UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~July 3, 2022~~April 2, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-34841

NXP Semiconductors N.V.

(Exact name of registrant as specified in its charter)


Netherlands						98-1144352
(State or other jurisdiction of incorporation or organization)						(I.R.S. employer identification number)

60 High Tech Campus						5656 AG
Eindhoven
Netherlands
(Address of principal executive offices)						(Zip code)


	+31	40	2729999
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common shares, EUR 0.20 par value	NXPI	The Nasdaq Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of ~~July 22, 2022,~~April 28, 2023, there were ~~262,598,471~~259,742,578 shares of our common stock, €0.20 par value per share, issued and outstanding.

NXP Semiconductors N.V.

Form 10-Q

For the Fiscal Quarter Ended ~~July 3, 2022~~April 2, 2023

TABLE OF CONTENTS


		Page
Part I
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1315
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2322
Item 4.	Controls and Procedures	2322

Part II
Item 1.	Legal Proceedings	2422
Item 1A.	Risk Factors	2523
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2523
Item 5.	Other Information	2523
Item 6.	Exhibits	2724

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

($ in millions, unless otherwise stated)


		For the three months ended		For the six months ended			For the three months ended
		July 3, 2022	July 4, 2021	July 3, 2022	July 4, 2021			April 2, 2023	April 3, 2022
Revenue	Revenue	3,312	2,596	6,448	5,163	Revenue		3,121	3,136
Cost of revenue	Cost of revenue	(1,430)	(1,174)	(2,789)	(2,386)	Cost of revenue		(1,351)	(1,359)
Gross profit	Gross profit	1,882	1,422	3,659	2,777	Gross profit		1,770	1,777
Research and development	Research and development	(542)	(476)	(1,060)	(937)	Research and development		(577)	(518)
Selling, general and administrative	Selling, general and administrative	(265)	(234)	(516)	(456)	Selling, general and administrative		(280)	(251)
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	(134)	(139)	(269)	(319)	Amortization of acquisition-related intangible assets		(85)	(135)
Total operating expenses	Total operating expenses	(941)	(849)	(1,845)	(1,712)	Total operating expenses		(942)	(904)
Other income (expense)	Other income (expense)	2	—	2	—	Other income (expense)		(3)	—
Operating income (loss)	Operating income (loss)	943	573	1,816	1,065	Operating income (loss)		825	873
Financial income (expense):	Financial income (expense):					Financial income (expense):
Extinguishment of debt		(18)	—	(18)	—

Other financial income (expense)	Other financial income (expense)	(110)	(100)	(215)	(187)	Other financial income (expense)		(82)	(105)
Income (loss) before income taxes	Income (loss) before income taxes	815	473	1,583	878	Income (loss) before income taxes		743	768
Benefit (provision) for income taxes	Benefit (provision) for income taxes	(129)	(65)	(243)	(105)	Benefit (provision) for income taxes		(118)	(114)
Results relating to equity-accounted investees	Results relating to equity-accounted investees	(3)	(2)	9	(3)	Results relating to equity-accounted investees		(2)	12
Net income (loss)	Net income (loss)	683	406	1,349	770	Net income (loss)		623	666
Less: Net income (loss) attributable to non-controlling interests	Less: Net income (loss) attributable to non-controlling interests	13	9	22	20	Less: Net income (loss) attributable to non-controlling interests		8	9
Net income (loss) attributable to stockholders	Net income (loss) attributable to stockholders	670	397	1,327	750	Net income (loss) attributable to stockholders		615	657

Earnings per share data:	Earnings per share data:					Earnings per share data:
Net income (loss) per common share attributable to stockholders in $	Net income (loss) per common share attributable to stockholders in $					Net income (loss) per common share attributable to stockholders in $
Basic	Basic	2.55	1.46	5.05	2.73	Basic		2.37	2.50
Diluted	Diluted	2.53	1.42	5.01	2.67	Diluted		2.35	2.48

Weighted average number of shares of common stock outstanding during the period (in thousands):	Weighted average number of shares of common stock outstanding during the period (in thousands):					Weighted average number of shares of common stock outstanding during the period (in thousands):
Basic	Basic	262,579	272,686	262,837	275,145	Basic		259,576	263,089
Diluted	Diluted	264,692	278,735	264,909	281,063	Diluted		261,210	265,109

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

($ in millions, unless otherwise stated)


		For the three months ended		For the six months ended			For the three months ended
		July 3, 2022	July 4, 2021	July 3, 2022	July 4, 2021			April 2, 2023	April 3, 2022
Net income (loss)	Net income (loss)	683	406	1,349	770	Net income (loss)		623	666
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:					Other comprehensive income (loss), net of tax:
Change in fair value cash flow hedges	Change in fair value cash flow hedges	(8)	—	(12)	(14)	Change in fair value cash flow hedges		3	(4)
Change in foreign currency translation adjustment	Change in foreign currency translation adjustment	(69)	9	(87)	(33)	Change in foreign currency translation adjustment		19	(18)
Change in net actuarial gain (loss)		(1)	—	(1)	—

Total other comprehensive income (loss)	Total other comprehensive income (loss)	(78)	9	(100)	(47)	Total other comprehensive income (loss)		22	(22)
Total comprehensive income (loss)	Total comprehensive income (loss)	605	415	1,249	723	Total comprehensive income (loss)		645	644
Less: Comprehensive income (loss) attributable to non-controlling interests	Less: Comprehensive income (loss) attributable to non-controlling interests	13	9	22	20	Less: Comprehensive income (loss) attributable to non-controlling interests		8	9
Total comprehensive income (loss) attributable to stockholders	Total comprehensive income (loss) attributable to stockholders	592	406	1,227	703	Total comprehensive income (loss) attributable to stockholders		637	635

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

($ in millions, unless otherwise stated)


