, fast charging, mobile wallets, highly secure localization and sensing technology, mobile transit and authentication is driving increased semiconductor content for NXP.
The demand for faster speeds, improved battery life, fast charging, mobile wallets, highly secure localization and sensing technology, mobile transit and authentication is driving increased semiconductor content for NXP.
Sievers, are as follows: Name Age Position Kurt Sievers 54 Executive director, president and chief executive officer Bill Betz 46 Executive vice president and chief financial officer Christopher Jensen 54 Executive vice president and chief human resources officer Ron Martino 58 Executive vice president and chief sales officer Andrew Micallef 59 Executive vice president and chief operations and manufacturing officer Jennifer Wuamett 58 Executive vice president, general counsel, corporate secretary and chief sustainability officer Human Capital At NXP, our diverse and talented employees, referred to as team members, drive the innovation that sets our company apart and fuels our success in the market.
Sievers, are as follows: Name Age Position Kurt Sievers 55 Executive director, president and chief executive officer Bill Betz 47 Executive vice president and chief financial officer Christopher Jensen 55 Executive vice president and chief people officer Andrew Hardy 48 Executive vice president and chief sales officer Andrew Micallef 60 Executive vice president and chief operations and manufacturing officer Jennifer Wuamett 59 Executive vice president, general counsel, corporate secretary and chief sustainability officer Human Capital At the heart of NXP's is our talented global employees, referred to as team members, whose creativity and dedication drive the innovation that sets our company apart.
This broad technology portfolio enables us to meet increasing demand from customers for system solutions, which require a variety of technologies. 8 Our back-end manufacturing facilities test and package many different types of products using a wide variety of processes. To optimize flexibility, we use shared technology platforms for our back-end assembly operations.
Our back-end manufacturing facilities test and package many different types of products using a wide variety of processes. To optimize flexibility, we use shared technology platforms for our back-end assembly operations.
Our purpose is bringing together bright minds to create breakthrough technologies that make the connected world better, safer, and more secure.
Our purpose is to bring together bright minds to create breakthrough technologies that make the connected world better, safer, and more secure. Globally, we implement policies and programs designed to attract, engage and retain top talent.
Our diversity, equality and inclusion approach is centered around • Leadership commitment and ownership; • Building and sustaining a qualified and diverse talent pipeline and equitable processes; and • Fostering an inclusive culture and a sense of belonging to attract and retain the best talent.
Our inclusion approach is centered around the following: • Leadership commitment and ownership; • Building and sustaining a qualified talent pipeline and robust processes; and • Fostering an inclusive culture and a sense of belonging to attract and retain the best talent. 13 NXP values team member engagement in driving inclusion through our Employee Resource Groups (ERGs).
Our NXP global workforce spans three regions encompassing 30+ countries and includes approximately 12,000 team members dedicated to the research and development of our products and solutions (representing 36% of our NXP workforce and 57% of our IDL workforce). Corporate Values and Team Member Engagement NXP's values are our fundamental beliefs and guiding principles.
Our NXP global workforce spans three regions encompassing 30+ countries and includes approximately 11,600 team members dedicated to the research and development of our products and solutions (representing 37% of our NXP workforce). Corporate Values, Team Member Engagement and Retention NXP's values are the cornerstone of how we operate, develop our teams, and foster innovation.
Development and Investing in the Future NXP is committed to a 70/20/10 continuous learning model, including mechanisms for learning through on-the-job experiences (70%), learning through others (20%), and learning through education (10%).
NXP empowers team members to develop their professional skills and capabilities and is dedicated to a 70/20/10 continuous learning model, including mechanisms for learning through on-the-job experiences (70%), learning through others (20%), and learning through formal education (10%).
Our wafer fabs produce semiconductors with line widths ranging from 90 nanometers to 3 microns for integrated circuits and 0.5 microns to greater than 4 microns for discretes.
Our wafer fabs produce semiconductors with line widths ranging from 90 nanometers to 3 microns for integrated circuits and 0.5 microns to greater than 4 microns for discretes. This broad technology portfolio enables us to meet increasing demand from customers for system solutions, which require a variety of technologies.
Using a blend of internally designed and externally sourced courses and learning resources, we offer our global team members a variety of training programs in support of key business processes, requirements and initiatives. We also provide a library of on-demand resources for skills development and microlearning to all our team members.
Using a blend of internally designed and externally sourced courses and learning resources, we offer our global team members a variety of training programs in support of key business processes, requirements and initiatives. Compensation and Benefits We provide team members with total rewards packages including base salary and short-term and long-term incentives.
We have assembled a global team of highly skilled semiconductor and embedded software design engineers with expertise in RF, analog, power management, interface, security and digital processing.
We target applications that require stringent overall system and subsystem performance. As new and challenging applications proliferate, we believe that many of these applications will benefit from our solutions. We have assembled a global team of highly skilled semiconductor and embedded software design engineers with expertise in RF, analog, power management, interface, security and digital processing.
NXP has committed to invest approximately $550m (€500m) for our investment in ESMC and is entitled to 10% of the fab facility capacity. Production at ESMC is currently targeted to begin by the end of 2027. Sales, Marketing and Customers We market our products and solutions worldwide to a variety of OEMs, contract manufacturers and distributors.
VSMC is 60% owned by Vanguard International Semiconductor Corporation and 40% owned by NXP. NXP is entitled to 40% of the fab facility capacity. Initial production at VSMC is currently targeted to begin in 2027. Sales, Marketing and Customers We market our products and solutions worldwide to a variety of OEMs, Electronic Manufacturing Service customers (EMSs) and Distributors.
From an operational perspective, all of our manufacturing facilities continue to operate around the world in accordance with guidance issued by local and national government authorities. On January 9, 2024, NXP acquired shares in the newly founded European Semiconductor Manufacturing Company (ESMC) GmbH, in Dresden, Germany. ESMC is 70% owned by TSMC, with Bosch, Infineon, and NXP each owning 10%.
From an operational perspective, all of our manufacturing facilities continue to operate around the world in accordance with guidance issued by local and national government authorities. 9 NXP also has equity investments in the following joint venture manufacturing companies: • European Semiconductor Manufacturing Company (ESMC) GmbH will build and operate a new 300mm semiconductor wafer manufacturing facility in Dresden, Germany.
In the same way, strict emissions regulations as well as consumer willingness for energy efficient cars are accelerating the penetration of electrification. Last but not least, many consumers want their cars to be service oriented, hyper-connected, configurable and upgradeable, in the same way as they are used to with their smartphones.
Last but not least, many consumers want their cars to be service oriented, hyper-connected, configurable and upgradeable, in the same way as they are used to with their smartphones. We expect such consumer demands will lead to new vehicle architectures and eventually to software defined vehicles (SDV).
Growth in the Industrial market is driven by the replacement of traditional mechanical equipment by smart, energy-saving and connected electronic equipment using various sensors, processors, connectivity, analog and security chipsets that align well with NXP’s ability to provide a complete range of processing, connectivity and secure solutions.
The energy ecosystem needs to develop and ensure smart, efficient and reliable power delivery. These trends drive the replacement of traditional mechanical equipment by smart, energy-saving and connected electronic equipment using various sensors, processors, connectivity, analog and security chipsets that align well with NXP’s portfolio and ability to provide customers with system solutions across these applications segments.
Reporting Segment NXP has one reportable segment representing the entity as a whole, which reflects the way in which our chief operating decision maker executes operating decisions, allocates resources, and manages the growth and profitability of the Company.
Reporting Segment NXP has one reportable segment representing the entity as a whole, which reflects the way in which our chief operating decision maker, Kurt Sievers, executes operating decisions, allocates resources, and manages the growth and profitability of the Company. 3 End Market Exposure Our product groups are focused on four primary end markets that we believe are characterized by long-term, attractive growth opportunities and where we believe we enjoy sustained, competitive differentiation through our technology leadership.
We continue to drive programs centered around retention actions for strategic roles and top-performing talent as well as broad-based programs targeting all team members. 13 Diversity, Equality and Inclusion At NXP, inclusion is key to living our core values which are built on a core foundation of trust and respect.
NXP is dedicated to retaining team members and closely monitors voluntary turnover. During calendar year 2024, our voluntary attrition rate was 5.5%. We continue to drive programs centered around retention actions for strategic roles and top-performing talent as well as broad-based programs targeting all team members. Inclusion At NXP, inclusion is integral to who we are.
Across the globe, we have policies and programs to attract and maintain the best talent, with a specific focus on team member engagement, thought leadership, diversity, equity and inclusion, compensation and benefits, development and growth opportunities, future talent, team member retention and community outreach. 12 NXP’s workforce includes direct labor (DL) and indirect labor (IDL).
These efforts center around key priorities including team member engagement, thought leadership, inclusion, compensation and benefits, development and growth, future talent, team member retention and community outreach. 12 NXP’s workforce includes direct labor (DL) and indirect labor (IDL).
No OEM for which we had direct sales to accounted for more than 10% of our revenue in 2023 or 2022. Research and Development We believe that our future success depends on our ability to both improve our existing products and to develop new products for both existing and new markets.
Research and Development We believe that our future success depends on our ability to both improve our existing products and to develop new products for both existing and new markets. We direct our research and development efforts largely to the development of new semiconductor solutions where we see significant opportunities for growth.
Our S32x Automotive Processing Platform offers scalability across products and multiple application domains with S32K MCU’s based on Arm Cortex-M cores with Automotive Safety Integrity Level (ASIL-D) capabilities. ii. Application Processors Application processors consist of a computing core with embedded memory and special-purpose hardware and software for secure multimedia applications such as graphics and video.
For automotive applications, our microcontrollers deliver the required reliability, security and functional safety to address current and future automotive challenges. Our S32x Automotive Processing Platform offers scalability across products and multiple application domains with S32K MCU’s based on Arm Cortex-M cores up to the Automotive Safety Integrity Level (ASIL-D) capabilities.
Communication Infrastructure & Other The Communication Infrastructure & Other end market is a combination of three different application markets, namely 5G networks, digital network communications and secure edge identification solutions. The transition to 5G and the cloudification of the network present a significant opportunity for NXP.
Communication Infrastructure & Other The Communication Infrastructure & Other end market is a combination of three different application markets, namely secure edge identification, 5G radio power and digital network communication solutions. In secure edge identification solutions, NXP has extensive experience providing customers with solutions for applications demanding the highest security and reliability (ePassports, eID credentials, transportation & payment cards.
These advances have resulted in growth of semiconductors and electronic content across a diverse array of products. The semiconductor market totaled $527 billion in 2023.
These advances have resulted in growth of semiconductors and electronic content across a diverse array of products. The semiconductor market totaled $627.6 billion in 2024. Business Combinations On December 17, 2024, NXP entered into a definitive agreement to acquire Aviva Links for $242.5 million in cash.
We believe three mega-trends will drive the semiconductor content increase in the future: Autonomous driving, electrification and the software defined vehicle. Each of the megatrends involve new functions and each new function requires new technologies. The path to full autonomy is driving the increase of driver assistance systems in the car already today.
Each of the megatrends involve new functions and each new function requires new technologies. The path to full autonomy is driving the increase of driver assistance systems in the car already today. In the same way, strict emissions regulations as well as consumer willingness for energy efficient cars are accelerating the penetration of electrification.
Vehicle Computer Domain and zonal processors Electrification systems Secure connected Edge solutions Smart home and industrial automation Connectivity and crossover processors UWB mobile access solutions RF Power Systems i. Automotive Growth in automotive semiconductor sales relies on (1) global vehicle sales and production trends and (2) the increase in semiconductor content per vehicle.
Automotive Growth in automotive semiconductor sales relies on (1) global vehicle sales and production trends and (2) the increase in semiconductor content per vehicle.
Finally, in secure edge identification solutions, NXP has extensive experience providing customers with solutions for applications demanding the highest security and reliability (ePassports, eID credentials, transportation & payment cards and RFID solutions). Further digitalization of governmental services, the trend towards secure contactless payment and the need to improve tracking, traceability and authentication of products are driving demand across these applications.
Included as well is the growing RFID market that uses wireless technology for identification and tracking of objects. Further digitalization of governmental services, the trend towards secure contactless payment and the need to improve tracking, traceability and authentication of products are driving demand across these applications. Most countries in the world have migrated their wireless infrastructure to 5G network technology.
Our revenue is primarily the sum of our direct sales to OEMs plus our distributors’ resale of NXP products. Avnet accounted for 21% of our revenue in 2023 and 20% in 2022. No other distributor accounted for greater than 10% of our revenue.
We also have a strong position with our distribution partners, including our five largest in alphabetical order, Arrow, Avnet, Nexty, WT Micro and World Peace. Our revenue is primarily the sum of our direct sales to OEMs, EMSs plus our distributors’ resale of NXP products. Avnet accounted for 22% of our revenue in 2024 and 21% in 2023.
Additional information about our environmental strategy, targets and metrics is included in our Corporate Sustainability Report and can be found on our website 2 . Available Information Our main corporate website address is www.nxp.com.
Available Information Our main corporate website address is www.nxp.com.
Finally, with the growing number of connected devices, latency, privacy and bandwidth have become critical limiting factors and Edge computing solves this by bringing the intelligence closer to the source. Security and tamper-detection capabilities are also becoming essential features of these Industrial & IoT solutions. iii. Mobile Mobile includes applications such as smartphones, feature phones, tablets, wearables and mobile accessories.
Finally, with the growing number of connected devices and increasing data generation, latency, privacy and bandwidth have become critical limiting factors. Intelligent edge solutions solve this by bringing the intelligence closer to the source. Edge systems reduce the tendency on the cloud, lowering power consumption, strengthening data protection. They are, most of the time, autonomous and real-time.
Our Diversity & Inclusion Council serves as an advocate, resource and governing entity to advance NXP’s global, strategic diversity, equality and inclusion initiatives. The Human Resources and C ompensation Committee of our Board provides oversight of our policies, programs and initiatives focusing on human capital management, including workforce diversity, equality and inclusion .
