NXP Semiconductors NXPI · USD

Segments and Geographical Information NXP has one reportable segment representing the entity as a whole, aligning with our organizational structure and with the way our chief operating decision maker ("CODM"), who is our Chief Executive Officer, makes operating decisions, allocates resources, and manages the growth and profitability of the Company.Our CODM regularly reviews income and expense items at the consolidated company (reporting segment) level and uses net income to evaluate income generated from total assets to evaluate whether and how to reinvest profits into the entity’s operations, shareholder return, acquisitions or otherwise. Net income is also used to monitor budget versus actual results, forecasted information and in competitive analysis. These income and expense items are as included on the statements of operations and in our notes to the financial statements. Geographical InformationRevenue attributed to geographic areas is based on the location where the sale originated. 1)Revenue 202520242023United States3,221 3,309 3,281 Germany2,369 2,435 2,917 China 2)2,036 1,921 1,765 Japan1,059 1,229 1,172 South Korea889 925 1,089 Taiwan874 833 735 Singapore714 758 861 Netherlands83 52 47 Other countries1,024 1,152 1,409 12,269 12,614 13,276 1) As of December 31, 2025, and applied retrospectively for all the periods presented, the Company revised its methodology for attributing revenue to geographic areas to reflect the location where sales originate, which represents where critical commercial decisions are made. This may differ from the customer's shipped-to location. The change in reporting basis was made to more appropriately reflect how we manage our business. For 2025, the largest impacts from the change were to the United States, Germany, and China, which reflected changes of approximately 174.4%, 135.7%, and (57.0)%, respectively.2) China includes Mainland China and Hong KongLong-lived assets include property, plant and equipment, net, which were based on the physical location of the assets as of the end of each year.

Commitments and ContingenciesPurchase Commitments The Company maintains purchase commitments with certain suppliers, primarily for raw materials, semi-finished goods and manufacturing services and for some non-production items. Purchase commitments for inventory materials are generally restricted to a forecasted time-horizon as mutually agreed upon between the parties. This forecasted time horizon can vary for different suppliers. As of December 31, 2025, other than commitments directly with our foundry joint ventures, the Company had purchase commitments of $3,087 million, which are due through 2044. Foundry Joint Venture CommitmentsDriven by our investment in VSMC, NXP has committed to invest an additional $969 million in equity through 2027. NXP has committed to contribute an additional $345 million to support the long-term capacity infrastructure that is expected to be paid through 2026. In addition, NXP has an agreed purchase commitment with VSMC that over the lifetime of the factory the minimal loading will be between 80% - 90%, resulting in a total purchase commitment of approximately $14,096 million that is expected to be purchased over 37 years once wafer production starts.Related to our investment in ESMC, NXP has committed to invest an additional $404 million in equity through 2029.Legal Proceedings We are regularly involved as plaintiffs or defendants in claims and litigation relating to a variety of matters such as contractual disputes, personal injury claims, employee grievances and intellectual property litigation. In addition, our acquisitions, divestments and financial transactions sometimes result in, or are followed by, claims or litigation. Some of these claims may possibly be recovered from insurance reimbursements. Although the ultimate disposition of asserted claims cannot be predicted with certainty, it is our belief that the outcome of any such claims, either individually or on a combined basis, will not have a material adverse effect on our consolidated financial position. However, such outcomes may be material to our consolidated statement of operations for a particular period. The Company records an accrual for any claim that arises whenever it considers that it is probable that it is exposed to a loss contingency, and the amount of the loss contingency can be reasonably estimated. The Company does not record a gain contingency until the period in which all contingencies are resolved, and the gain is realized or realizable.