			July 3, 2022	December 31, 2021			April 2, 2023	December 31, 2022
ASSETS	ASSETS				ASSETS
Current assets:	Current assets:				Current assets:
		Cash and cash equivalents	3,545	2,830		Cash and cash equivalents	3,930	3,845
		Accounts receivable, net	996	923		Accounts receivable, net	1,063	960

		Inventories, net	1,462	1,189		Inventories, net	1,977	1,782
		Other current assets	317	286		Other current assets	387	348
Total current assets	Total current assets		6,320	5,228	Total current assets		7,357	6,935
Non-current assets:	Non-current assets:				Non-current assets:
		Other non-current assets	1,848	1,346		Other non-current assets	2,095	1,942
		Property, plant and equipment, net of accumulated depreciation of $4,931 and $4,676	2,914	2,635		Property, plant and equipment, net of accumulated depreciation of $5,350 and $5,214	3,123	3,105
		Identified intangible assets, net of accumulated amortization of $3,111 and $3,021	1,527	1,694		Identified intangible assets, net of accumulated amortization of $1,717 and $1,883	1,208	1,311
		Goodwill	9,930	9,961		Goodwill	9,949	9,943
		Total non-current assets	16,219	15,636		Total non-current assets	16,375	16,301
Total assets	Total assets		22,539	20,864	Total assets		23,732	23,236

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY				LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:				Current liabilities:
		Accounts payable	1,462	1,252		Accounts payable	1,002	1,185

		Restructuring liabilities-current	12	25		Restructuring liabilities-current	27	19
		Other current liabilities	1,467	1,175		Other current liabilities	2,186	2,066
						Short-term debt	998	—
Total current liabilities	Total current liabilities		2,941	2,452	Total current liabilities		4,213	3,270
Non-current liabilities:	Non-current liabilities:				Non-current liabilities:
		Long-term debt	11,160	10,572		Long-term debt	10,169	11,165
		Restructuring liabilities	12	12		Restructuring liabilities	7	1
		Deferred tax liabilities	41	57		Deferred tax liabilities	38	45
		Other non-current liabilities	1,159	1,001		Other non-current liabilities	1,057	1,015
Total non-current liabilities	Total non-current liabilities		12,372	11,642	Total non-current liabilities		11,271	12,226
Total liabilities	Total liabilities		15,313	14,094	Total liabilities		15,484	15,496
Equity:	Equity:				Equity:
		Non-controlling interests	264	242		Non-controlling interests	299	291

		Stockholders’ equity:				Stockholders’ equity:
		Common stock, par value €0.20 per share:	56	56		Common stock, par value €0.20 per share:	56	56
		Capital in excess of par value	13,904	13,727		Capital in excess of par value	14,192	14,091
		Treasury shares, at cost:				Treasury shares, at cost:
		11,924,962 shares (2021: 9,569,359 shares)	(2,424)	(1,932)		14,784,336 shares (2022: 15,056,232 shares)	(2,745)	(2,799)
		Accumulated other comprehensive income (loss)	(52)	48		Accumulated other comprehensive income (loss)	98	76
		Accumulated deficit	(4,522)	(5,371)		Accumulated deficit	(3,652)	(3,975)
		Total stockholders’ equity	6,962	6,528		Total stockholders’ equity	7,949	7,449
Total equity	Total equity		7,226	6,770	Total equity		8,248	7,740
Total liabilities and equity	Total liabilities and equity		22,539	20,864	Total liabilities and equity		23,732	23,236

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

($ in millions, unless otherwise stated)


		For the six months ended			For the three months ended
		July 3, 2022	July 4, 2021		April 2, 2023	April 3, 2022
Cash flows from operating activities:	Cash flows from operating activities:			Cash flows from operating activities:
Net income (loss)	Net income (loss)	1,349	770	Net income (loss)	623	666
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:	Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:			Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization	Depreciation and amortization	627	646	Depreciation and amortization	283	310
Share-based compensation	Share-based compensation	178	184	Share-based compensation	99	89
Amortization of discount (premium) on debt, net	Amortization of discount (premium) on debt, net	1	1	Amortization of discount (premium) on debt, net	1	1
Amortization of debt issuance costs	Amortization of debt issuance costs	3	3	Amortization of debt issuance costs	2	2
Net (gain) loss on sale of assets	Net (gain) loss on sale of assets	(1)	—	Net (gain) loss on sale of assets	—	(1)
(Gain) loss on equity security, net	(Gain) loss on equity security, net	4	2	(Gain) loss on equity security, net	1	(4)
(Gain) loss on extinguishment of debt		18	—

Results relating to equity-accounted investees	Results relating to equity-accounted investees	(9)	3	Results relating to equity-accounted investees	2	(12)
Deferred tax expense (benefit)	Deferred tax expense (benefit)	(98)	12	Deferred tax expense (benefit)	(62)	(33)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:			Changes in operating assets and liabilities:
(Increase) decrease in receivables and other current assets	(Increase) decrease in receivables and other current assets	(111)	(230)	(Increase) decrease in receivables and other current assets	(138)	(61)
(Increase) decrease in inventories	(Increase) decrease in inventories	(273)	(86)	(Increase) decrease in inventories	(196)	(122)
Increase (decrease) in accounts payable and other liabilities	Increase (decrease) in accounts payable and other liabilities	270	124	Increase (decrease) in accounts payable and other liabilities	52	266
Decrease (increase) in other non-current assets	Decrease (increase) in other non-current assets	(288)	(60)	Decrease (increase) in other non-current assets	(33)	(247)
Exchange differences	Exchange differences	(3)	—	Exchange differences	5	—
Other items	Other items	8	(1)	Other items	(7)	2
Net cash provided by (used for) operating activities	Net cash provided by (used for) operating activities	1,675	1,368	Net cash provided by (used for) operating activities	632	856
Cash flows from investing activities:	Cash flows from investing activities:			Cash flows from investing activities:
Purchase of identified intangible assets	Purchase of identified intangible assets	(72)	(72)	Purchase of identified intangible assets	(42)	(43)
Capital expenditures on property, plant and equipment	Capital expenditures on property, plant and equipment	(548)	(300)	Capital expenditures on property, plant and equipment	(251)	(280)
Purchase of equipment leased to others	Purchase of equipment leased to others	(5)	—	Purchase of equipment leased to others	—	(5)