Membership is open to all team members, and each ERG has defined missions and executive oversight. Today, we have nine primary ERGs with representation in Asia, Europe and North America. The Human Resources and C ompensation Committee of our Board provides oversight of our policies, programs and initiatives focusing on human capital management, including workforce inclusion .
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End Market Exposure Our product groups are focused on four primary end markets that we believe are characterized by long-term, attractive growth opportunities and where we believe we enjoy sustained, competitive differentiation through our technology leadership.
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Subject to customary closing conditions, including regulatory approvals, the transaction is expected to close in the first half of 2025. On January 7, 2025, NXP entered into a definitive agreement to acquire TTTech Auto for $625 million in cash.
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The four end markets are Automotive, Industrial & IoT, Mobile, and Communication Infrastructure & Other. 3 Automotive Industrial & IoT Mobile Comm Infra & Other Core Applications ADAS Electrification Vehicle Networks Secure Car Access eCockpit Body Comfort & Convenience Powertrain Smart Home Edge Nodes Factory and Building Automation Home Entertainment Power and Energy Smart Appliances Medical Smart Retail Smartphones Wearables Mobile Accessories Wireless Basestations Network & Security Banking Cards Government ID documents Transit Cards RFID Tagging Key Growth Drivers Radar systems Software Defined Vehicle, incl.
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Subject to customary closing conditions, including regulatory approvals, the transaction is expected to close in the second half of 2025 with a possibility for an accelerated closing timeline. On February 10, 2025, NXP entered into a definitive agreement to acquire Kinara, Inc. for $307 million in cash.
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Despite the decline in vehicles sales and production in 2020 due to the outbreak of the COVID-19 and the moderate growth in 2021 and 2022 due to the global supply crisis, the increase in semiconductor content per vehicle continued. In 2023, the supply chain crisis eased and vehicle production rebounded to the level of 2019.
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Subject to customary closing conditions, including regulatory approvals, the transaction is expected to close in the first half of 2025.
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The way we generate and store energies will likely be more distributed. The energy ecosystem needs to develop and ensure smart, efficient and reliable power delivery.
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The four end markets are Automotive, Industrial & IoT, Mobile, and Communication Infrastructure & Other.
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In IoT, growth is driven by the increasing use of high-performance edge and media devices (e.g., home entertainment, connected home assistants, home and building control and security) and low power IoT nodes where NXP scalable solutions across the entire embedded processing spectrum are ideally suited.
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Automotive Industrial & IoT Mobile Comm Infra & Other Core Auto MCU (non-S32) In-vehicle infotainment (IVI) In-vehicle networking (IVN) Advanced Analog Secure Car Access Processors Analog & Security Connectivity Secure Mobile payment & Access Solutions Custom Analog Interfaces Secure Card Solutions Legacy Networking Processors RF Power Amplifiers Accelerated Growth SDV Radar Systems Electrification Connectivity Intelligent Edge Systems i.
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More base stations are needed and massive MIMO radio technology - which provides better throughput and better spectrum efficiency - is greatly expanding the number of antennas and power amplifiers needed. Small cells are also deployed to improve coverage and capacity of wireless networks.
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They handle data and do decisions locally. NXP's scalable low power solutions across the entire embedded processing spectrum are ideally suited here. iii. Mobile Mobile includes applications such as smartphones, feature phones, tablets, wearables and mobile accessories. NXP has a strong focus on mobile wallet, Ultra-Wideband (UWB) and specialty custom analog solutions.
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In power amplification, as more bandwidth and higher frequencies are needed, we observe an increasing adoption of GaN technology because of its higher power output and efficiency. 5 Workplaces are evolving from offices to homes, and consumers and enterprises need to adapt to changing working conditions, leading to increasing demand for better digital communication capabilities and digital content.
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This application market provides base station radio units with power amplifiers for improved signal throughput and efficiency. 5 Finally, the increasing number of connected devices exchanging more data in the cloud and on the device edge, combined with demand for improved digital communication drives demand in the network communications market.
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This creates strong growth in the network communications market. Meanwhile, billions of connected devices exchange more and more data, leading to strong demand for device edge and cloud processing solutions.
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Application Processors Application processors, also known as SoCs, consist of a computing core with external memory and special-purpose hardware accelerators and software for secure applications that support standard application operating systems such as Linux, and are targeted at specific applications, such as multimedia to run graphics and video, system networking management, or specialized processing.
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Most of our assembly and test activities are maintained in-house.
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ESMC is 70% owned by TSMC, with Bosch, Infineon, and NXP each owning 10%. NXP is entitled to 10% of the fab facility capacity. Initial production at ESMC is currently targeted to begin in 2027. • VisionPower Semiconductor Manufacturing Company Pte. Ltd. (VSMC) will build and operate a new 300mm semiconductor wafer manufacturing facility in Singapore.
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We direct our research and development efforts largely to the development of new semiconductor solutions where we see significant opportunities for growth. We target applications that require stringent overall system and subsystem performance. As new and challenging applications proliferate, we believe that many of these applications will benefit from our solutions.
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No other distributor accounted for greater than 10% of our revenue. No OEM for which we had direct sales to accounted for more than 10% of our revenue in 2024 or 2023.
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They speak about how we operate, engage with and develop our team members, and push the boundaries of creativity and innovation. Our values rest on a strong foundation of trust and respect.
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Built on trust and respect, these principles guide every aspect of our talent strategy. To assess and improve engagement, we consistently invite team members to share their feedback through the Winning Culture Survey, which covers various factors such as engagement and ethics. In our 2024 survey, 87% of our indirect-labor team members participated.
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We hold ourselves accountable to our values by ensuring they are reflected in all of our talent programs, including talent acquisition, enabling performance, rewards and recognition, communications, development, assessment and succession. To assess and improve engagement, NXP regularly conducts our global Winning Culture Survey, which is administered by a third party to ensure confidentiality.
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We value the unique talents, experiences, and perspectives that each team member brings to the workplace.
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NXP is committed to actively listening to team members and solicits feedback on a variety of factors, including engagement, strategy, culture, leadership, innovation, growth, continuous improvement, collaboration, ownership, work environment, ethics, sustainability and diversity, equality and inclusion. In 2023, 90% of team members participated in the survey.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

46 edited+13 added−6 removed173 unchanged
Biggest changeIn the event of a future decline in global economic conditions, our business, financial condition and results of operations could be materially adversely affected, and the resulting economic decline might disproportionately affect the markets in which we participate, further exacerbating a decline in our results of operations. 2 The contents of our website, our Corporate Sustainability Report, and our Sustainability Policy are referenced for general information only and are not incorporated by reference into, and do not form a part of, this Form 10-K. 16 The semiconductor industry is highly competitive.
Biggest changeIn the event of a future decline in global 1 The contents of our website, our Corporate Sustainability Report, and our Sustainability Policy are referenced for general information only and are not incorporated by reference into, and do not form a part of, this Form 10-K. 15 economic conditions, our business, financial condition and results of operations could be materially adversely affected, and the resulting economic decline might disproportionately affect the markets in which we participate, further exacerbating a decline in our results of operations.
If we fail to introduce new technologies and products in a timely manner, this could adversely affect our business. The semiconductor industry is highly competitive and characterized by constant and rapid technological change, short product lifecycles, significant price erosion and evolving standards.
The semiconductor industry is highly competitive. If we fail to introduce new technologies and products in a timely manner, this could adversely affect our business. The semiconductor industry is highly competitive and characterized by constant and rapid technological change, short product lifecycles, significant price erosion and evolving standards.
Our substantial indebtedness could have a material adverse effect on our business by: • increasing our vulnerability to adverse economic, industry or competitive developments; • requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities; • exposing us to the risk of increased interest rates in the event we have borrowings under our $2,500 million revolving credit facility agreement (the “RCF Agreement”) because loans under the RCF Agreement bear interest at a variable rate; • making it more difficult for us to satisfy our obligations with respect to our indebtedness and any failure to comply with the obligations of any our debt instruments, including restrictive covenants and borrowing conditions, could result in an event default under the indentures governing our notes and agreements governing other indebtedness; • restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; • limiting our ability to obtain additional financial for working capital, capital expenditures, restructurings, product development, research and development, debt service requirements, investments, acquisitions and general corporate or other purposes; and • limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting.
Our substantial indebtedness could have a material adverse effect on our business by: • increasing our vulnerability to adverse economic, industry or competitive developments; • requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities; • exposing us to the risk of increased interest rates in the event we have borrowings under our $2,500 million revolving credit facility agreement (the “RCF Agreement”) because loans under the RCF Agreement may bear interest at a variable rate; 26 • making it more difficult for us to satisfy our obligations with respect to our indebtedness and any failure to comply with the obligations of any our debt instruments, including restrictive covenants and borrowing conditions, could result in an event default under the indentures governing our notes and agreements governing other indebtedness; • restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; • limiting our ability to obtain additional financial for working capital, capital expenditures, restructurings, product development, research and development, debt service requirements, investments, acquisitions and general corporate or other purposes; and • limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting.
In order to obtain a judgment which is enforceable in the Netherlands, the claim must be relitigated before a competent court of the Netherlands; the relevant Netherlands court has discretion to attach such weight to a judgment of the courts of the United States as it deems appropriate; based on case law, the courts of the Netherlands may be expected to recognize and grant permission for enforcement of a judgment of a court of competent jurisdiction in the United States without re-examination or relitigation of the substantive matters adjudicated thereby, provided that (i) the relevant court in the United States had jurisdiction in the matter in 26 accordance with standards which are generally accepted internationally; (ii) the proceedings before that court complied with principles of proper procedure; (iii) recognition and/or enforcement of that judgment does not conflict with the public policy of the Netherlands; and (iv) recognition and/or enforcement of that judgment is not irreconcilable with a decision of a Dutch court rendered between the same parties or with an earlier decision of a foreign court rendered between the same parties in a dispute that is about the same subject matter and that is based on the same cause, provided that earlier decision can be recognized in the Netherlands.
In order to obtain a judgment which is enforceable in the Netherlands, the claim must be relitigated before a competent court of the Netherlands; the relevant Netherlands court has discretion to attach such weight to a judgment of the courts of the United States as it deems appropriate; based on case law, the courts of the Netherlands may be expected to recognize and grant permission for enforcement of a judgment of a court of competent jurisdiction in the United States without re-examination or relitigation of the substantive matters adjudicated thereby, provided that (i) the relevant court in the United States had jurisdiction in the matter in accordance with standards which are generally accepted internationally; (ii) the proceedings before that court complied with principles of proper procedure; (iii) recognition and/or enforcement of that judgment does not conflict with the public policy of the Netherlands; and (iv) recognition and/or enforcement of that judgment is not irreconcilable with a decision of a Dutch court rendered between the same parties or with an earlier decision of a foreign court rendered between the same parties in a dispute that is about the same subject matter and that is based on the same cause, provided that earlier decision can be recognized in the Netherlands.
In addition, the U.S. may enact legislation that would allow a tax payer to deduct domestic R&D expenses in the year that they are expensed, which would adversely affect our tax rate, while beneficial for our cash position. 29 We are exposed to a number of different tax uncertainties, which could have an impact on our results.
In addition, the U.S. may enact legislation that would allow a tax payer to deduct domestic R&D expenses in the year that they are expensed, which would adversely affect our tax rate, while beneficial for our cash position. We are exposed to a number of different tax uncertainties, which could have an impact on our results.
Moreover, third parties can release information regarding potential 20 vulnerabilities of our products before mitigations are available. This, in turn, could lead to attempted or successful exploits, adversely affect our ability to introduce mitigations, or otherwise harm our business and reputation. Our business has suffered, and could in the future suffer, from manufacturing problems.
Moreover, third parties can release information regarding potential vulnerabilities of our products before mitigations are available. This, in turn, could lead to attempted or successful exploits, adversely affect our ability to introduce mitigations, or otherwise harm our business and reputation. Our business has suffered, and could in the future suffer, from manufacturing problems.
Any inability on our part to adequately protect our intellectual property may have a material adverse effect on our business, financial condition and results of operations. 25 We may become party to intellectual property claims or litigation that could cause us to incur substantial costs, pay substantial damages or prohibit us from selling our products.
Any inability on our part to adequately protect our intellectual property may have a material adverse effect on our business, financial condition and results of operations. We may become party to intellectual property claims or litigation that could cause us to incur substantial costs, pay substantial damages or prohibit us from selling our products.
As part of the OECD framework to implement a minimum tax rate, the EU has adopted a directive on ensuring a global minimum level of taxation for multinational companies, also known as Pillar 2, to become effective in 2024. The Dutch government has enacted new legislation in response to and based on such EU directive.
As part of the OECD framework to implement a minimum tax rate, the EU has adopted a directive on ensuring a global minimum level of taxation for multinational companies, also known as Pillar 2, to become effective in 2024. 28 The Dutch government has enacted new legislation in response to and based on such EU directive.
The failure of these suppliers to perform under these agreements or an unexpected reduction in demand for these products could result in a material adverse effect on our business, financial condition and results of operations. 21 Disruptions in our relationships with any one of our key customers could adversely affect our business.
The failure of these suppliers to perform under these agreements or an unexpected reduction in demand for these products could result in a material adverse effect on our business, financial condition and results of operations. Disruptions in our relationships with any one of our key customers could adversely affect our business.
Such breaches could result in, for example, unauthorized access to, disclosure, misuse, loss, or 24 destruction of our, our customer, or other third party data or systems, theft of sensitive or confidential data including personal information (including personal data about our employees, customers or other third parties) and intellectual property, system disruptions, and denial of service.
Such breaches could result in, for example, unauthorized access to, disclosure, misuse, loss, or destruction of our, our customer, or other third party data or systems, theft of sensitive or confidential data including personal information (including personal data about our employees, customers or other third parties) and intellectual property, system disruptions, and denial of service.