DebtCommercial PaperWe have a $2 billion Commercial Paper Program to support general corporate purposes. As of December 31, 2025, we had no commercial paper notes outstanding.Long-term debtThe following table summarizes the outstanding long-term debt as of December 31, 2025, and 2024: 20252024MaturitiesAmountInterest rateAmountInterest rateFixed-rate 2.7% senior unsecured notesMay, 2025— 2.700 500 2.700 Fixed-rate 5.35% senior unsecured notesMar, 2026500 5.350 500 5.350 Fixed-rate 3.875% senior unsecured notesJun, 2026750 3.875 750 3.875 Fixed-rate 3.15% senior unsecured notesMay, 2027500 3.150 500 3.150 Fixed-rate 4.40% senior unsecured notesJun, 2027500 4.400 500 4.400 Fixed-rate 4.30% senior unsecured notesAug, 2028500 4.300 — — Fixed-rate 5.55% senior unsecured notesDec, 2028500 5.550 500 5.550 Fixed-rate 4.3% senior unsecured notesJun, 20291,000 4.300 1,000 4.300 Fixed-rate 3.4% senior unsecured notesMay, 20301,000 3.400 1,000 3.400 Fixed-rate 2.5% senior unsecured notesMay, 20311,000 2.500 1,000 2.500 Fixed-rate 2.65% senior unsecured notesFeb, 20321,000 2.650 1,000 2.650 Fixed-rate 4.85% senior unsecured notesAug, 2032300 4.850 — — Fixed-rate 5.0% senior unsecured notesJan, 20331,000 5.000 1,000 5.000 Fixed-rate 5.25% senior unsecured notesAug, 2035700 5.250 — — Fixed-rate 3.25% senior unsecured notesMay, 20411,000 3.250 1,000 3.250 Fixed-rate 3.125% senior unsecured notesFeb, 2042500 3.125 500 3.125 Fixed-rate 3.25% senior unsecured notesNov, 2051500 3.250 500 3.250 Floating-rate revolving credit facility (RCF)Aug, 2027— — — — Fixed-rate 4.45% EIB Facility A LoanDec, 2030670 4.450 670 4.450 Fixed-rate 4.709% EIB Facility B LoanFeb, 2031370 4.709— — Total principal12,290 10,920 Unamortized discounts, premiums and debt issuance costs(68)(66)Total debt, including unamortized discounts, premiums, debt issuance costs and fair value adjustments12,222 10,854 Current portion of long-term debt(1,250)(500)Long-term debt10,972 10,354 Range of interest ratesAverage rate of interestPrincipal amount outstanding 2025Due in 2026Due after 2026Due after 2030Average remaining term (in years)Principal amount outstanding 2024USD notes2.50%-5.55%3.9 %11,250 1,250 10,000 6,000 6.810,250 Revolving Credit Facility (RCF) (1)— %— %— — — — 0— Bank borrowings4.45%-4.71%4.5 %1,040 — 1,040 370 5.0670 3.9 %12,290 1,250 11,040 6,370 6.610,920 (1)We do not have any borrowings under the $2,500 million RCF as of December 31, 2025.

Income TaxesIn 2025, NXP generated income before income taxes of $2,663 million (2024: income of $3,099 million; 2023: income of $3,352 million). The components of income (loss) before income taxes are as follows: Income (or loss) from continuing operations before income tax expense (or benefit)202520242023Domestic1,263 1,444 1,398 Foreign1,400 1,655 1,954 2,663 3,099 3,352 The components of income tax benefit (expense) are as follows:Income tax expense (or benefit) from continuing operations202520242023Current taxes:Domestic(232)(305)(271)Foreign(301)(512)(519)(533)(817)(790)Deferred taxes:Domestic(17)6 4 Foreign25 266 263 8 272 267 Total benefit (expense) for income taxes(525)(545)(523)NXP Semiconductors N.V. is domiciled in the Netherlands and therefore the federal statutory corporate income tax rate of 25.8% of the Netherlands as a percentage of income (loss) before income taxes is used as the starting point of the effective income tax rate reconciliation and is as follows:202520242023$%$%$%Statutory income tax rate in the Netherlands687 25.8 800 25.8 865 25.8 Foreign tax effectsUnited StatesStatutory tax rate difference between United States and the Netherlands(34)(1.3)(52)(1.7)(66)(2.0) R&D tax credits(47)(1.8)(59)(1.9)(66)(2.0) Foreign-derived intangible income(67)(2.5)(127)(4.1)(148)(4.4) Other20 0.8 10 0.3 7 0.2 Taiwan25 0.9 ****Other foreign jurisdictions16 0.6 27 0.9 9 0.3 Effect of Cross-border Tax Laws16 0.6 23 0.7 — — Tax Credits(8)(0.3)(8)(0.3)(7)(0.2)Changes in Valuation Allowances1 — (2)(0.1)(2)(0.1)Nontaxable or Nondeductible ItemsNetherlands tax incentive(99)(3.7)(113)(3.6)(112)(3.3)Other13 0.5 19 0.6 15 0.4 Changes in Unrecognized Tax Benefits7 0.3 28 0.9 28 0.8 Other Adjustments(5)(0.2)(1)— 1 0.1 Effective Tax Rate525 19.7 545 17.6 523 15.6 * The amount of the individual reconciling item during the year does not meet the 5% disaggregation threshold and is included in "Other foreign jurisdictions".The effective income tax rate for 2025 was 19.7% compared to 17.6% for 2024. The increase was primarily driven by a different mix of income tax expense across our operating jurisdictions, as well as lower U.S. and NL tax incentives in 2025 due to a decrease in qualifying income and R&D expenses. In addition, the One Big Beautiful Bill Act was enacted in the U.S., which reduced the amount of claimable R&D tax credits.