Proceeds from disposals of property, plant and equipment	Proceeds from disposals of property, plant and equipment	1	—	Proceeds from disposals of property, plant and equipment	—	1
Purchase of interests in businesses, net of cash acquired	Purchase of interests in businesses, net of cash acquired	(5)	(1)	Purchase of interests in businesses, net of cash acquired	—	(4)

Purchase of investments	Purchase of investments	(2)	(6)	Purchase of investments	(58)	—
Proceeds from sale of investments		12	8

Proceeds from return of equity investment	Proceeds from return of equity investment	2	1	Proceeds from return of equity investment	—	2
Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	(617)	(370)	Net cash provided by (used for) investing activities	(351)	(329)
Cash flows from financing activities:	Cash flows from financing activities:			Cash flows from financing activities:
Repurchase of long-term debt		(917)	—

Proceeds from the issuance of long-term debt		1,496	2,000

Cash paid for debt issuance costs	Cash paid for debt issuance costs	(13)	(22)	Cash paid for debt issuance costs	—	(1)

Dividends paid to common stockholders	Dividends paid to common stockholders	(371)	(260)	Dividends paid to common stockholders	(219)	(149)
Proceeds from issuance of common stock through stock plans	Proceeds from issuance of common stock through stock plans	28	31	Proceeds from issuance of common stock through stock plans	33	28
Purchase of treasury shares and restricted stock unit withholdings	Purchase of treasury shares and restricted stock unit withholdings	(554)	(2,108)	Purchase of treasury shares and restricted stock unit withholdings	(11)	(552)
Other, net	Other, net	(1)	(1)	Other, net	(1)	—
Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	(332)	(360)	Net cash provided by (used for) financing activities	(198)	(674)
Effect of changes in exchange rates on cash positions	Effect of changes in exchange rates on cash positions	(11)	(3)	Effect of changes in exchange rates on cash positions	2	—
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	715	635	Increase (decrease) in cash and cash equivalents	85	(147)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	2,830	2,275	Cash and cash equivalents at beginning of period	3,845	2,830
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	3,545	2,910	Cash and cash equivalents at end of period	3,930	2,683


Supplemental disclosures to the condensed consolidated cash flows	Supplemental disclosures to the condensed consolidated cash flows			Supplemental disclosures to the condensed consolidated cash flows
Net cash paid during the period for:	Net cash paid during the period for:			Net cash paid during the period for:
Interest	Interest	178	160	Interest	54	45
Income taxes, net of refunds	Income taxes, net of refunds	272	161	Income taxes, net of refunds	294	122
Net gain (loss) on sale of assets:	Net gain (loss) on sale of assets:			Net gain (loss) on sale of assets:
Cash proceeds from the sale of assets	Cash proceeds from the sale of assets	1	—	Cash proceeds from the sale of assets	—	1
Book value of these assets		—	—

Non-cash investing activities:	Non-cash investing activities:			Non-cash investing activities:
Non-cash capital expenditures	Non-cash capital expenditures	243	167	Non-cash capital expenditures	176	246

See accompanying notes to the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

($ in millions, unless otherwise stated)


		Outstanding number of shares (in thousands)	Common stock	Capital in excess of par value	Treasury shares at cost	Accumulated other comprehensive income (loss)	Accumulated deficit	Total stock- holders’ equity	Non- controlling interests	Total equity		Outstanding number of shares (in thousands)	Common stock	Capital in excess of par value	Treasury shares at cost	Accumulated other comprehensive income (loss)	Accumulated deficit	Total stock- holders’ equity	Non- controlling interests	Total equity
Balance as of December 31, 2021		264,950	56	13,727	(1,932)	48	(5,371)	6,528	242	6,770
Balance as of December 31, 2022											Balance as of December 31, 2022	259,463	56	14,091	(2,799)	76	(3,975)	7,449	291	7,740
Net income (loss)	Net income (loss)						657	657	9	666	Net income (loss)						615	615	8	623
Other comprehensive income	Other comprehensive income					(22)		(22)		(22)	Other comprehensive income					22		22		22
Share-based compensation plans	Share-based compensation plans			92				92		92	Share-based compensation plans			101				101		101
Shares issued pursuant to stock awards	Shares issued pursuant to stock awards	256			51		(23)	28		28	Shares issued pursuant to stock awards	309			61		(28)	33		33
Treasury shares repurchased and retired	Treasury shares repurchased and retired	(2,653)			(552)			(552)		(552)	Treasury shares repurchased and retired	(37)			(7)			(7)		(7)
Dividends common stock ($0.8450 per share)							(222)	(222)		(222)
Balance as of April 3, 2022		262,553	56	13,819	(2,433)	26	(4,959)	6,509	251	6,760
Net income (loss)							670	670	13	683
Other comprehensive income						(78)		(78)		(78)
Share-based compensation plans				85				85		85
Shares issued pursuant to stock awards		57			11		(11)	—		—
Treasury shares repurchased and retired		(15)			(2)			(2)		(2)

Dividends common stock ($0.8450 per share)							(222)	(222)		(222)
Balance as of July 3, 2022		262,595	56	13,904	(2,424)	(52)	(4,522)	6,962	264	7,226
Dividends common stock ($1.014 per share)											Dividends common stock ($1.014 per share)						(264)	(264)		(264)
Balance as of April 2, 2023											Balance as of April 2, 2023	259,735	56	14,192	(2,745)	98	(3,652)	7,949	299	8,248