Our working capital needs are difficult to predict. Our working capital needs are difficult to predict and may fluctuate. The comparatively long period between the time at which we commence development of a product and the time at which it may be delivered to a customer leads to high inventory and work-in-progress levels.
Our working capital needs are difficult to predict. Our working capital needs are difficult to predict and may fluctuate. The comparatively long period between the time at which we commence development of a product and the time at which it may be delivered to a customer 18 leads to high inventory and work-in-progress levels.
We are also required to obtain environmental permits from governmental authorities for certain of our operations. We cannot assure you that we have been or 23 will be at all times in complete compliance with such laws, regulations and permits.
We are also required to obtain environmental permits from governmental authorities for certain of our operations. We cannot assure you that we have been or will be at all times in complete compliance with such laws, regulations and permits.
As a result, it may be difficult for investors to effect service of process within the United States upon us or such other persons residing outside the United States, or to enforce outside the United States judgments obtained against such persons in U.S. courts in any action.
As a result, it may be difficult for investors to effect service of process within the United States upon us or such other 25 persons residing outside the United States, or to enforce outside the United States judgments obtained against such persons in U.S. courts in any action.
The protection offered by intellectual property rights may be inadequate or weakened for reasons or circumstances that are out of our control. Further, our proprietary technology, designs and processes and other intellectual property may be vulnerable to disclosure or misappropriation by employees, contractors and other persons.
The protection offered by intellectual property rights may be inadequate or weakened for reasons or circumstances that are out of our control. Further, our proprietary technology, designs and processes and other intellectual property may be vulnerable to disclosure or misappropriation by employees, contractors and other 24 persons.
Such difficulties may include rationing, or other forced disruption of utility supplies such as electricity, gas or water by governments or regulators which could lead to disruptions of our operation resulting in high costs and global supply chain disruptions.
Such difficulties may include rationing, or other forced disruption of utility supplies such as electricity, gas 19 or water by governments or regulators which could lead to disruptions of our operation resulting in high costs and global supply chain disruptions.
The demand for our products depends to a significant degree on the demand for our customers’ end products. The vast majority of our revenue is derived from sales to manufacturers in the automotive, industrial & IoT, mobile, and communication infrastructure.
The demand for our products depends to a significant degree on the demand for our customers’ end products. The vast majority of our revenue is derived from sales to manufacturers in the automotive, industrial & IoT, mobile, and communication infrastructure end markets.
As the availability of government funding is outside our control, we cannot guarantee that we will continue to benefit from government support or that sufficient alternative funding will be available if we lose such support.
As the availability of government funding is outside our control, we cannot guarantee that 20 we will continue to benefit from government support or that sufficient alternative funding will be available if we lose such support.
Sustained geopolitical tensions, such as the current geopolitical tensions involving China and Taiwan, could lead to long-term changes in global trade and technology supply chains and decoupling of global trade networks; 18 • volatility in foreign currency exchange rates, in particular with respect to the U.S. dollar, and transfer restrictions, in particular in mainland China; and • threats that our operations or property could be subject to nationalization and expropriation.
Sustained geopolitical tensions, such as the current geopolitical tensions involving China and Taiwan, could lead to long-term changes in global trade and technology supply chains and decoupling of global trade networks; 17 • volatility in foreign currency exchange rates, in particular with respect to the U.S. dollar, and transfer restrictions, in particular in mainland China; and • threats that our operations or property could be subject to nationalization and expropriation.
The impact of future negotiations and consultation processes with employee 19 representatives could have a material impact on our financial results.
The impact of future negotiations and consultation processes with employee representatives could have a material impact on our financial results.
Such risks may include (i) adverse impacts from deficient, inaccurate, or biased AI recommendations, (ii) AI technologies the company develops and adopts may become obsolete earlier than planned, and there can be no assurance that the company will realize the desired or anticipated benefits, (iii) use of AI applications could increase the risk of cybersecurity incidents, such as through unintended or inadvertent transmission of proprietary or sensitive information, or (iv) any laws, regulations or industry standards adopted in response to the emergence of AI may be burdensome.
Such risks may include (i) adverse impacts from deficient, inaccurate, or biased AI recommendations, (ii) AI technologies the company develops and adopts may not meet market requirements or become obsolete earlier than planned, and there can be no assurance that the company will realize the desired or anticipated benefits, (iii) use of AI applications could increase the risk of cybersecurity incidents, such as through unintended or inadvertent transmission of proprietary or sensitive information, or (iv) any laws, regulations or industry standards adopted in response to the emergence of AI may be burdensome.
The foregoing risks could have a material adverse effect on our business, financial condition and results of operations. 17 The semiconductor industry is historically characterized by continued price erosion, especially after a product has been on the market.
The foregoing risks could have a material adverse effect on our business, financial condition and results of operations. 16 The semiconductor industry is historically characterized by continued price erosion, especially after a product has been on the market.
As a result, we are subject to environmental, data privacy, AI technologies, disclosure and reporting (including reporting of ESG-related data), labor and health and safety laws and regulations in each jurisdiction in which we operate. We are also required to obtain environmental permits and other authorizations or licenses from governmental authorities for certain of our operations.
As a result, we are subject to environmental, data privacy, export and sanctions, AI technologies, cybersecurity, disclosure and reporting (including reporting of ESG-related data), labor and health and safety laws and regulations in each jurisdiction in which we operate. We are also required to obtain environmental permits and other authorizations or licenses from governmental authorities for certain of our operations.
As of December 31, 2023, we had recognized a net accrued benefit liability of $392 million, representing the unfunded benefit obligations of our defined pension plans. The funding status and the liabilities and costs of maintaining these defined benefit pension plans may be impacted by financial market developments.
As of December 31, 2024, we had recognized a net accrued benefit liability of $360 million, representing the unfunded benefit obligations of our defined pension plans. The funding status and the liabilities and costs of maintaining these defined benefit pension plans may be impacted by financial market developments.
If any of the following international business risks were to materialize or become worse, they could have a material adverse effect on our business, financial condition and results of operations: • negative economic developments in economies around the world and the instability of governments and international trade arrangements, such as the increase of barriers to international trade including the imposition of tariffs on imports by the United States and China, the withdrawal of the United Kingdom from the European Union, enhanced export controls on certain products and sanctions on certain industry sectors and parties and the sovereign debt crisis in certain European countries; • social and political instability in a number of countries around the world, including continued hostilities in the Middle East and the armed conflict in Ukraine.
If any of the following international business risks were to materialize or become worse, they could have a material adverse effect on our business, financial condition and results of operations: • negative economic developments in economies around the world and the instability of governments and international trade arrangements, such as the increase of barriers to international trade including the imposition of new or increased tariffs on imports by the United States and China, enhanced export controls on certain products and sanctions on certain industry sectors and parties; • social and political instability in a number of countries around the world, including continued hostilities in the Middle East and the armed conflict in Ukraine.
Legal proceedings covering a range of matters are pending in various jurisdictions. Due to the uncertainty inherent in litigation, it is difficult to predict the final outcome. An adverse outcome might affect our results of operations. We and certain of our businesses are involved as plaintiffs or defendants in legal proceedings in various matters.
Due to the uncertainty inherent in litigation, it is difficult to predict the final outcome. An adverse outcome might affect our results of operations. We and certain of our businesses are involved as plaintiffs or defendants in legal proceedings in various matters.
In addition, governments are increasingly imposing restrictions on foreign investment in semiconductor businesses and technology, such as the Dutch foreign investment control regime, that may limit our ability to execute strategic acquisitions, investments and alliances, any of which could have a material adverse effect on our business.
In addition, governments are increasingly imposing restrictions on cross-border investments in semiconductor businesses and technology, such as the Dutch foreign investment control regime and U.S. outbound investment rules, that may limit our ability to execute strategic acquisitions, investments and alliances, any of which could have a material adverse effect on our business.
Risks related to our indebtedness Our debt obligations expose us to risks that could adversely affect our financial condition, which could adversely affect our results of operations. As of December 31, 2023, we had outstanding indebtedness with an aggregate principal amount of $11,250 million.
Risks related to our indebtedness Our debt obligations expose us to risks that could adversely affect our financial condition, which could adversely affect our results of operations. As of December 31, 2024, we had outstanding indebtedness with an aggregate principal amount of $10,920 million.
Meeting evolving industry requirements, including the increasing use of AI and machine learning technologies, and introducing new products to the market in a timely manner and at prices that are acceptable to our customers are significant factors in determining our competitiveness and success.
Meeting evolving industry requirements, including the increasing use of AI and machine learning technologies (including the need to run complex AI-based applications on devices), and introducing new products to the market in a timely manner and at prices that are acceptable to our customers are significant factors in determining our competitiveness and success.
For example, import and export regulations, such as the U.S. Export Administration Regulations administered by the U.S. Department of Commerce, are complex, change frequently, have generally become more stringent over time and have intensified in recent years.
For example, import and export regulations, such as the U.S. Export Administration Regulations administered by the U.S. Department of Commerce and sanctions imposed by the European Union (EU) and other jurisdictions, are complex, change frequently, have generally become more stringent over time and have intensified in recent years.
Even our inadvertent failure to comply with applicable privacy-related or data protection laws and regulations could result in proceedings against us by governmental entities or others.
Costs to comply with and implement these privacy-related and data protection measures could be significant. Even our inadvertent failure to comply with applicable privacy-related or data protection laws and regulations could result in proceedings against us by governmental entities or others.
Compliance with, or changes in the interpretation of, existing regulations, the adoption of new regulations, changes in the oversight of our activities by governments or standard bodies or rulings in court, regulatory, administrative or other proceedings relating to such regulations, among others, could have an adverse effect on our business and results of operations.
Compliance with, or changes in the interpretation of, existing regulations, the adoption of new regulations, changes in the oversight of our activities by governments or standard bodies or rulings in court, regulatory, administrative or other proceedings relating to such regulations, among others, could have an adverse effect on our business and results of operations. 22 Legal proceedings covering a range of matters are pending in various jurisdictions.
Any significant interruption in our business applications, systems or networks, including but not limited to new system implementations, computer viruses, cyberattacks, security breaches, facility issues or energy blackouts could have a material adverse impact on our business, financial condition and results of operations.
Any significant interruption in our business applications, systems or networks, including but not limited to new system implementations, computer viruses, cyberattacks, security breaches, facility issues or energy blackouts could have a material adverse impact on our business, financial condition and results of operations. 23 Our computer systems and networks are subject to attempted security breaches and other cybersecurity incidents, which, if successful, could adversely impact our business.
If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation. 28 We may have fluctuations in the amount and frequency of our stock repurchases.
In the past, following periods of market volatility, shareholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation. We may have fluctuations in the amount and frequency of our stock repurchases.
The instability may have a negative effect on our business, financial condition and operations via our customers and global supply chain and volatility in energy prices and the financial markets; • potential terrorist attacks; • epidemics and pandemics, such as the coronavirus outbreak, which may adversely affect our workforce, as well as our suppliers and customers; • geopolitical tension and disputes, as well as, resulting adverse changes in government policies, especially those affecting global trade and investment.
The instability and any resulting sanctions, export controls or other penalties, may have a negative effect on our business, financial condition and operations via our customers and global supply chain and volatility in energy prices and the financial markets or negatively impact demand for our products; • potential terrorist attacks; • epidemics and pandemics, such as the coronavirus outbreak, which may adversely affect our workforce, as well as our suppliers and customers; • geopolitical tension and disputes, as well as, resulting adverse changes in government policies, especially those affecting global trade and investment, including the imposition of new or increased tariffs.
We cannot predict the economic impact, if any, of natural disasters or climate change. 22 Risks related to regulatory or legal challenges As our business is global, we need to comply with laws and regulations in countries across the world. We operate globally, with manufacturing, assembly and testing facilities in several continents, and we market our products globally.
Risks related to regulatory or legal challenges As our business is global, we need to comply with laws and regulations in countries across the world. We operate globally, with manufacturing, assembly and testing facilities in several continents, and we market our products globally.
There is increasing concern that climate change is occurring that may cause a rising number of natural disasters with potentially dramatic effects on human activity.
There is increasing concern that climate change is occurring that may cause a rising number of natural disasters with potentially dramatic effects on human activity. We cannot predict the economic impact, if any, of natural disasters or climate change.
Any such disruption could result in an adverse impact to our financial results. Goodwill and other identifiable intangible assets represent a significant portion of our total assets, and we may never realize the full value of our intangible assets. Goodwill and other identifiable intangible assets are recorded at fair value on the date of an acquisition.
Goodwill and other identifiable intangible assets represent a significant portion of our total assets, and we may never realize the full value of our intangible assets. Goodwill and other identifiable intangible assets are recorded at fair value on the date of an acquisition.
It is anticipated that other countries will also introduce Pillar 2 legislation. These initiatives include recommendations and proposals that, if enacted in countries in which we and our affiliates do business, could adversely affect us and our affiliates. In addition, the Dutch government has enacted legislation to curtail exemptions on taxing share repurchases to become effective in 2025.
It is anticipated that other countries will also introduce Pillar 2 legislation. These initiatives include recommendations and proposals that, if enacted in countries in which we and our affiliates do business, could adversely affect us and our affiliates.
Despite our level of indebtedness, we may still incur significantly more debt, which could further exacerbate the risks described above and affect our ability to service and repay our debt. 27 If we do not comply with the covenants in our debt agreements or fail to generate sufficient cash to service and repay our debt, it could adversely affect our operating results and our financial condition.
If we do not comply with the covenants in our debt agreements or fail to generate sufficient cash to service and repay our debt, it could adversely affect our operating results and our financial condition.
Our results of operations could be negatively impacted if we are required to suspend activities with certain customers or suppliers due to the current and future changes in regulations. In 2020, due to regulations imposed by the U.S. government, we ceased shipments of our products to Huawei pending approval of export licenses.