Share-based CompensationShare-based compensation expense is included in the following line items in our statement of operations: 202520242023Cost of revenue59 59 54 Research and development237 234 211 Selling, general and administrative166 168 146 462 461 411 The income tax (expense) benefit recognized in net income related to share-based compensation expenses was $36 million (includes $5 million of excess tax benefits), $46 million (includes $15 million of excess tax benefits) and $36 million (includes $9 million of excess tax benefits) for the years ended December 31, 2025, 2024 and 2023, respectively.Long Term Incentive Plan (LTIP) The LTIP was introduced in 2010 and is a broad-based long-term retention program to attract, retain and motivate talented employees as well as align stockholder and employee interests. The LTIP provides share-based compensation (“awards”) to both our eligible employees and non-employee directors. Awards that may be granted include performance shares, stock options and restricted shares. Awards granted generally will become fully vested upon a termination event occurring within one year following a change in control, as defined. A termination event is defined as either termination of employment or services other than for cause or constructive termination resulting from a significant reduction in either the nature or scope of duties and responsibilities, a reduction in compensation or a required relocation. The number of shares authorized and available for awards at December 31, 2025, was 14.4 million. A charge of $450 million was recorded in 2025 for the LTIP (2024: $448 million; 2023: $398 million).A summary of the activity for our LTIP during 2025 is presented below.Stock options At December 31, 2025, there were no (2024: none) unrecognized compensation cost related to non-vested stock options.Stock optionsWeighted averageexerciseprice in USDWeighted averageremainingcontractual termAggregate intrinsicvalueOutstanding at January 1, 2025143,867 74.01 Exercised126,121 73.74 Forfeited2,370 73.00 Outstanding at December 31,202515,376 76.31 0.12 Exercisable at December 31,202515,376 76.31 0.12 No options were granted in 2025, 2024 and 2023.The intrinsic value of the exercised options was $18 million (2024: $21 million; 2023: $13 million), whereas the amount received by NXP was $9 million (2024: $7 million; 2023: $5 million).

LeasesOperating and finance lease assets relate to buildings (corporate offices, research and development and manufacturing facilities and datacenters), land, machinery and installations and other equipment (vehicles and certain office equipment). These leases, except for land leases, have remaining lease terms of 1 to 16 years (land leases 3 to 73 years), some of which may include options to extend the leases for up to 6 years, and some of which may include options to terminate the leases within 1 year. As of December 31, 2025, assets recorded under finance leases amounted to $92 million and accumulated depreciation associated with finance leases was $28 million (December 31, 2024: $82 million and $25 million, respectively). Finance lease liabilities amounted to $15 million as of December 31, 2025 (December 31, 2024: $17 million).Operating lease expense for each year was as follows:202520242023Operating lease cost66 66 68 Supplemental cash flows information related to operating lease as follow:Operating cash flows from operating leases64 64 66 Right-of-use assets obtained in exchange for lease obligations28 78 55 Weighted average remaining lease term7 years7 years6 yearsWeighted average discount rate4 %4 %4 %Future minimum lease payments for operating leases as of December 31, 2025, were as follows:As ofDecember 31, 2025202669 202758 202851 202938 203029 Thereafter70 Total future minimum lease payments315 Less: imputed interest41 Total274 Rent expense amounted to $15 million in 2025 compared to $12 million in 2024 and $11 million in 2023 (containing services related to leased assets as well as short-term leases).Lease liabilities related to operating leases are split between current and non-current as follows:As of December 31,20252024Other current liabilities59 52 Other non-current liabilities215 223 Total274 275 Operating lease right-of-use assets are $256 million as of December 31, 2025 (December 31, 2024: $265 million) and are included in other non-current assets in the balance sheets.

Acquisitions and Divestments2025TTTech Auto acquisitionOn June 17, 2025, NXP announced the closing of the acquisition of 100% of TTTech Auto for $766 million in cash ($675 million net of cash acquired). TTTech Auto is a leader in innovating unique safety-critical systems and middleware for software-defined vehicles (SDVs). The TTTech Auto acquisition complements and expands NXP’s system and software offerings in the Automotive and Industrial & IoT end markets.The fair values of the assets acquired, and liabilities assumed in the TTTech Auto acquisition, by major class, were recognized as follows:Cash91 Other assets74 Other liabilities(52)Identified intangible assets347 Goodwill306 Net assets acquired766 The purchase price allocation contains valuations related to certain assets and liabilities as some of the estimates and assumptions are subject to change within the measurement period as additional information becomes available.Goodwill arising from the TTTech Auto acquisition is attributed to the anticipated growth from new product sales, sales to new customers, the assembled workforce, and synergies expected from the combination. The goodwill recognized is non-deductible for income tax purposes.The identified intangible assets assumed were recognized as follows:Fair valueWeighted Average Estimated Useful Life (in Years)Software267 11.5Technology25 11.5Customer relationships50 8.5Order backlog5 3.5Total identified intangible assets347 10.9The income approach was applied to estimate the fair values of the intangible assets acquired. Software, technology, customer relationships, and order backlog were valued using the excess earnings method, which reflects the present values of the projected cash flows that are expected to be generated by the software, technology, customer relationships, and order backlog less charges representing the contribution of other assets to those cash flows.Aviva Links acquisitionOn October 24, 2025, NXP closed the previously announced acquisition of 100% of Aviva Links for $222 million in cash ($202 million net of cash acquired) and $26 million through the settlement of previously held investments in Aviva Links. Aviva Links is a provider of Automotive SerDes Alliance (ASA) compliant in-vehicle connectivity solutions. The Aviva Links acquisition complements and expands NXP’s automotive networking solutions in the Automotive and Industrial & IoT end markets.

Risk Management and StrategyNXP, 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 help strengthen internet security and to implementing measures designed to protect our company against illicit activities, including cyberattacks and malware.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. 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. From time to time, the company engages external cybersecurity assessor and advisors to support risk evaluation, control testing and program maturity benchmarking. 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. 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. 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. These systems are audited by internal and external audit teams.