		Outstanding number of shares (in thousands)	Common stock	Capital in excess of par value	Treasury shares at cost	Accumulated other comprehensive income (loss)	Accumulated deficit	Total stock- holders’ equity	Non- controlling interests	Total equity		Outstanding number of shares (in thousands)	Common stock	Capital in excess of par value	Treasury shares at cost	Accumulated other comprehensive income (loss)	Accumulated deficit	Total stock- holders’ equity	Non- controlling interests	Total equity
Balance as of December 31, 2020		280,475	59	14,133	(1,037)	117	(4,328)	8,944	207	9,151
Balance as of December 31, 2021											Balance as of December 31, 2021	264,950	56	13,727	(1,932)	48	(5,371)	6,528	242	6,770
Net income (loss)	Net income (loss)						353	353	11	364	Net income (loss)						657	657	9	666
Other comprehensive income	Other comprehensive income					(56)		(56)		(56)	Other comprehensive income					(22)		(22)		(22)
Share-based compensation plans	Share-based compensation plans			91				91		91	Share-based compensation plans			92				92		92
Shares issued pursuant to stock awards	Shares issued pursuant to stock awards	361			37		(6)	31		31	Shares issued pursuant to stock awards	256			51		(23)	28		28
Treasury shares repurchased and retired	Treasury shares repurchased and retired	(5,087)			(905)			(905)		(905)	Treasury shares repurchased and retired	(2,653)			(552)			(552)		(552)
Dividends common stock ($0.5625 per share)							(155)	(155)		(155)
Balance as of April 4, 2021		275,749	59	14,224	(1,905)	61	(4,136)	8,303	218	8,521
Net income (loss)							397	397	9	406
Other comprehensive income						9		9		9
Share-based compensation plans				88				88		88
Shares issued pursuant to stock awards		64			6		(6)	—		—
Treasury shares repurchased and retired		(6,103)			(1,203)			(1,203)		(1,203)

Dividends common stock ($0.5625 per share)							(152)	(152)		(152)
Balance as of July 4, 2021		269,710	59	14,312	(3,102)	70	(3,897)	7,442	227	7,669
Dividends common stock ($0.8450 per share)											Dividends common stock ($0.8450 per share)						(222)	(222)		(222)
Balance as of April 3, 2022											Balance as of April 3, 2022	262,553	56	13,819	(2,433)	26	(4,959)	6,509	251	6,760

See accompanying notes to the Condensed Consolidated Financial Statements

NXP SEMICONDUCTORS N.V.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

All amounts in millions of $ unless otherwise stated

1 Basis of Presentation and Overview

We prepared our interim condensed consolidated financial statements that accompany these notes in conformity with U.S. generally accepted accounting principles, consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

We have made estimates and judgments affecting the amounts reported in our condensed consolidated financial statements and the accompanying notes. The actual results that we experience may differ materially from our estimates. The interim financial information is unaudited, but reflects all normal adjustments that are, in our opinion, necessary to provide a fair statement of results for the interim periods presented. This interim information should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

2 Significant Accounting Policies and Recent Accounting Pronouncements

Significant Accounting Policies

For a discussion of our significant accounting policies see, “Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – “Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. There have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

New accounting standards not yet adopted

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

Accounting standards recently adopted

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

3 Acquisitions and Divestments

~~2022~~2023

There were no material acquisitions or divestments during the first ~~six~~three months of ~~2022.~~2023.

~~2021~~2022

On July ~~6, 2021,~~19, 2022, we acquired ~~Retune DSP~~PL Sense for a total consideration of ~~$15.7~~$22.1 million, net of closing adjustments. There were no material divestments during 2022.

4 Supplemental Financial Information

Statement of Operations Information:

Disaggregation of revenue

The following table presents revenue disaggregated by sales channel:


		For the three months ended		For the six months ended			For the three months ended
		July 3, 2022	July 4, 2021	July 3, 2022	July 4, 2021			April 2, 2023	April 3, 2022
Distributors	Distributors	1,829	1,518	3,509	2,986	Distributors		1,491	1,680
Original Equipment Manufacturers and Electronic Manufacturing Services	Original Equipment Manufacturers and Electronic Manufacturing Services	1,441	1,040	2,853	2,104	Original Equipment Manufacturers and Electronic Manufacturing Services		1,594	1,412
Other	Other	42	38	86	73	Other		36	44
Total	Total	3,312	2,596	6,448	5,163	Total		3,121	3,136

Depreciation, amortization and impairment


		For the three months ended		For the six months ended			For the three months ended
		July 3, 2022	July 4, 2021	July 3, 2022	July 4, 2021			April 2, 2023	April 3, 2022
Depreciation of property, plant and equipment	Depreciation of property, plant and equipment	149	135	291	267	Depreciation of property, plant and equipment		160	142
Amortization of internal use software	Amortization of internal use software	4	2	6	4	Amortization of internal use software		4	2
Amortization of other identified intangible assets 1)		164	168	330	375
Amortization of other identified intangible assets						Amortization of other identified intangible assets		119	166
Total - Depreciation, amortization and impairment	Total - Depreciation, amortization and impairment	317	305	627	646	Total - Depreciation, amortization and impairment		283	310

1) ~~For the six month period ending July 4, 2021, the amount includes an impairment charge as a result of the discontinuation of an IPR&D project for an amount of $36 million.~~

Financial income and expense


		For the three months ended		For the six months ended			For the three months ended
		July 3, 2022	July 4, 2021	July 3, 2022	July 4, 2021			April 2, 2023	April 3, 2022
Interest income	Interest income	6	1	8	2	Interest income		42	2
Interest expense	Interest expense	(106)	(90)	(210)	(177)	Interest expense		(111)	(104)
Total interest expense, net		(100)	(89)	(202)	(175)
Extinguishment of debt		(18)	—	(18)	—
Foreign exchange rate results		3	(1)	3	—
Miscellaneous financing costs/income and other, net		(13)	(10)	(16)	(12)