Our results of operations could be negatively impacted if we are required to suspend activities with certain customers or suppliers due to the current and future changes in regulations, including as a result of executive orders or policy changes pursued by the new U.S. administration.
We believe that we have a robust cybersecurity program that is aligned to international cybersecurity frameworks, and that we leverage industry best practices across people, processes and technologies in an attempt to mitigate cybersecurity threats.
There can be no assurance that a breach or incident will not have a material impact on our operations and financial results in the future. We believe that we have a robust cybersecurity program that is aligned to international cybersecurity frameworks, and that we leverage industry best practices across people, processes and technologies in an attempt to mitigate cybersecurity threats.
Computer hackers and others routinely attempt to breach the security of technology products, services, and systems, and those of customers, suppliers, and some of those attempts may be successful.
In the current environment, there are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, state-sponsored intrusions, industrial espionage, employee malfeasance, and human or technological error. Computer hackers and others routinely attempt to breach the security of technology products, services, and systems, and those of customers, suppliers, and some of those attempts may be successful.
The stock market in recent years has experienced significant price and volume fluctuations that have often been unrelated to the operating performance of companies. The market price for our common stock has varied between a high of $238.27 on December 15, 2023 and a low of $153.10 on January 5, 2023 in the twelve-month period ending on December 31, 2023.
The stock market in recent years has experienced significant price and volume fluctuations that have often been unrelated to the operating performance of companies.
However, we cannot always anticipate, detect, repel or implement fully effective preventative measures against all cybersecurity threats, particularly because the techniques used are increasingly sophisticated and constantly evolving. In the current environment, there are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, state-sponsored intrusions, industrial espionage, employee malfeasance, and human or technological error.
However, we cannot always anticipate, detect, repel or implement fully effective preventative measures against all cybersecurity threats, particularly because the techniques used are increasingly sophisticated and constantly evolving. For example, as AI continues to evolve, cyber attackers could also use AI to develop malicious code and increasingly sophisticated phishing attempts.
Furthermore, global privacy legislation, enforcement, and policy activity, such as the EU General Data Privacy Regulation, are rapidly expanding and creating a complex regulatory compliance environment. Costs to comply with and implement these privacy-related and data protection measures could be significant.
For example, in 2020, due to regulations imposed by the U.S. government, we ceased shipments of our products to Huawei pending approval of export licenses. Furthermore, global privacy legislation, enforcement, and policy activity, such as the EU General Data Privacy Regulation, are rapidly expanding and creating a complex regulatory compliance environment.
Such incidents could result in the misappropriation of our proprietary information and technology, the compromise of personal and confidential information of our employees, customers or suppliers or interrupt our business. There can be no assurance that a breach or incident will not have a material impact on our operations and financial results in the future.
We have, from time to time, experienced cyber-attacks attempting to obtain access to and misuse our computer systems and networks. Such incidents could result in the misappropriation of our proprietary information and technology, the compromise of personal and confidential information of our employees, customers or suppliers or interrupt our business.
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In addition, Russia’s invasion of Ukraine has led to sanctions, export controls and other penalties being levied by the United States, European Union and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic. Additional potential sanctions and penalties have also been proposed and/or threatened.
Added
We may engage in acquisitions and other strategic transactions or make investments, or be unable to consummate planned strategic acquisitions, which could adversely affect our results of operations. We engage in acquisitions and other strategic transactions, including joint ventures, and make investments, which we believe are important to the future of our business.
Removed
Russian military and economic actions and resulting sanctions could adversely affect the global economy and financial markets. Further escalation of the conflict between Ukraine and Russia could adversely impact the global supply chain, disrupt our operations, or negatively impact the demand for our products in our primary end markets.
Added
We routinely acquire businesses and other assets, including patents, technology and other intangible assets, enter into joint ventures or other strategic transactions, and purchase minority equity interests in or make loans to companies.
Removed
In October 2022, the U.S. imposed restrictions on the export of US-regulated products and technology to certain mainland Chinese technology companies and in October 2023, the Department of Commerce’s revisited these controls, proposing further refinements, and is moving toward final rule making.
Added
Achieving the anticipated benefits of business acquisitions depends in part upon our ability to integrate the businesses in an efficient and effective manner and achieve anticipated synergies, and we may not be successful in these efforts.
Removed
Our computer systems and networks are subject to attempted security breaches and other cybersecurity incidents, which, if successful, could adversely impact our business. We have, from time to time, experienced cyber-attacks attempting to obtain access to and misuse our computer systems and networks.
Added
Such integration is complex and time consuming and involves significant challenges, including, among others: retaining key employees; integration of new employees, technology, products, operations, sales and distribution channels, business models, facilities and business systems; retaining customers and suppliers of the businesses; consolidating research and development operations; and consolidating corporate and administrative infrastructures.
Removed
In the past, following periods of market volatility, shareholders have instituted securities class action litigation.
Added
If we do not achieve the anticipated benefits of business acquisitions or other strategic activities, or if we are unable to consummate acquisitions or strategic investments that we consider important to the future of our business, our business and results of operations may be adversely affected and our growth strategy may not be successful. 21 We rely on joint ventures to meet our current and future manufacturing requirements.
Removed
If such legislation is not amended or repealed, this will lead to an additional out of pocket tax payment associated with future share repurchases.
Added
However, we often do not control these partnerships and joint ventures, and actions taken by any of our partners or the termination of these joint ventures could adversely affect our business.
Added
As part of our hybrid manufacturing strategy, we have entered into a number of long-term strategic partnerships with other leading industry participants, and may do so again in the future. For example, we currently participate in a joint venture with Taiwan Semiconductor Manufacturing Company Limited (“TSMC”) called Systems on Silicon Manufacturing Company Pte. Ltd.
Added
(“SSMC”) and have recently formed a joint venture with Vanguard International Semiconductor Corporation called VisionPower Semiconductor Manufacturing Company Pte. Ltd. (“VSMC”), and a joint venture with TSMC, Robert Bosch Gmbh and Infineon Technologies AG called European Semiconductor Manufacturing Company (“ESMC”) to create capability for our future manufacturing requirements.
Added
If any of our strategic partners in alliances we currently engage with or may engage with in the future were to encounter financial difficulties or change their business strategies, they may no longer be able or willing to participate in these groups or alliances, which could have a material adverse effect on our business, financial condition and results of operations.
Added
Under the terms of current or future alliances, we may have certain obligations, including funding obligations or take or pay obligations.
Added
If we do not achieve the anticipated benefits of these joint ventures, or if newly established joint ventures are not able to begin production in the expected timing or achieve expected efficiency and quality, our business and results of operations may be adversely affected.
Added
Despite our level of indebtedness, we may still incur significantly more debt, which could further exacerbate the risks described above and affect our ability to service and repay our debt.
Added
The market price for our common stock has varied between a high of $296.08 on July 17, 2024 and a low of $204.72 on December 20, 2024 in the twelve-month period ending on 27 December 31, 2024.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeNXP is certified and externally audited to ISO 27001 with certain additional certifications such as Common Criteria 6+, PCI DSS and GSMA Security for focused functions, and we maintain information security risk insurance coverage. We have multiple cybersecurity training initiatives as part of our information security training and compliance program. We regularly deploy simulated attacks and related trainings.
Biggest changeThese systems are audited by internal and external audit teams. On a strategic level, NXP’s information technology risk management program is a component of the ERM process described below. NXP is certified and externally audited to ISO 27001 with certain additional certifications such as Common Criteria 6+, PCI DSS and GSMA Security for focused functions.
We do not believe that cybersecurity threats resulting from any previous cybersecurity incidents of which we are aware are reasonably likely to materially affect NXP. For additional information on certain risks associated with cybersecurity, refer to the risk factors set forth under the caption “Risks related to cybersecurity and IT systems” in Part I, Item 1A. “Risk Factors.”
We do not believe that cybersecurity threats resulting from any previous cybersecurity incidents of which we are aware are reasonably likely to materially affect NXP. For additional information on certain risks associated with cybersecurity, refer to the risk factors set forth under the caption “Risks related to cybersecurity and IT systems” in Part I, Item 1A.
Item 1C. Cybersecurity NXP, similar to other semiconductor companies, operates in a complex and rapidly changing environment that involves many risks, including information and cybersecurity risks. As a leading technology company, we are committed to helping strengthen internet security and to implementing measures designed to protect our company against illicit activities, including cyberattacks and malware.
Item 1C. Cybersecurity Risk Management and Strategy NXP, similar to other semiconductor companies, operates in a complex and rapidly changing environment that involves many risks, including information and cybersecurity risks. As a leading technology company, we are committed to helping strengthen internet security and to implementing measures designed to protect our company against illicit activities, including cyberattacks and malware.
Our management is directly responsible for executing the Company’s risk management processes. Our Board is responsible for overseeing these risk management processes. In exercising its oversight, the Board and, as appropriate, the relevant Board committees, assesses the material risks facing the Company and evaluate management’s plans for managing material risk exposures.
“Risk Factors.” Governance Our management is directly responsible for executing the Company’s risk management processes. Our Board is responsible for overseeing these risk management processes. In exercising its oversight, the Board and, as appropriate, the relevant Board committees, assesses the material risks facing the Company and evaluate management’s plans for managing material risk exposures.
This includes performing risk assessments, prioritizing the most likely and impactful risk elements, and recommending appropriate measures to mitigate the risk. NXP’s cybersecurity initiatives focus on strengthening our Core IT infrastructure and services against external threats, securing our manufacturing operations from compromise, limiting damage through processes and controls, and protecting our intellectual property.
NXP’s cybersecurity initiatives focus on strengthening our Core IT infrastructure and services against external threats, securing our manufacturing operations from compromise, limiting damage through processes and controls, and protecting our intellectual property. On a day-to-day basis, NXP identifies vulnerabilities, breach attempts, and possible criminal activity by external threat actors.
Key ERM activities include: • Assessment (identification and evaluation of risks) • Response (building capabilities, mitigation) • Management Assurance (effective management methods, clear accountabilities) 30 • Monitoring (audit, inquire, verify) • Communication (internally and externally) • Periodically evaluate effectiveness method NXP’s Chief Information Security Officer is primarily responsible for managing the cybersecurity risks identified in the ERM process.
Key ERM activities include: • Assessment (identification and evaluation of risks) • Response (building capabilities, mitigation) • Management Assurance (effective management methods, clear accountabilities) • Monitoring (audit, inquire, verify) • Communication (internally and externally) • Periodically evaluate effectiveness method To date, we have experienced no cybersecurity incidents that have materially affected NXP, including our business strategy, results of operations or financial condition.
As part of the framework, we conduct due diligence which covers topics such as data protection, confidentiality, security, business continuity and incident management. These activities are covered by our process for cybersecurity risk management under our ERM. NXP uses a multi-layer approach to identify and mitigate information security risks.
Additionally, NXP has a supplier security framework that helps with monitoring and accessing the security of suppliers and third-party service providers. As part of the framework, we conduct due diligence which covers topics such as data protection, confidentiality, security, business continuity and incident management.
Furthermore, NXP has an Identify and Access Management System integrated with HR systems which helps manage employee life cycle processes, including both onboarding and offboarding NXP workers. These systems are audited by internal and external audit teams. On a strategic level, NXP’s information technology risk management program is a component of the ERM process described above.
In addition to SOC, the NXP IT Service Desk and NXP employees are trained to identify Cyber Security issues and to escalate them to correct owners. Furthermore, NXP has an Identify and Access Management System integrated with HR systems which helps manage employee life cycle processes, including both onboarding and offboarding NXP workers.
On a tactical level, NXP maintains a 24x7 Security Operating Center (SOC) that actively monitors for and identifies cyber security threats and initiates appropriate mitigation processes. The SOC reports to the Computer Security Incident Response Team (CSIRT). When needed, a task force containing Security, IT, Communications, Legal and Business representatives is established.
The SOC reports to the Chief Information Security Officer (CISO), who can in case of an incident establish a Computer Security Incident Response Team (CSIRT). When needed, a task force containing Security, IT, Communications, Legal and Business representatives is established. This task force leads mitigation activities where the potential threat or risk is elevated.
We deliver a Cyber Security orientation to new employees and maintain a library of cyber security learning sessions available to our employees. To date, we have experienced no cybersecurity incidents that have materially affected NXP, including our business strategy, results of operations or financial condition.
We have multiple cybersecurity training initiatives as part of our information security training and compliance program. We regularly deploy simulated attacks and 29 related trainings. We deliver a Cyber Security orientation to new employees and maintain a library of cyber security learning sessions available to our employees.
NXP’s program for Information Technology (IT) Risk Management is a component of NXP’s overall process for Enterprise Risk Management (“ERM”).
Where appropriate, we use external service providers to assess, evaluate, test or otherwise assist with aspects of our security controls and processes. NXP’s program for Information Technology (IT) Risk Management is a component of NXP’s overall process for ERM.
Removed
On a day-to-day basis, NXP identifies vulnerabilities, breach attempts, and possible criminal activity by external threat actors. Additionally, NXP has a supplier security framework that helps with monitoring and accessing the security of suppliers and third-party service providers.
Added
These activities are covered by our process for cybersecurity risk management under our Enterprise Risk Management (“ERM”). NXP uses a multi-layer approach to identify and mitigate information security risks. On a tactical level, NXP maintains a 24x7 Security Operating Center (SOC) that actively monitors for and identifies cyber security threats and initiates appropriate mitigation processes.
Removed
This task force leads mitigation activities where the potential threat or risk is elevated. In addition to SOC, the NXP IT Service Desk and NXP employees are trained to identify Cyber Security issues and to escalate them to correct owners.
Added
NXP’s CISO has over 20 years of relevant experience managing cybersecurity risks and is primarily responsible for managing the cybersecurity risks identified in the ERM process. This includes performing risk assessments, prioritizing the most likely and impactful risk elements, and recommending appropriate measures to mitigate the risk.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company also owns or leases other properties in multiple countries for use as administrative, sales or research and development facilities. The Company believes its existing facilities and equipment are in good operating condition and adequate to meet our need for the near future.