Total other financial income/ (expense)	Total other financial income/ (expense)	(28)	(11)	(31)	(12)	Total other financial income/ (expense)		(13)	(3)
Total - Financial income and expenses	Total - Financial income and expenses	(128)	(100)	(233)	(187)	Total - Financial income and expenses		(82)	(105)

Earnings per share

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


		For the three months ended		For the six months ended			For the three months ended
		July 3, 2022	July 4, 2021	July 3, 2022	July 4, 2021			April 2, 2023	April 3, 2022
Net income (loss)	Net income (loss)	683	406	1,349	770	Net income (loss)		623	666
Less: net income (loss) attributable to non-controlling interests	Less: net income (loss) attributable to non-controlling interests	13	9	22	20	Less: net income (loss) attributable to non-controlling interests		8	9
Net income (loss) attributable to stockholders	Net income (loss) attributable to stockholders	670	397	1,327	750	Net income (loss) attributable to stockholders		615	657

Weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	Weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	262,579	272,686	262,837	275,145	Weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)		259,576	263,089
Plus incremental shares from assumed conversion of:	Plus incremental shares from assumed conversion of:					Plus incremental shares from assumed conversion of:
Options 1)	Options 1)	295	394	309	406	Options 1)		206	321
Restricted Share Units, Performance Share Units and Equity Rights 2)	Restricted Share Units, Performance Share Units and Equity Rights 2)	1,818	5,655	1,763	5,512	Restricted Share Units, Performance Share Units and Equity Rights 2)		1,428	1,699
Dilutive potential common shares	Dilutive potential common shares	2,113	6,049	2,072	5,918	Dilutive potential common shares		1,634	2,020

Adjusted weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	Adjusted weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)	264,692	278,735	264,909	281,063	Adjusted weighted average number of shares outstanding (after deduction of treasury shares) during the year (in thousands)		261,210	265,109

EPS attributable to stockholders in $:	EPS attributable to stockholders in $:					EPS attributable to stockholders in $:
Basic net income (loss)	Basic net income (loss)	2.55	1.46	5.05	2.73	Basic net income (loss)		2.37	2.50
Diluted net income (loss)	Diluted net income (loss)	2.53	1.42	5.01	2.67	Diluted net income (loss)		2.35	2.48

1) There were no stock options to purchase shares of NXP’s common stock that were outstanding in ~~Q2 2022 and YTD 2022 (Q2 2021 and YTD 2021:~~Q1 2023 (Q1 2022: no shares) that were anti-dilutive and were not included in the computation of diluted EPS because the exercise price was greater than the average fair market value of the common stock or the number of shares assumed to be repurchased using the proceeds of unrecognized compensation expense and exercise prices were greater than the weighted average number of shares underlying outstanding stock options.

2) There were 0.3 million unvested RSUs, PSUs and equity rights that were outstanding in ~~Q2 2022 and 0.3~~Q1 2023 (Q1 2022: 0.2 million ~~outstanding YTD 2022 (Q2 2021 and YTD 2021: no~~ shares) that were anti-dilutive and were not included in the computation of diluted EPS because the number of shares assumed to be repurchased using the proceeds of unrecognized compensation expense were greater than the weighted average number of outstanding unvested RSUs, PSUs and equity rights or the performance goal has not been met yet.

Balance Sheet Information

Cash and cash equivalents

At ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021,~~2022, our cash balance was ~~$3,545~~$3,930 million and ~~$2,830~~$3,845 million, respectively, of which ~~$193~~$234 million and ~~$208~~$227 million was held by SSMC, our consolidated joint venture company with TSMC. Under the terms of our joint venture agreement with TSMC, a portion of this cash can be distributed by way of a dividend to us, but 38.8% of the dividend will be paid to our joint venture partner. During both first ~~six~~three months of ~~2022~~2023 and ~~2021,~~2022, no dividends were declared by SSMC.

Inventories

The portion of finished goods stored at customer locations under consignment amounted to $8$11 million as of ~~July 3, 2022~~April 2, 2023 (December 31, ~~2021: $12~~2022: $8 million).

Inventories are summarized as follows:


		July 3, 2022	December 31, 2021		April 2, 2023	December 31, 2022
Raw materials	Raw materials	129	107	Raw materials	135	151
Work in process	Work in process	1,083	846	Work in process	1,522	1,308
Finished goods	Finished goods	250	236	Finished goods	320	323
		1,462	1,189		1,977	1,782

The amounts recorded above are net of allowance for obsolescence of ~~$136~~$142 million as of ~~July 3, 2022~~April 2, 2023 (December 31, ~~2021: $120~~2022: $125 million).

Equity Investments

At ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021,~~2022, the total carrying value of investments in equity securities is summarized as follows:


		July 3, 2022	December 31, 2021		April 2, 2023	December 31, 2022
Marketable equity securities	Marketable equity securities	10	18	Marketable equity securities	9	9
Non-marketable equity securities	Non-marketable equity securities	10	19	Non-marketable equity securities	31	18
Equity-accounted investments	Equity-accounted investments	88	75	Equity-accounted investments	103	71
		108	112		143	98

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

July 3, 2022 December 31, 2021
Shareholding % Amount Shareholding % Amount
SMART Growth Fund, L.P.1)
8.41 % 44 8.41 % 31
Others — 44 — 44
88 75
1) Previously named “Wise Road Industry Investment Fund I, L.P.”


	April 2, 2023			December 31, 2022
	Shareholding %		Amount	Shareholding %		Amount
SMART Growth Fund, L.P.	8.41	%	39	8.41	%	38
SigmaSense, LLC	10.64	%	35	—		—
Others	—		29	—		33
			103			71

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


		For the three months ended		For the six months ended			For the three months ended
		July 3, 2022	July 4, 2021	July 3, 2022	July 4, 2021			April 2, 2023	April 3, 2022
Company's share in income (loss)	Company's share in income (loss)	(3)	(2)	8	(3)	Company's share in income (loss)		(2)	11
Other results	Other results	—	—	1	—	Other results		—	1
		(3)	(2)	9	(3)			(2)	12

Other current liabilities

~~Other current liabilities~~

Other current liabilities at ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021~~2022 consisted of the following:


		July 3, 2022	December 31, 2021		April 2, 2023	December 31, 2022
Accrued compensation and benefits	Accrued compensation and benefits	463	476	Accrued compensation and benefits	491	467
Customer programs				Customer programs	614	432
Income taxes payable	Income taxes payable	134	82	Income taxes payable	177	296
Dividend payable	Dividend payable	222	149	Dividend payable	263	219
Other	Other	648	468	Other	641	652
		1,467	1,175		2,186	2,066

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


			December 31, 2022
Accounts payable:
As reported			1,617
Reclassification - customer programs			(432)
Adjusted			1,185

Other current liabilities:
As reported			1,634
Reclassification - customer programs			432
Adjusted			2,066

Accumulated other comprehensive income (loss)

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


		Currency translation differences	Change in fair value cash flow hedges	Net actuarial gain/(losses)	Accumulated Other Comprehensive Income (loss)		Currency translation differences	Change in fair value cash flow hedges	Net actuarial gain/(losses)	Accumulated Other Comprehensive Income (loss)
As of December 31, 2021		207	—	(159)	48
As of December 31, 2022						As of December 31, 2022	135	(1)	(58)	76
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(87)	(24)	(1)	(112)	Other comprehensive income (loss) before reclassifications	19	2	—	21
Amounts reclassified out of accumulated other comprehensive income (loss)	Amounts reclassified out of accumulated other comprehensive income (loss)	—	8	—	8	Amounts reclassified out of accumulated other comprehensive income (loss)	—	2	—	2
Tax effects	Tax effects	—	4	—	4	Tax effects	—	(1)	—	(1)
Other comprehensive income (loss)	Other comprehensive income (loss)	(87)	(12)	(1)	(100)	Other comprehensive income (loss)	19	3	—	22
As of July 3, 2022		120	(12)	(160)	(52)
As of April 2, 2023						As of April 2, 2023	154	2	(58)	98

Cash dividends

The following dividends were declared during the first ~~two~~ quarters of ~~2022~~2023 and ~~2021~~2022 under NXP’s quarterly dividend program:

Fiscal year 2022 Fiscal year 2021
Dividend per share Amount Dividend per share Amount
First quarter 0.845 222 0.5625 155
Second quarter 0.845 222 0.5625 152

Fiscal year 2023

Fiscal year 2022

Dividend per share

Amount

Dividend per share

Amount

First quarter

1.014

263

0.845

222

The dividend declared in the ~~second~~first quarter (not yet paid) is classified in the condensed consolidated balance sheet in other current liabilities as of ~~July 3, 2022~~April 2, 2023 and was subsequently paid on ~~July 6, 2022.~~April 5, 2023.

5 Restructuring

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

The following table presents the changes in restructuring liabilities in ~~2022:~~2023:

As of January 1, 2022 Additions Utilized Released Other
changes As of July 3, 2022
Restructuring liabilities 37 1 (8) (5) (1) 24


	As of January 1, 2023	Additions	Utilized	Released	Other changes	As of April 2, 2023
Restructuring liabilities	20	21	(2)	(3)	(2)	34

The total restructuring liability as of April 2, 2023 of $34 million is classified in the consolidated balance sheet under current liabilities ($27 million) and non-current liabilities ($7 million).

The restructuring charges for the three month period ending April 2, 2023 consist of $21 million for personnel related costs for a new restructuring program, offset by a $3 million release for an earlier program. There were no significant restructuring costs incurred for ~~both six~~the three month ~~periods~~period ended ~~July~~April 3, 2022 ~~and July 4, 2021~~ and the utilization of the restructuring liabilities mainly reflects the execution of ongoing restructuring programs the Company initiated in earlier years.

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


		For the three months ended		For the six months ended			For the three months ended
		July 3, 2022	July 4, 2021	July 3, 2022	July 4, 2021			April 2, 2023	April 3, 2022
Cost of revenue	Cost of revenue	(3)	—	(3)	—	Cost of revenue		(2)	—
Research and development	Research and development	(1)	1	(2)	1	Research and development		14	(1)
Selling, general and administrative	Selling, general and administrative	—	—	—	—	Selling, general and administrative		6	—

Net restructuring charges	Net restructuring charges	(4)	1	(5)	1	Net restructuring charges		18	(1)

6 Income ~~Taxes~~Tax

~~Benefit/provision~~


	For the three months ended
	April 2, 2023		April 3, 2022
Benefit (provision) for income taxes	(118)		(114)
Effective tax rate	15.9	%	14.8	%
Statutory income tax rate in the Netherlands	25.8	%	25.8	%

Beginning with the first quarter of 2023, NXP was in a position to make a reliable estimate of its annual effective tax rate. This estimated annual effective tax rate ("EAETR") is then applied to the year-to-date Income (loss) before income taxes excluding discrete items, to determine the year-to-date benefit (provision) for income ~~taxes:~~

For the three months ended For the six months ended
July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021
Tax expense (benefit) 129 65 243 105
Effective tax rate 15.8 % 13.7 % 15.4 % 12.0 %
taxes. The income tax effects of any discrete items are recognized in the interim period in which they occur. As the year progresses, the Company continually refines the EAETR based upon actual events and the apportionment of our earnings (loss). This continual estimation process periodically may result in a change to our EAETR for the year. When this occurs, we adjust on an accumulated basis the benefit (provision) for income taxes during the quarter in which the change occurs.