Biggest changeThe Company believes its existing facilities and equipment are in good operating condition and adequate to meet our need for the near future.
Item 2. Properties The Company's headquarters are located in Eindhoven, the Netherlands. As of February 22, 2024, the Company operates owned manufacturing facilities primarily in the United States, Netherlands, Malaysia, China, Thailand and Taiwan, as well as in Singapore (SSMC) together with our joint venture partner TSMC.
Item 2. Properties The Company's headquarters are located in Eindhoven, the Netherlands. As of February 20, 2025, the Company operates owned manufacturing facilities primarily in the United States, Netherlands, Malaysia, China, Thailand and Taiwan, as well as in Singapore (SSMC) together with our joint venture partner TSMC.
Added
Through investments in VSMC and ESMC, the Company holds capacity rights in external manufacturing facilities, presently under construction. The Company also owns or leases other properties in multiple countries for use as administrative, 30 sales or research and development facilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings The information set forth under the “Litigation” and “Environmental Remediation” captions of Note 15 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report is incorporated herein by reference. For additional discussion of certain risks associated with legal proceedings, see Part I, Item 1A. Risk Factors . Item 4.
Biggest changeItem 3. Legal Proceedings The information set forth under the “Legal Proceedings” and “Environmental Remediation” captions of Note 15 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report is incorporated herein by reference. For additional discussion of certain risks associated with legal proceedings, see Part I, Item 1A. Risk Factors . Item 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAt December 31, 2023, there was approximately $1,536 million remaining under the 2022 Share Repurchase Program.
Biggest changeIn August 2024, the Board approved the repurchase of shares up to a maximum of $2 billion (the "2024 Share Repurchase Program") in addition to the 2022 Share Repurchase Program. At December 31, 2024, there was approximately $336 million remaining under the 2022 Share Repurchase Program and another $2 billion under the 2024 Share Repurchase Program.
(2) Reflects shares surrendered by participants to satisfy tax withholding obligations in connection with the Company's equity programs. 32 Company Performance The following graph shows a comparison, since December 31, 2018 of cumulative total return for NXP, the Standard & Poor's 500 Index, and the Philadelphia Stock Exchange Semiconductor Index.
(2) Reflects shares surrendered by participants to satisfy tax withholding obligations in connection with the Company's equity programs. 32 Company Performance The following graph shows a comparison, since December 31, 2019 of cumulative total return for NXP, the Standard & Poor's 500 Index, and the Philadelphia Stock Exchange Semiconductor Index.
The graph assumes $100 (not in millions) invested on December 31, 2018 in our common stock and each of the indices. Item 6. [Reserved]
The graph assumes $100 (not in millions) invested on December 31, 2019 in our common stock and each of the indices. Item 6. [Reserved]
Dividends Per Common Share The following table presents the quarterly dividends on our common stock for the periods indicated: 2023 2022 First Quarter 1.014 0.845 Second Quarter 1.014 0.845 Third Quarter 1.014 0.845 Fourth Quarter 1.014 0.845 We currently expect to continue to pay dividends in the future.
Dividends Per Common Share The following table presents the quarterly dividends on our common stock for the periods indicated: 2024 2023 First Quarter 1.014 1.014 Second Quarter 1.014 1.014 Third Quarter 1.014 1.014 Fourth Quarter 1.014 1.014 We currently expect to continue to pay dividends in the future.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's common stock is traded on the Nasdaq stock market under the symbol NXPI. On February 14, 2024 there were 18 shareholders of record and 884,874 beneficial shareholders of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's common stock is traded on the Nasdaq stock market under the symbol NXPI. On February 12, 2025 there were 16 shareholders of record and 949,354 beneficial shareholders of our common stock.
The following table provides a summary of share repurchase activity during the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program (1) Number of Shares Purchased as Trade for Tax (2) October 2, 2023 – November 5, 2023 1,229,305 $182.10 658,033 9,432,436 571,272 November 6, 2023 – December 3, 2023 656,622 $191.19 467,659 7,882,258 188,963 December 4, 2023 – December 31, 2023 382,185 $221.78 382,120 6,689,633 65 Total 2,268,112 1,507,812 760,300 (1) Represents the number of shares that may be purchased under the remaining dollar repurchase authorizations noted above, calculated based on the share closing price at the end of the respective monthly period.
The following table provides a summary of share repurchase activity during the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid per Share Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Program (1) Number of Shares Purchased as Trade for Tax (2) September 30, 2024 – November 3, 2024 874,964 $236.87 494,314 10,557,891 380,650 November 4, 2024 – December 1, 2024 675,877 $228.50 395,752 10,592,322 280,125 December 2, 2024 – December 31, 2024 425,589 $218.84 425,697 11,240,803 (108) Total 1,976,430 1,315,763 660,667 (1) Represents the number of shares that may be purchased under the remaining dollar repurchase authorizations noted above, calculated based on the share closing price at the end of the respective monthly period.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRevenue by end market was as follows: ($ in millions, unless otherwise stated) 2023 2022 Increase/(decrease) % Automotive 7,484 6,879 605 8.8 % Industrial & IoT 2,351 2,713 (362) (13.3) % Mobile 1,327 1,607 (280) (17.4) % Communication Infrastructure & Other 2,114 2,006 108 5.4 % Revenue 13,276 13,205 71 0.5 % Revenue by sales channel was as follows: ($ in millions, unless otherwise stated) 2023 2022 Increase/(decrease) % Distributors 7,195 7,261 (66) (0.9) % OEM/EMS 5,963 5,775 188 3.3 % Other 118 169 (51) (30.2) % Revenue 13,276 13,205 71 0.5 % 35 Revenue by geographic region, which is based on the customer’s shipped-to location, was as follows: ($ in millions, unless otherwise stated) 2023 2022 Increase/(decrease) % China 1) 4,366 4,700 (334) (7.1) % APAC, excluding China 3,741 4,165 (424) (10.2) % EMEA (Europe, the Middle East and Africa) 3,096 2,582 514 19.9 % Americas 2,073 1,758 315 17.9 % Revenue 13,276 13,205 71 0.5 % 1) China includes Mainland China and Hong Kong n Automotive n Mobile n Distributors n Other n Industrial & IoT n Comm Infra & Other n OEM/EMS The year-to-date change in revenue was due to a combination of higher average selling prices, offset by lower shipment volumes.
Biggest change($ in millions, unless otherwise stated) 2024 % of Revenue 2023 % of Revenue Revenue 12,614 13,276 % nominal growth (5.0) 0.5 Gross profit 7,119 7,553 Gross margin 56.4 % 56.9 % Research and development (2,347) 18.6 % (2,418) 18.2 % Selling, general and administrative (1,164) 9.2 % (1,159) 8.7 % Amortization of acquisition-related intangible assets (136) 1.1 % (300) 2.3 % Other income (expense) (55) 0.4 % (15) 0.1 % Operating income (loss) 3,417 27.1 % 3,661 27.6 % Financial income (expense) (318) 2.5 % (309) 2.3 % Benefit (provision) for income taxes (545) 4.3 % (523) 3.9 % Results relating to equity-accounted investees (12) 0.1 % (7) 0.1 % Net income (loss) 2,542 20.2 % 2,822 21.3 % Less: Net income (loss) attributable to non-controlling interests 32 0.3 % 25 0.2 % Net income (loss) attributable to stockholders 2,510 19.9 % 2,797 21.1 % Diluted earnings per share 9.73 10.70 Revenue Revenue for the year ended December 31, 2024 was $12,614 million compared to $13,276 million for the year ended December 31, 2023, a decrease of $662 million or 5.0% year-on-year. 37 Revenue by end market was as follows: ($ in millions, unless otherwise stated) 2024 2023 Increase/(decrease) % Automotive 7,151 7,484 (333) (4.4) % Industrial & IoT 2,269 2,351 (82) (3.5) % Mobile 1,497 1,327 170 12.8 % Communication Infrastructure & Other 1,697 2,114 (417) (19.7) % Revenue 12,614 13,276 (662) (5.0) % Revenue by sales channel was as follows: ($ in millions, unless otherwise stated) 2024 2023 Increase/(decrease) % Distributors 7,203 7,195 8 0.1 % OEM/EMS 5,291 5,963 (672) (11.3) % Other 120 118 2 1.7 % Revenue 12,614 13,276 (662) (5.0) % Revenue by geographic region, which is based on the customer’s shipped-to location, was as follows: ($ in millions, unless otherwise stated) 2024 2023 Increase/(decrease) % China 1) 4,556 4,366 190 4.4 % APAC, excluding China 3,541 3,741 (200) (5.3) % EMEA (Europe, the Middle East and Africa) 2,719 3,096 (377) (12.2) % Americas 1,798 2,073 (275) (13.3) % Revenue 12,614 13,276 (662) (5.0) % 1) China includes Mainland China and Hong Kong From an end market perspective, NXP experienced growth in its Mobile end market, which was offset by declines in the Communication Infrastructure & Other, Automotive and Industrial & IoT end markets versus the year ago period.
Information Regarding Guarantors of NXP (unaudited) Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries All debt instruments are guaranteed, fully and unconditionally, jointly and severally, by NXP Semiconductors N.V. and issued or guaranteed by NXP USA, Inc., NXP B.V. and NXP LLC, (together, the “Subsidiary Obligors” and together with NXP Semiconductors N.V., the “Obligor Group”).
Information Regarding Guarantors of NXP (unaudited) Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries All debt instruments are guaranteed, fully and unconditionally, jointly and severally, by NXP Semiconductors N.V. and issued or guaranteed by NXP USA, Inc., NXP B.V. and NXP Funding LLC, (together, the “Subsidiary Obligors” and together with NXP Semiconductors N.V., the “Obligor Group”).
MD&A is organized as follows: • Overview - Overall analysis of financial and other highlights to provide context for the MD&A • Results of Operations - An analysis of our financial results • Financial Condition, Liquidity and Capital Resources - An analysis of changes in our balance sheets and cash flows and a discussion of our financial condition and potential sources of liquidity • Critical Accounting Estimates - Accounting estimates that management believes are the most important to understanding the assumptions and judgments incorporated in our financial results and forecasts • Use of Certain Non-GAAP Financial Measures - A discussion of the non-GAAP measures used 33 NXP has one reportable segment representing the entity as a whole.
MD&A is organized as follows: • Overview - Overall analysis of financial and other highlights to provide context for the MD&A • Results of Operations - An analysis of our financial results • Financial Condition, Liquidity and Capital Resources - An analysis of changes in our balance sheets and cash flows and a discussion of our financial condition and potential sources of liquidity • Critical Accounting Estimates - Accounting estimates that management believes are the most important to understanding the assumptions and judgments incorporated in our financial results and forecasts • Use of Certain Non-GAAP Financial Measures - A discussion of the presentation of non-GAAP financial measures 33 NXP has one reportable segment representing the entity as a whole.
Other than the Subsidiary Obligors, none of the Company’s subsidiaries (together the “Non-Guarantor Subsidiaries”) guarantee the Notes. The Company consolidates the Subsidiary Obligors in its consolidated financial statements and each of the Subsidiary Obligors are wholly owned subsidiaries of the Company.
Other than the Subsidiary Obligors, none of the Company’s subsidiaries (together the “Non-Guarantor Subsidiaries”) guarantee the Notes. The Company 45 consolidates the Subsidiary Obligors in its consolidated financial statements and each of the Subsidiary Obligors are wholly owned subsidiaries of the Company.
Such events or changes in circumstances can be significant changes in business climate, operating performance or competition, or upon the disposition of a significant portion of a reporting unit. A significant amount of judgment is involved in determining if an indicator of impairment has occurred between annual test dates. We perform impairment tests using a fair value approach when necessary.
Such events or changes in circumstances can include significant changes in business climate, operating performance or competition, or upon the disposition of a significant portion of a reporting unit. A significant amount of judgment is involved in determining if an indicator of impairment has occurred between annual test dates. We perform impairment tests using a fair value approach when necessary.
As with repurchases of our shares, it is our standard practice to request our annual general meeting of shareholders (the “AGM”) every year to renew this authorization for a period of 18 months from the AGM. The board of directors did not make use of the authorization during the fiscal year-ended December 31, 2023.
As with repurchases of our shares, it is our standard practice to request our annual general meeting of shareholders (the “AGM”) every year to renew this authorization for a period of 18 months from the AGM. The board of directors did not make use of the authorization during the fiscal year ended December 31, 2024.
Adjustments to net income include offsetting non-cash items, such as depreciation and amortization of $1,106 million, share-based compensation of $411 million, a loss on equity securities of $1 million, results relating to equity-accounted investees of $7 million and changes in deferred taxes of $(267) million.
Adjustments to net income include offsetting non-cash items, such as depreciation and amortization of $1,106 million, share-based compensation of $411 million, a gain on equity securities of $1 million, results relating to equity-accounted investees of $7 million and changes in deferred taxes of $(267) million.
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 2023 and 2022, no dividend was declared.
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 2024 and 2023, no dividend was declared.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 as filed with the SEC on March 1, 2023.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 as filed with the SEC on February 22, 2024.
This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023 .
Non-controlling Interests Non-controlling interests are related to the third-party share in the results of consolidated companies, predominantly SSMC. Their share of non-controlling interests amounted to a profit of $25 million for the year-ended December 31, 2023, compared to a profit of $46 million for the year-ended December 31, 2022.
Non-controlling Interests Non-controlling interests are related to the third-party share in the results of consolidated companies, predominantly SSMC. Their share of non-controlling interests amounted to a profit of $32 million for the year ended December 31, 2024, compared to a profit of $25 million for the year ended December 31, 2023.
This was primarily driven by the dividend payment to common stockholders of $1006 million, and purchase of treasury shares and restricted stock unit holdings of $1,053 million; partially offset by the $71 million proceeds from the issuance of common stock through stock plans. Net cash used for financing activities was $1,619 million for the year-ended December 31, 2022.
Net cash used for financing activities was $1,990 million for the year ended December 31, 2023. This was primarily driven by the dividend payment to common stockholders of $1,006 million, and purchase of treasury shares and restricted stock unit holdings of $1,053 million; partially offset by the $71 million proceeds from the issuance of common stock through stock plans.
The financial information of the Obligor Group includes sales executed through a Non-Guarantor Subsidiary single-billing entity as a sales agent on behalf of an entity in the Obligor Group. The Obligor Group has sales to non-guarantors (2023: $792 million).
The financial information of the Obligor Group includes sales executed through a Non-Guarantor Subsidiary single-billing entity as a sales agent on behalf of an entity in the Obligor Group. The Obligor Group has sales to non-guarantors (2024: $699 million).
During the fiscal year-ended December 31, 2022, NXP repurchased 8.3 million shares, for a total of approximately $1.4 billion under the trade for tax and 2021 Share Repurchase Program and during the fiscal year-ended December 31, 2023, NXP repurchased 5.5 million shares, for a total of approximately $1 billion under the trade for tax 2021 and 2022 Share Repurchase Program.
During the fiscal year ended December 31, 2023, NXP repurchased 5.5 million shares, for a total of approximately $1 billion under the trade for tax, 2021 and 2022 Share Repurchase Programs and during the fiscal year ended December 31, 2024, NXP repurchased 5.7 million shares, for a total of approximately $1.4 billion under the trade for tax and 2022 Share Repurchase Program.
For repurchases of shares in 2022 and 2023, the board of directors made use of the authorizations renewed by the AGM on May 26, 2021, June 1, 2022 and May 24, 2023, respectively.
For repurchases of shares in 2023 and 2024, the board of directors made use of the authorizations renewed by the AGM on June 1, 2022, May 24, 2023 and May 29, 2024, respectively.
Based on past performance and current expectations, we believe that our current available sources of funds (including cash and cash equivalents, short-term deposits, RCF Agreement, plus anticipated cash generated from operations) will be adequate to finance our operations, working capital requirements, capital expenditures and potential dividends for at least the next year.
Based on past performance and current expectations, we believe that our current available sources of funds (including cash and cash equivalents, RCF Agreement, Commercial Paper Program, EIB facilities, plus anticipated cash generated from operations) will be adequate to finance our operations, working capital requirements, capital expenditures and potential dividends for at least the next year.
Our business may not generate sufficient cash flow from operations, or we may not have enough capacity under the RCF Agreement, or from other sources in an amount sufficient to enable us to repay our indebtedness, including the RCF Agreement, the unsecured notes or to fund our other liquidity needs, including working capital and capital expenditure requirements.
Our business may not generate sufficient cash flow from operations, or we may not have enough capacity under the RCF Agreement, EIB Facility Agreements, Commercial Paper Program, or from other sources in an amount sufficient to enable us to repay our indebtedness, including outstanding commercial paper notes, and borrowings under the EIB Facility and RCF Agreements, the unsecured notes or to fund our other liquidity needs, including working capital and capital expenditure requirements.
GILTI is recognized as a current period expense when incurred. Results Relating to Equity-accounted Investees Results relating to equity-accounted investees amounted to a loss of $7 million in 2023, whereas in 2022 results relating to equity-accounted investees amounted to a loss of $1 million.
GILTI is recognized as a current period expense when incurred. 40 Results Relating to Equity-accounted Investees Results relating to equity-accounted investees amounted to a loss of $12 million in 2024, whereas in 2023 results relating to equity-accounted investees amounted to a loss of $7 million.
In January 2022, 39 the board of directors approved the additional repurchase of shares up to a maximum of $2 billion (the "2022 Share Repurchase Program").
In January 2022, the board of directors approved the repurchase of additional shares up to a maximum of $2 billion (the "2022 Share Repurchase Program") and in August 2024, the Board approved the repurchase of additional shares up to a maximum of $2 billion (the "2024 Share Repurchase Program").
Benefit (Provision) for Income Taxes We recorded an income tax expense of $523 million for the year-ended December 31, 2023, which reflects an effective tax rate of 15.6% compared to an expense of $529 million (15.7%) for the year-ended December 31, 2022. 2023 2022 $ % $ % Statutory income tax in the Netherlands 865 25.8 868 25.8 Rate differential local statutory rates versus statutory rate of the Netherlands (77) (2.3) (80) (2.4) Net change in valuation allowance (3) (0.1) — — Non-deductible expenses/losses 60 1.8 56 1.7 Netherlands tax incentives (111) (3.3) (113) (3.4) Foreign tax incentives (251) (7.5) (266) (7.9) Changes in estimates of prior years’ income taxes (17) (0.5) (2) (0.1) Withholding taxes 13 0.4 8 0.3 Other differences 44 1.3 58 1.7 Effective tax rate 523 15.6 529 15.7 The effective tax rate reflects the impact of tax incentives, a portion of our earnings being taxed in foreign jurisdictions at rates different than the Netherlands statutory tax rate, changes in estimates of prior years' income taxes, change in valuation allowance non-deductible expenses and withholding taxes.
Benefit (Provision) for Income Taxes We recorded an income tax expense of $545 million for the year ended December 31, 2024, which reflects an effective tax rate of 17.6% compared to an expense of $523 million (15.6%) for the year ended December 31, 2023. 2024 2023 $ % $ % Statutory income tax in the Netherlands 800 25.8 865 25.8 Rate differential local statutory rates versus statutory rate of the Netherlands (71) (2.3) (77) (2.3) Net change in valuation allowance 3 0.1 (3) (0.1) Non-deductible expenses/losses 68 2.2 60 1.8 Netherlands tax incentives (112) (3.6) (111) (3.3) Foreign tax incentives (214) (6.9) (251) (7.5) Changes in estimates of prior years’ income taxes 12 0.4 (17) (0.5) Withholding taxes 9 0.3 13 0.4 Pillar 2 income taxes 22 0.7 — — Other differences 28 0.9 44 1.3 Effective tax rate 545 17.6 523 15.6 The effective tax rate reflects the impact of tax incentives, a portion of our earnings being taxed in foreign jurisdictions at rates different than the Netherlands statutory tax rate, changes in estimates of prior years' income taxes, change in valuation allowance non-deductible expenses and withholding taxes.
This was primarily the result of net income of $2,822 million, adjustments to reconcile the net income of $1,265 million and changes in operating assets and liabilities of $(594) million.
This was primarily the result of net income of $2,542 million, adjustments to reconcile the net income of $1,151 million and changes in operating assets and liabilities of $(923) million.
The Obligor Group has amounts due from equity financing (2023: $5,441 million) and due to debt financing (2023: $2,346 million) with non-guarantor subsidiaries.
The Obligor Group has amounts due from equity financing (2024: $5,749 million) and due to debt financing (2024: $2,283 million) with non-guarantor subsidiaries.
Cash flows Our cash and cash equivalents in 2023 increased by $15 million (excluding the effect of changes in exchange rates on our cash position of $2 million) as follows: ($ in millions) Year ended December 31, 2023 2022 Net cash provided by (used for) operating activities 3,513 3,895 Net cash (used for) provided by investing activities (1,508) (1,249) Net cash provided by (used for) financing activities (1,990) (1,619) Increase (decrease) in cash and cash equivalents 15 1,027 • Cash Flow from Operating Activities For the year-ended December 31, 2023 our operating activities provided $3,513 million in cash.
Cash flows Our cash and cash equivalents in 2024 decreased by $566 million (excluding the effect of changes in exchange rates on our cash position of $(4) million) as follows: ($ in millions) Year ended December 31, 2024 2023 Net cash provided by (used for) operating activities 2,782 3,513 Net cash (used for) provided by investing activities (686) (1,508) Net cash provided by (used for) financing activities (2,662) (1,990) Increase (decrease) in cash and cash equivalents (566) 15 44 • Cash Flow from Operating Activities For the year ended December 31, 2024 our operating activities provided $2,782 million in cash.
For the year-ended December 31, 2022 our operating activities provided $3,895 million in cash. This was primarily the result of net income of $2,833 million, adjustments to reconcile the net income of $1,410 million and changes in operating assets and liabilities of $(372) million.
For the year ended December 31, 2023 our operating activities provided $3,513 million in cash. This was primarily the result of net income of $2,822 million, adjustments to reconcile the net income of $1,265 million and changes in operating assets and liabilities of $(594) million.
In 2023, the foreign tax incentives are lower compared to 2022 primarily due to less qualifying investments. 38 • The higher favorable changes in estimates of prior years' income taxes in 2023 is 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. • The other differences tax expense in 2023 and 2022 are mainly relating to excess tax benefits, unrecognized tax benefits, FX-effects and taxes due on Global Intangible Low-Taxed Income (GILTI) inclusions in U.S.
In accordance with this law, NXP N.V. recorded an additional tax expense in 2024. • The higher favorable changes in estimates of prior years' income taxes in 2023 is 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. • The other differences are mainly relating to excess tax benefits, unrecognized tax benefits, FX-effects and taxes due on Global Intangible Low-Taxed Income (GILTI) inclusions in the U.S.
As of December 31, 2023, the Company had outstanding fixed-rate notes with varying maturities for an aggregate principal amount of $11,250 million (collectively the “Notes”), with $1,000 million payable within 12 months. Future interest payments associated with the Notes total $3,135 million, with $402 million payable within 12 months.
As of December 31, 2024, the Company had outstanding fixed-rate notes with varying maturities for an aggregate principal amount of $10,250 million (collectively the “Notes”), with $500 million payable within 12 months. Future interest payments associated with the Notes total $2,711 million, with $371 million payable within 12 months.
Under our Quarterly Dividend Program, interim dividends of $0.845 per ordinary share were paid on April 6, July 6, October 6, 2022 and January 6, 2023; and dividends of $1.014 were paid on April 5, July 6, October 5, 2023 and January 5, 2024. 2023 2022 Dividends declared (per share) 4.056 3.380 Dividends declared (in millions) 1,048 885 Debt Our total debt, inclusive of aggregate principal, unamortized discounts, premiums, debt issuance costs and fair value adjustments, amounted to $11,175 million as of December 31, 2023, an increase of $10 million compared to December 31, 2022 ($11,165 million).
Under our Quarterly Dividend Program, interim dividends of $1.014 per ordinary share were paid on April 10, 2024 ($260 million), dividends of $1.014 per ordinary share were paid on July 10, 2024 ($259 million), dividends of $1.014 per ordinary share were paid on October 9, 2024 ($258 million) and dividends of $1.014 per ordinary share were paid on January 8, 2025 ($258 million). 2024 2023 Dividends declared (per share) 4.056 4.056 Dividends declared (in millions) 1,035 1,048 42 Debt Our total debt, inclusive of aggregate principal, unamortized discounts, premiums, debt issuance costs and fair value adjustments, amounted to $10,854 million as of December 31, 2024, a decrease of $321 million compared to December 31, 2023 ($11,175 million).
This was primarily driven by purchase of treasury shares and restricted stock unit holdings of $1,426 million, repurchase of long-term debt of $917 million, the dividend payment to common stockholders of $815 million, cash paid for debt issuance costs of $14 million; partially offset by the $1,496 million proceeds from the issuance of long-term debt and $59 million proceeds from the issuance of common stock through stock plans.
This was primarily driven by the repurchase of long-term debt of $1,000 million, the dividend payment to common stockholders of $1,038 million, and purchase of treasury shares and restricted stock unit holdings of $1,373 million; partially offset by the $670 million proceeds from issuance of long-term debt and $82 million proceeds from the issuance of common stock through stock plans.
Cash and short-term deposits As of December 31, 2023, our cash and short-term deposit balance was $4,271 million, an increase of $426 million compared to December 31, 2022 ($3,845 million), of which $214 million (2022, $227 million) was held by SSMC, our consolidated joint venture company with TSMC.
Cash and short-term deposits As of December 31, 2024, our cash balance was $3,292 million, a decrease of $979 million compared to our cash balance and short-term deposits on December 31, 2023 ($4,271 million), of which $261 million (2023: $214 million) was held by SSMC, our consolidated joint venture company with TSMC.
($ in millions, unless otherwise stated) 2023 2022 % change Research and development 2,418 $ 2,148 12.6 % As a percentage of revenue 18.2 % 16.3 % 1.9 ppt R&D costs for the year-ended December 31, 2023 increased by $270 million, or 12.6%, when compared to last year primarily driven by higher personnel-related costs of $269 million (including engineer salaries and wages of $169 million, higher restructuring costs of $59 million, mainly personnel related costs for specific targeted actions under new global programs, and higher share-based compensation costs of $27 million), partly offset by higher received government assistance due to subsidies and R&D tax credits of $33 million. • Selling, general and administrative Selling, general and administrative (SG&A) costs primarily consist of personnel salaries and wages (including share based compensation and other variable compensation), communication and IT related costs, fixed-asset related costs and sales and marketing costs (including travel expenses).
($ in millions, unless otherwise stated) 2024 2023 % change Research and development 2,347 $ 2,418 (2.9) % As a percentage of revenue 18.6 % 18.2 % 0.4 ppt R&D costs for the year ended December 31, 2024 decreased by $71 million, or 2.9%, when compared to last year primarily driven by lower bonus of $85 million and higher received government assistance due to subsidies and R&D tax credits of $60 million, partly offset by higher engineer salaries and wages of $25 million, higher share-based compensation costs of $22 million and higher licensing fees of $12 million. • Selling, general and administrative Selling, general and administrative (SG&A) costs primarily consist of personnel salaries and wages (including share based compensation and other variable compensation), communication and IT related costs, fixed-asset related costs and sales and marketing costs (including travel expenses).
Adjustments to net income include offsetting non-cash items, such as depreciation and amortization of $1,250 million, share-based compensation of $364 million, amortization of the discount on debt and debt issuance costs of $9 million, a loss on extinguishment of debt of $18 million, a loss on equity securities of $4 million, results relating to equity-accounted investees of $1 million and changes in deferred taxes of $(236) million.
Adjustments to net income include offsetting non-cash items, such as depreciation and amortization of $925 million, share-based compensation of $461 million, a loss on equity securities of $18 million, results relating to equity-accounted investees of $12 million and changes in deferred taxes of $(272) million.
We returned $2,059 million to our shareholders during the year in dividends and repurchases of common stock. Our cash and short-term deposit position at the end of 2023 was $4,271 million.
We returned $2,411 million to our shareholders during the year in dividends and repurchases of common stock. Our cash position at the end of 2024 was $3,292 million.
The gross profit percentage for the fourth quarter of 2023 decreased to 56.6% from 57.2% in the third quarter of 2023, primarily due to higher restructuring costs for specific targeted actions under new global restructuring programs in the fourth quarter of 2023.
The gross profit percentage for the fourth quarter of 2024 decreased to 53.9% from 57.4% in the third quarter of 2024, primarily due to an impairment of capital assets and higher restructuring costs for specific targeted actions under the new global restructuring programs in the fourth quarter of 2024.
We did not recognize any impairment charges for goodwill in the years presented, as our annual impairment testing indicated that the fair value exceeded the recorded value for the respective reporting unit. 47 Impairment or disposal of identified long-lived assets We perform reviews of long-lived assets including property, plant and equipment, and intangible assets subject to amortization, whenever facts and circumstances indicate that the useful life is shorter than what we had originally estimated or that the carrying amount of assets may not be recoverable.
Impairment or disposal of identified long-lived assets We perform reviews of long-lived assets including property, plant and equipment, and intangible assets subject to amortization, whenever facts and circumstances indicate that the useful life is shorter than what we had originally estimated or that the carrying amount of assets may not be recoverable.
Operating Expenses Operating expenses for the year-ended December 31, 2023 totaled $3,877 million, or 29.2% of revenue, compared to $3,723 million, or 28.2% of revenue, for the year-ended December 31, 2022. • Research and development Research and development (R&D) costs primarily consist of engineer salaries and wages (including share based compensation and other variable compensation), engineering related costs (including outside services, fixed-asset, IP and other licenses related costs), shared service center costs and other pre-production related expenses.
Gross Profit Gross profit for the year ended December 31, 2024 was $7,119 million, or 56.4% of revenue, compared to $7,553 million, or 56.9% of revenue, relatively consistent with revenue and costs, both of which had comparable decreases year on year, with 2024 experiencing a slightly lower year on year utilization. 38 Operating Expenses Operating expenses for the year ended December 31, 2024 totaled $3,647 million, or 28.9% of revenue, compared to $3,877 million, or 29.2% of revenue, for the year ended December 31, 2023. • Research and development Research and development (R&D) costs primarily consist of engineer salaries and wages (including share based compensation and other variable compensation), engineering related costs (including outside services, fixed-asset, IP and other licenses related costs), shared service center costs and other pre-production related expenses.
When aggregating all end markets together, and reviewing sales channel performance, NXP’s third party distribution partners was $2,078 million, an increase of $202 million or 10.8% versus the year ago period. Business transacted through direct OEM and EMS customers was $1,310 million, a decrease of $87 million or 6.2% versus the year ago period.
When aggregating all end markets and reviewing sales channel performance, revenue through NXP’s third party distribution partners was $7,203 million, consistent with the year ago period with an increase of $8 million or 0.1%. Revenue through direct OEM and EMS customers was $5,291 million, a decrease of $672 million or 11.3% versus the year ago period.
When aggregating all end markets together and reviewing sales channel performance, revenues through NXP’s third party distribution partners was $2,078 million, an increase of $131 million or 6.7% compared to the previous period. Revenues through NXP’s third party direct OEM and EMS customers was $1,310 million, a decline of $153 million or 10.5% versus the previous period.
When aggregating all end markets together and reviewing sales channel performance, revenue through NXP’s third party distribution partners was $1,763 million, a decrease of $134 million or 7.1% compared to the previous period. Revenue through NXP’s third party direct OEM and EMS customers was $1,321 million, consistent with the previous period.
Within the Automotive end market our processor, advanced analog and connectivity products contributed to the growth, with offsets in our ADAS – Safety products. Revenue in the Industrial & IoT end market was $2,351 million, a decrease of $362 million or 13.3% versus the year ago period.
Revenue in the Industrial & IoT end market was $2,269 million, a decrease of $82 million or 3.5% versus the year ago period, with processor products contributing to the decline partly offset with growth in advanced analog and connectivity products.
From a geographic perspective, revenue increased across the China and the Americas regions. Offsetting the positive growth trends, were declines in revenues in the EMEA and the Asia Pacific regions.
From a geographic perspective, revenue increased in the Asia Pacific and China regions, partly offset by declines in the EMEA and the Americas regions.
Summarized Statements of Income ($ in millions) December 31, 2023 Revenue 8,064 Gross Profit 4,075 Operating income 1,508 Net income 715 45 Summarized Balance Sheets As of ($ in millions) December 31, 2023 Current assets 4,298 Non-current assets 11,773 Total assets 16,071 Current liabilities 2,005 Non-current liabilities 10,566 Total liabilities 12,571 Obligor's Group equity 3,500 Total liabilities and Obligor's Group equity 16,071 NXP Semiconductors N.V. is the head of a fiscal unity for the corporate income tax and VAT that contains the most significant Dutch wholly-owned group companies.
Summarized Statements of Income ($ in millions) December 31, 2024 Revenue 7,207 Gross Profit 3,547 Operating income 1,129 Net income 310 Summarized Balance Sheets As of ($ in millions) December 31, 2024 Current assets 3,273 Non-current assets 12,191 Total assets 15,464 Current liabilities 1,244 Non-current liabilities 10,967 Total liabilities 12,211 Obligor's Group equity 3,253 Total liabilities and Obligor's Group equity 15,464 NXP Semiconductors N.V. is the head of a fiscal unity for the corporate income tax and VAT that contains the most significant Dutch wholly-owned group companies.
For sales where return rights exist, the Company has determined, based on historical data, that only a small percentage of the sales of this type to distributors is actually returned.
For sales where return rights exist, the Company has determined, based on historical data, that only a small percentage of the sales of this type to distributors is actually returned. Sales to most distributors are made under programs common in the semiconductor industry whereby distributors receive certain price adjustments to meet individual competitive opportunities.
The assumptions and estimates used to determine future values and remaining useful lives of our intangible and other long-lived assets are complex and subjective. They can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for specific product lines.
Future values include estimates of future cash flows and estimates of fair value. These assumptions and estimates can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for specific product lines.
Our management bases its estimates and judgments on historical experience, current economic and industry conditions and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
GAAP requires our management to make judgments, assumptions and estimates that affect the amounts reported in our Consolidated Financial Statements and the accompanying notes. Our management bases its estimates and judgments on historical experience, current economic and industry conditions and on various other factors that are believed to be reasonable under the circumstances.
Revenues through direct OEM and EMS customers was $5,963 million, an increase of 3.3% versus the year ago period. From a geographic perspective, revenue increased in the EMEA and Americas regions and declined in the China and Asia Pacific regions versus the year ago period.
From a geographic perspective, revenue increased in the China region and declined in the EMEA, Americas, and Asia Pacific regions versus the year ago period.
Our ability to make scheduled payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions.
Any such transaction could require significant use of our cash and cash equivalents, or require us to arrange for new debt and equity financing to fund the transaction. Our ability to make scheduled payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions.
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 December 31, 2023, the Company had purchase commitments of $4,184 million, of which $1,026 million is expected to be paid in the next 12 months.
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.
The methods, estimates, and judgments that we use in applying our accounting policies have a significant impact on the results that we report in our Consolidated Financial Statements. Some of our accounting policies 46 require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain.
Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain and based on information available when the estimates were made. In the following section, we discuss our most critical accounting estimates and the judgments involved.
This allowance is determined for groups of products based on sales of our products in the recent past and/or expected future demand. Future demand is affected by market conditions, technological obsolescence, new products and strategic plans, each of which is subject to change with little or no forewarning. In estimating obsolescence, we utilize information that includes projecting future demand.
Future demand is affected by market conditions, technological obsolescence, new products and strategic plans, each of which is subject to change with little or no forewarning.
The Company had a net debt position (see section Use of Certain Non-GAAP Financial Measures) at December 31, 2023 of $6,904 million compared to $7,320 million as of December 31, 2022. 40 Additional capital requirements We believe our current positions in cash and cash equivalents and short-term deposits, together with our expected cash flow generated from operations and our expected financing activities will satisfy our working and other capital requirements for at least the next 12 months based on our current business plans.
Additional capital requirements We believe our current positions in cash and cash equivalents, together with our expected cash flow generated from operations and our expected financing activities will satisfy our working and other capital requirements for at least the next 12 months based on our current business plans.
Actual cash flow amounts for future periods may differ from estimates used in impairment testing. We perform our annual impairment test for goodwill in the fourth quarter of each fiscal year.
Actual cash flow amounts for future periods may differ from estimates used in impairment testing.
Capital return The common stock repurchase activity was as follows: ($ in millions, unless otherwise stated) 2023 2022 Shares repurchased 5,460,135 8,330,021 Cost of shares repurchased 1,049 1,429 Average price per share $192.16 $171.59 Under Dutch corporate law and our articles of association, NXP may acquire its own shares if the general meeting of shareholders has granted the board of directors the authority to effect such acquisitions.
On February 11, 2025, we have provided notice to EIB that we will fully draw the remaining amounts under the EIB facility agreements, drawing on February 25, 2025, an additional total principal amount of $370 million with a fixed annual interest rate of 4.709% and a maturity of February 2031. 41 Capital return The common stock repurchase activity was as follows: ($ in millions, unless otherwise stated) 2024 2023 Shares repurchased 5,726,770 5,460,135 Cost of shares repurchased 1,373 1,049 Average price per share $239.74 $192.16 Under Dutch corporate law and our articles of association, NXP may acquire its own shares if the general meeting of shareholders has granted the board of directors the authority to effect such acquisitions.
(7) On August 26, 2022, we entered into a $2.5 billion unsecured revolving credit facility agreement. We may from time to time continue to seek to retire or purchase our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise. See the discussion in Part II, Item 7.
We may from time to time continue to seek to retire or purchase our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise.
Impairment losses, if any, are based on the excess of the carrying amount over the fair value of those assets. Long-lived assets to be disposed of by sale are reported at the lower of their carrying amounts or their estimated fair values less costs to sell and are not depreciated.
Long-lived assets to be disposed of by sale are reported at the lower of their carrying amounts or their estimated fair values less costs to sell and are not depreciated. 50 The assumptions and estimates used to determine future values and remaining useful lives of our intangible and other long-lived assets are complex and subjective.
Changes in operating assets and liabilities were primarily driven by a $353 million increase in inventories due to improved supply capabilities, $138 million increase in receivables and other current assets from prepayments to secure production supply with multiple vendors, and $119 million decrease in accounts payable and other liabilities as a result of timing related to payments.
Changes in operating assets and liabilities were primarily driven by a $222 million increase in inventories in order to align inventory on hand with expected demand, $207 million increase in receivables and other current assets due to the related timing of cash collection (driven primarily by distributors), $188 million decrease in accounts payable and other liabilities as a result of timing related to payments and lower purchases, and $306 million increase in other non-current assets due to payments to secure production supply with multiple vendors (driven primarily by payments of $275 million to support the long-term capacity infrastructure of VSMC).
($ in millions, unless otherwise stated) 2023 2022 % change Selling, general and administrative 1,159 $ 1,066 8.7 % As a percentage of revenue 8.7 % 8.1 % 0.6 ppt SG&A costs for the year-ended December 31, 2023 increased by $93 million, or 8.7%, when compared to last year primarily driven by higher personnel-related costs of $60 million (including personnel salaries and wages of $28 million and higher restructuring costs of $28 million, mainly personnel related costs for specific targeted actions under new global programs) and higher legal expenses of $25 million (related to ongoing litigation, including the Impinj Patent Litigation). • Amortization of acquisition-related intangible assets ($ in millions, unless otherwise stated) 2023 2022 % change Amortization of acquisition-related intangible assets 300 509 (41.1) % As a percentage of revenue 2.3 % 3.9 % (1.6) ppt Amortization of acquisition-related intangible assets decreased by $209 million, or 41.1%, when compared to last year mainly as the effect of fully amortized acquisition-related intangibles during 2022 (with regard to the former Freescale acquisition). 37 Other Income (Expense) Other income (expense) includes results from manufacturing service arrangements (“MSA”) and transitional service arrangements (“TSA”) that are put into place when we divest a business or activity, as well as other activity.
($ in millions, unless otherwise stated) 2024 2023 % change Selling, general and administrative 1,164 $ 1,159 0.4 % As a percentage of revenue 9.2 % 8.7 % 0.5 ppt SG&A costs for the year ended December 31, 2024 remained relatively flat, an increase of $5 million, or 0.4%, when compared to last year primarily driven by higher personnel salaries and wages, including social securities of $32 million, higher share-based compensation costs of $23 million and higher restructuring costs for specific targeted actions under global restructuring programs of $11 million, offset by lower bonus of $43 million and lower legal expenses of $26 million. • Amortization of acquisition-related intangible assets ($ in millions, unless otherwise stated) 2024 2023 % change Amortization of acquisition-related intangible assets 136 300 (54.7) % As a percentage of revenue 1.1 % 2.3 % (1.2) ppt Amortization of acquisition-related intangible assets decreased by $164 million, or 54.7%, when compared to last year mainly from the effect of certain acquisition-related intangibles becoming fully amortized (with regard to the previous Marvell and Freescale acquisitions).
Financial Income (Expense) ($ in millions) For the years ended December 31, 2023 2022 Interest income 187 61 Interest expense (438) (427) Extinguishment of debt — (18) Total other financial income (expense) (58) (50) Total (309) (434) Financial income (expense) was an expense of $309 million in 2023, compared to an expense of $434 million in 2022.
Included in 2024 is a $40 million charge for a vacated deposit on an exited technology. 39 Financial Income (Expense) ($ in millions) For the years ended December 31, 2024 2023 Interest income 160 187 Interest expense (398) (438) Total other financial income (expense) (80) (58) Total (318) (309) Financial income (expense) was an expense of $318 million in 2024, compared to an expense of $309 million in 2023.
NXP experienced growth in the Industrial IoT end market of $55 million or 9.1%, Mobile end market of $29 million or 7.7%, and Automotive end market of $8 million or 0.4%. The positive trends were offset by declines in the Communications Infrastructure & Other end market of $104 million or 18.6%.
NXP experienced declines in the Industrial & IoT end market of $47 million or 8.3%, Communication Infrastructure & Other end market of $42 million or 9.3%, Automotive end market of $39 million or 2.1%, and Mobile end market of $11 million or 2.7%.
The change in financial income (expense) is attributable to an increase in interest income of $126 million as a result of higher interest rates and to a lesser extent by a higher level of cash, and no debt extinguishment costs in 2023 (2022: $18 million).
The change in financial income (expense) is attributable to a decrease in interest income of $27 million as a result of lower cash level in 2024, partially offset by higher interest rates. Interest expense decreased by $40 million as a result of redemption of debt.
Outstanding unpaid balances for technology licenses total $159 million as of December 31, 2023, of which $127 million is expected to be paid in the next 12 months. • The Company has committed to invest approximately $550 million in the newly founded European Semiconductor Manufacturing Company (ESMC) GmbH, over the coming five years, of which approximately $83 million is expected to be paid in the next 12 months. • Cash outflows for capital expenditures were $827 million in 2023, compared to $1,063 million in 2022.
Payments for these technology licenses are made over varying time periods. Outstanding unpaid balances for technology licenses total $325 million as of December 31, 2024, of which $85 million is expected to be paid in the next 12 months. • Cash outflows for capital expenditures were $727 million in 2024, compared to $827 million in 2023.
Variable consideration is estimated and includes the impact of discounts, price protection, product returns and distributor incentive programs. The estimate of variable consideration is dependent on a variety of factors, including contractual terms, analysis of historical data, current economic conditions, industry demand and both the current and forecasted pricing environments.
The estimate of variable consideration is dependent on a variety of factors, including contractual terms, analysis of historical data, current economic conditions, industry demand and both the current and forecasted pricing environments. For some sales to distributors, contractual arrangements are in place which allow these distributors to return products if certain conditions are met.
Net cash used for investing activities amounted to $1,249 million for the year-ended December 31, 2022 and principally consisted of the cash outflows for capital expenditures of $1,063 million, $159 million for the purchase of identified intangible assets, $5 million for the purchase of equipment leased to others, $27 million purchases of interests in businesses (net of cash acquired), and $20 million purchase of investments, partly offset 44 by $10 million from proceeds from return of equity investments and $13 million from proceeds from sale of investments. • Cash Flow from Financing Activities Net cash used for financing activities was $1,990 million for the year-ended December 31, 2023.
Net cash used for investing activities amounted to $1,508 million for the year ended December 31, 2023 and principally consisted of the cash outflows for capital expenditures of $827 million, $409 investments in short-term deposits, $(179) million for the purchase of identified intangible assets, and $94 million for the purchase of investments. • Cash Flow from Financing Activities Net cash used for financing activities was $2,662 million for the year ended December 31, 2024.
We expect to maintain similar levels of capital expenditures as a percentage of revenue in 2024, to support current and future manufacturing and production capacity needs. • Our research and development expenditures were $2,418 million in 2023 and $2,148 million in 2022, and we expect to maintain similar levels of investment in research and development as a percentage of revenue in 2024.
We expect to reduce levels of capital expenditures as a percentage of revenue in 2025, given our focus on investments in foundry partners while still supporting current and future manufacturing and production capacity needs. • Our research and development expenditures were $2,347 million in 2024 and $2,418 million in 2023, and we expect to maintain similar levels of investment in research and development as a percentage of revenue in 2025. 43 • The Company has entered into definitive agreements to acquire in cash, Aviva Links ($242.5 million), TTTech Auto ($625 million) and Kinara, Inc.
Changes in operating assets and liabilities were primarily driven by a $593 million increase in inventories due increased production levels in order to align inventory on hand with expected demand, $106 million increase in receivables and other current assets from the accumulation of insignificant increases in numerous asset accounts within the "other" classification, and $633 million increase in accounts payable and other liabilities as a result of the increase of trade accounts payable to meet the increase in growth in our business and timing related to payments. • Cash Flow from Investing Activities Net cash used for investing activities amounted to $1,508 million for the year-ended December 31, 2023 and principally consisted of the cash outflows for capital expenditures of $827 million, $409 investments in short-term deposits, $179 million for the purchase of identified intangible assets, and $94 million for the purchase of investments.
Changes in operating assets and liabilities were primarily driven by a $353 million increase in inventories due to improved supply capabilities, $138 million increase in receivables and other current assets from prepayments to secure production supply with multiple vendors, and $119 million decrease in accounts payable and other liabilities as a result of timing related to payments. • Cash Flow from Investing Activities Net cash used for investing activities amounted to $686 million for the year ended December 31, 2024 and principally consisted of the cash outflows for capital expenditures of $727 million, $149 million for the purchase of identified intangible assets, and $260 million for the purchase of investments (driven primarily by the capital contributions of approximately $80 million into ESMC and approximately $140 million into VSMC); partially offset by the $409 million for the proceeds of short-term deposits and $30 million for the advance payment from sale of property, plant and equipment.
The vast majority of the Company’s revenue is derived from the sale of semiconductor products to distributors, Original Equipment Manufacturers (“OEMs”) and similar customers. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the consideration to which the Company expects to be entitled.
Revenue recognition In determining the transaction price of contracts with customers, the Company evaluates whether the price is subject to refund or adjustment to determine the consideration to which the Company expects to be entitled. Variable consideration is estimated and includes the impact of discounts, price protection, product returns and distributor incentive programs.
We expect operating cash outflows to remain elevated as we make payments under these purchase agreements. • Amounts related to future lease payments for operating lease obligations at December 31, 2023 totaled $299 million, with $64 million expected to be paid within the next 12 months. • The Company enters into certain technology license arrangements which are used in conjunction with research and development activities for product development.
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 $14,242 million that is expected to be purchased over 37 years once wafer production starts. • Amounts related to future lease payments for operating lease obligations at December 31, 2024 totaled $321 million, with $62 million expected to be paid within the next 12 months. • The Company enters into certain technology license arrangements which are used in conjunction with research and development activities for product development.
Revenue in the Communication Infrastructure & Other end market was $2,114 million, an increase of $108 million or 5.4% versus the year ago period.
Revenue in the Communication Infrastructure & Other end market was $1,697 million, a decrease of $417 million or 19.7% versus the year ago period, with the entire product portfolio contributing the decline.
Within the Industrial & IoT end market the year-to-date decline was across the entire product portfolio. Revenue in the Mobile end market was $1,327 million, a decrease of $280 million or 17.4% versus the year ago period. Within the Mobile end market revenue our advanced analog and mobile wallet products caused the decline.
Revenue in the Automotive end market was $7,151 million, a decrease of $333 million or 4.4% versus the year ago period, with processor and connectivity products contributing to the decline partly offset with growth in advanced analog and ADAS – Safety products.
Results of Operations The following table presents the composition of operating income for the years ended December 31, 2023 and December 31, 2022.
Operating cash flows for the three months ended December 31, 2024 was $391 million compared to $779 million for the three months ended September 29, 2024, a decrease of $388 million or 50.2% quarter-on-quarter. 36 Results of Operations The following table presents the composition of operating income for the years ended December 31, 2024 and December 31, 2023.
These arrangements are expected to decrease as the divested business or activity becomes more established. Other income (expense) reflects a loss of $15 million for 2023, compared to an income of $3 million in 2022.
Other income (expense) reflects a loss of $55 million for 2024, compared to a loss of $15 million in 2023.
Our gross profit percentage for 2023 and 2022 remained flat at 56.9%, as both revenue and cost of revenue were impacted by inflationary effect of increased input costs which were passed along to end customers. We continue to generate strong operating cash flows, with $3,513 million in cash flows from operations for 2023.
Our gross profit percentage for 2024 of 56.4% decreased when compared to 2023 (56.9%), reflecting a lower decline of cost of revenue compared with the decreased revenue. We continue to generate strong operating cash flows, with $2,782 million in cash flows from operations for 2024.
Overview Revenue for the year-ended ended December 31, 2023 was $13,276 million compared to $13,205 million for the year-ended December 31, 2022, an increase of $71 million or 0.5% year-on-year.
Subject to customary closing conditions, including regulatory approvals, the transaction is expected to close in the first half of 2025. 34 Revenue for the year ended December 31, 2024 was $12,614 million compared to $13,276 million for the year ended December 31, 2023, a decrease of $662 million or 5.0% year-on-year.
From time to time, we engage in discussions with third parties regarding potential acquisitions of, or investments in, businesses, technologies and product lines. Any such transaction could require significant use of our cash and cash equivalents and short term deposits, or require us to arrange for new debt and equity financing to fund the transaction.
($307 million), which are respectively expected to be paid within the next 12 months. From time to time, we engage in discussions with third parties regarding potential acquisitions of, or investments in, businesses, technologies and product lines.
From an end market perspective, NXP experienced growth in its Automotive and Communication Infrastructure & Other end markets which were offset by declines in the Industrial IoT and the Mobile end markets versus the year ago period. Revenue in the Automotive end market was $7,484 million, an increase of $605 million or 8.8% versus the year ago period.
Revenue in the Mobile end market was $1,497 million, an increase of $170 million or 12.8% versus the year ago period, with mobile wallet products contributing to the growth.
Net debt is a non-GAAP financial measure and represents total debt (short-term and long-term) after deduction of cash and cash equivalents and short-term deposits.
We believe that free cash flow provides insight into our cash-generating capability and our financial performance, and is an efficient means by which users of our financial statements can evaluate our cash flow after meeting our capital expenditure. Net debt Net debt represents total debt (short-term and long-term) after deduction of cash and cash equivalents and short-term deposits.
In the following section, we discuss these policies further, as well as the estimates and judgments involved. Inventories Inventories are valued at the lower of cost or net realizable value. We regularly review our inventories and write down our inventories for estimated losses due to obsolescence.
Inventories We regularly review our inventories and write down our inventories for estimated losses due to obsolescence. This allowance is determined for groups of products based on sales of our products in the recent past and/or projected future demand.
Removed
Q4 2023 compared to Q3 2023 Revenue for the three months ended December 31, 2023 was $3,422 million compared to $3,434 million for the three months ended October 1, 2023, a decrease of $12 million or 0.3% quarter-on-quarter.
Added
Overview Year in Focus • Revenue was $12.6 billion, down 5.0% year-on-year; • GAAP gross margin was 56.4%, and GAAP operating margin was 27.1%; • Non-GAAP gross margin was 58.1%, and non-GAAP operating margin was 34.6%; • Cash flow from operations was $2,782 million, with net capital expenditures on property, plant and equipment of $693 million, resulting in non-GAAP free cash flow of $2,089 million; and • During 2024, NXP returned capital to shareholders with the payment of $1,038 million in cash dividends and the repurchase of $1,373 million of its common shares, for a total capital return of $2,411 million.
Removed
Operating cash flows for the three months ended December 31, 2023 was $1,137 million compared to $988 million for the three months ended October 1, 2023, an increase of $149 million or 15.1% quarter-on-quarter. Under the financing section of the cash flow, there was a $409 million investment in short-term deposit that was made in the fourth quarter of 2023.
Added
On January 9, 2024, NXP acquired shares in the newly founded European Semiconductor Manufacturing Company GmbH (ESMC), which will build and operate a new 300mm semiconductor wafer manufacturing facility in Dresden, Germany. ESMC is 70% owned by TSMC, with Bosch, Infineon, and NXP each owning 10%.
Removed
Q4 2023 compared to Q4 2022 Revenue for the three months ended December 31, 2023 was $3,422 million compared to $3,312 million for the three months ended December 31, 2022, an increase of $110 million or 3.3% versus the year ago period.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWhen the fair value of a derivative contract is positive, the counterparty owes us, thus creating a receivable risk for us. We are exposed to counterparty credit risk in the event of non-performance by counterparties to our derivative agreements. We minimize counterparty credit (or repayment) risk by entering into transactions with major financial institutions of investment grade credit rating.
Biggest changeWhen the fair value of a derivative contract is positive, the counterparty owes us, thus creating a receivable risk for us. We are exposed to counterparty 51 credit risk in the event of non-performance by counterparties to our derivative agreements. We minimize counterparty credit (or repayment) risk by entering into transactions with major financial institutions of investment grade credit rating.
The Company measures all derivative financial instruments based on fair values derived from market 51 prices of the instruments or from option pricing models, as appropriate and record these as assets or liabilities in the balance sheet. Changes in the fair values are recognized in the statement of operations immediately unless cash flow hedge accounting is applied.
The Company measures all derivative financial instruments based on fair values derived from market prices of the instruments or from option pricing models, as appropriate and record these as assets or liabilities in the balance sheet. Changes in the fair values are recognized in the statement of operations immediately unless cash flow hedge accounting is applied.
At December 31, 2023 our net asset related to foreign currency forward contracts designated as hedges of foreign currency risk on certain operating expenditure transactions was $3 million.
At December 31, 2024 our net asset related to foreign currency forward contracts designated as hedges of foreign currency risk on certain operating expenditure transactions was $3 million.

Other NXPI 10-K year-over-year comparisons