Our provision for income taxes for 2023 is based on our EAETR of 17.0%, which is lower than the Netherlands statutory tax rate of 25.8%, primarily due to tax benefits from the Netherlands and foreign tax incentives. The effective tax rate of 15.9% for the first ~~six months~~quarter of 2023 was lower than the EAETR due to the income tax benefit for discrete items of $8 million. The discrete items are primarily related to changes in estimates for previous years and the impact of foreign currency on income tax related items. The effective tax rate of 14.8% for the first quarter of 2022 was ~~$243 million (15.4% effective tax rate)~~lower compared to ~~a provision from income taxes of $105 million (12.0% effective tax rate) for~~ the ~~first six months of 2021. The increase in the income tax expense was~~current period due to higher ~~income before income taxes~~foreign tax incentives as a result of ~~the improved operational performance of the company which was partly offset by~~ an increase in ~~tax incentives~~qualifying investments and also ~~taking into account the effect of specific US tax law that became effective as from 2022. In addition to this, in the first six months of 2021 there were income tax benefits~~ due to ~~changes in estimates~~a different mix of ~~prior positions and a net change in~~ the ~~valuation allowance.~~

~~The Company benefits from income tax incentives in certain jurisdictions which provide that we pay reduced~~benefit (provision) of income taxes in ~~those jurisdictions for a fixed period of time~~the locations that varies depending on the jurisdiction. The predominant income tax holiday is expected to expire at the end of 2026. The impact of this tax holiday decreased foreign income taxes for the second quarter of 2022 by $4 million and decreased by $3 million for the second quarter 2021 (YTD 2022: a decrease of $7 million and YTD 2021: a decrease of $7 million). The benefit of this tax holiday on net income per share (diluted) was $0.02 for the second quarter of 2022 (YTD 2022: $0.03) and $0.02 for the second quarter of 2021 (YTD 2021: $0.03).we operate in.

7 Identified Intangible Assets

Identified intangible assets as of ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021,~~2022, respectively, were composed of the following:


		July 3, 2022		December 31, 2021			April 2, 2023		December 31, 2022
		Gross carrying amount	Accumulated amortization	Gross carrying amount	Accumulated amortization		Gross carrying amount	Accumulated amortization	Gross carrying amount	Accumulated amortization
In-process R&D (IPR&D) 1)	In-process R&D (IPR&D) 1)	53	—	96	—	In-process R&D (IPR&D) 1)	70	—	70	—
Marketing-related		—	—	81	(81)

Customer-related	Customer-related	849	(345)	852	(325)	Customer-related	788	(318)	788	(307)
Technology-based	Technology-based	3,736	(2,766)	3,686	(2,615)	Technology-based	2,067	(1,399)	2,336	(1,576)
Identified intangible assets	Identified intangible assets	4,638	(3,111)	4,715	(3,021)	Identified intangible assets	2,925	(1,717)	3,194	(1,883)

1) IPR&D is not subject to amortization until completion or abandonment of the associated research and development effort.	1) IPR&D is not subject to amortization until completion or abandonment of the associated research and development effort.					1) IPR&D is not subject to amortization until completion or abandonment of the associated research and development effort.

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


2022 (remaining)		308
2023		436
2023 (remaining)			2023 (remaining)	329
2024	2024	251	2024	281
2025	2025	133	2025	160
2026	2026	69	2026	82
2027			2027	61
Thereafter	Thereafter	330	Thereafter	295

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

The expected weighted average remaining life of identified intangibles is 4 years as of ~~July 3, 2022~~April 2, 2023 (December 31, ~~2021:~~2022: 4 years).

1011

8 Debt

~~Exchange Offers~~

On April 14, 2022, we initiated a registered exchange offering of our outstanding Senior Unsecured Notes (the “Notes”) for new issues of substantially identical registered debt securities (the “Exchange Offers”). The Exchange Offers expired on May 16, 2022, at which time substantially all of the Notes were exchanged for registered senior unsecured notes with the U.S. Securities and Exchange Commission.

~~Debt Issuance and redemption~~

On May 16, 2022, NXP B.V., together with NXP Funding LLC and NXP USA, Inc., issued $500 million of 4.4% senior unsecured notes due June 1, 2027 and $1 billion of 5.0% senior unsecured notes due January 15, 2033.

~~On May 27, 2022 we redeemed the $900 million aggregate principal amount of outstanding dollar-denominated 4.625% Senior Unsecured Notes due 2023 in accordance with the terms of the indenture.~~

The following table summarizes the outstanding debt as of ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021:~~2022:


			July 3, 2022		December 31, 2021				April 2, 2023		December 31, 2022
		Maturities	Amount	Interest rate	Amount	Interest rate		Maturities	Amount	Interest rate	Amount	Interest rate
Fixed-rate 4.625% senior unsecured notes		Jun, 2023	—	4.625	900	4.625
Fixed-rate 4.875% senior unsecured notes	Fixed-rate 4.875% senior unsecured notes	Mar, 2024	1,000	4.875	1,000	4.875	Fixed-rate 4.875% senior unsecured notes	Mar, 2024	1,000	4.875	1,000	4.875
Fixed-rate 2.7% senior unsecured notes	Fixed-rate 2.7% senior unsecured notes	May, 2025	500	2.700	500	2.700	Fixed-rate 2.7% senior unsecured notes	May, 2025	500	2.700	500	2.700
Fixed-rate 5.35% senior unsecured notes	Fixed-rate 5.35% senior unsecured notes	Mar, 2026	500	5.350	500	5.350	Fixed-rate 5.35% senior unsecured notes	Mar, 2026	500	5.350	500	5.350
Fixed-rate 3.875% senior unsecured notes	Fixed-rate 3.875% senior unsecured notes	Jun, 2026	750	3.875	750	3.875	Fixed-rate 3.875% senior unsecured notes	Jun, 2026	750	3.875	750	3.875
Fixed-rate 3.15% senior unsecured notes	Fixed-rate 3.15% senior unsecured notes	May, 2027	500	3.150	500	3.150	Fixed-rate 3.15% senior unsecured notes	May, 2027	500	3.150	500	3.150
Fixed-rate 4.40% senior unsecured notes	Fixed-rate 4.40% senior unsecured notes	June, 2027	500	4.400	—	—	Fixed-rate 4.40% senior unsecured notes	Jun, 2027	500	4.400	500	4.400
Fixed-rate 5.55% senior unsecured notes	Fixed-rate 5.55% senior unsecured notes	Dec, 2028	500	5.550	500	5.550	Fixed-rate 5.55% senior unsecured notes	Dec, 2028	500	5.550	500	5.550
Fixed-rate 4.3% senior unsecured notes	Fixed-rate 4.3% senior unsecured notes	Jun, 2029	1,000	4.300	1,000	4.300	Fixed-rate 4.3% senior unsecured notes	Jun, 2029	1,000	4.300	1,000	4.300
Fixed-rate 3.4% senior unsecured notes	Fixed-rate 3.4% senior unsecured notes	May, 2030	1,000	3.400	1,000	3.400	Fixed-rate 3.4% senior unsecured notes	May, 2030	1,000	3.400	1,000	3.400
Fixed-rate 2.5% senior unsecured notes	Fixed-rate 2.5% senior unsecured notes	May, 2031	1,000	2.500	1,000	2.500	Fixed-rate 2.5% senior unsecured notes	May, 2031	1,000	2.500	1,000	2.500
Fixed-rate 2.65% senior unsecured notes	Fixed-rate 2.65% senior unsecured notes	Feb, 2032	1,000	2.650	1,000	2.650	Fixed-rate 2.65% senior unsecured notes	Feb, 2032	1,000	2.650	1,000	2.650
Fixed-rate 5.00% senior unsecured notes	Fixed-rate 5.00% senior unsecured notes	Jan, 2033	1,000	5.000	—	—	Fixed-rate 5.00% senior unsecured notes	Jan, 2033	1,000	5.000	1,000	5.000
Fixed-rate 3.25% senior unsecured notes	Fixed-rate 3.25% senior unsecured notes	May, 2041	1,000	3.250	1,000	3.250	Fixed-rate 3.25% senior unsecured notes	May, 2041	1,000	3.250	1,000	3.250
Fixed-rate 3.125% senior unsecured notes	Fixed-rate 3.125% senior unsecured notes	Feb, 2042	500	3.125	500	3.125	Fixed-rate 3.125% senior unsecured notes	Feb, 2042	500	3.125	500	3.125
Fixed-rate 3.25% senior unsecured notes	Fixed-rate 3.25% senior unsecured notes	Nov, 2051	500	3.250	500	3.250	Fixed-rate 3.25% senior unsecured notes	Nov, 2051	500	3.250	500	3.250
Floating-rate revolving credit facility (RCF)	Floating-rate revolving credit facility (RCF)	Jun, 2024	—	—	—	—	Floating-rate revolving credit facility (RCF)	Aug, 2027	—	—	—	—
Total principal	Total principal		11,250		10,650		Total principal		11,250		11,250

Unamortized discounts, premiums and debt issuance costs	Unamortized discounts, premiums and debt issuance costs		(90)		(78)		Unamortized discounts, premiums and debt issuance costs		(83)		(85)
Total debt, including unamortized discounts, premiums, debt issuance costs and fair value adjustments	Total debt, including unamortized discounts, premiums, debt issuance costs and fair value adjustments		11,160		10,572		Total debt, including unamortized discounts, premiums, debt issuance costs and fair value adjustments		11,167		11,165
Current portion of long-term debt	Current portion of long-term debt		—		—		Current portion of long-term debt		998		—
Long-term debt	Long-term debt		11,160		10,572		Long-term debt		10,169		11,165

9 Related-Party Transactions

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

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


		For the three months ended		For the six months ended			For the three months ended
		July 3, 2022	July 4, 2021	July 3, 2022	July 4, 2021			April 2, 2023	April 3, 2022
Revenue and other income	Revenue and other income	2	2	5	4	Revenue and other income		1	3
Purchase of goods and services	Purchase of goods and services	1	1	2	2	Purchase of goods and services		—	1

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


		July 3, 2022	December 31, 2021		April 2, 2023	December 31, 2022
Receivables	Receivables	1	1	Receivables	5	1
Payables	Payables	3	3	Payables	12	3

10 Fair Value Measurements

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


			Estimated fair value				Estimated fair value
		Fair value hierarchy	July 3, 2022	December 31, 2021		Fair value hierarchy	April 2, 2023	December 31, 2022
Assets:	Assets:				Assets:
Money market funds	Money market funds	1	2,554	2,111	Money market funds	1	2,832	2,817
Marketable equity securities	Marketable equity securities	1	10	18	Marketable equity securities	1	9	9
Derivative instruments-assets	Derivative instruments-assets	2	1	5	Derivative instruments-assets	2	7	8

Liabilities:	Liabilities:				Liabilities:

Derivative instruments-liabilities	Derivative instruments-liabilities	2	(26)	(3)	Derivative instruments-liabilities	2	(3)	(6)

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

Assets and liabilities measured at fair value on a recurring basis

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

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

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

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

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

As of ~~July 3, 2022,~~April 2, 2023, the estimated fair value of current and non-current debt was ~~$10.2~~$10.1 billion ($~~11.3~~9.8 billion as of December 31, ~~2021)~~2022). The fair value is estimated on the basis of broker-dealer quotes, which are Level 2 inputs. Accrued interest is included under accrued liabilities and not within the carrying amount or estimated fair value of debt.

11 Commitments and Contingencies

Purchase Commitments

The Company maintains purchase commitments with certain suppliers, primarily for raw materials, semi-finished goods and manufacturing services and for some non-production items. Purchase commitments for inventory materials are generally restricted to a forecasted time-horizon as mutually agreed upon between the parties. This forecasted time-horizon can vary for different suppliers. As of ~~July 3, 2022,~~April 2, 2023, the Company had purchase commitments of ~~$3,885 million,~~$3.9 billion, which are due through 2044. Our long-term obligations increased substantially in 2021 as we locked in long-term supply with our key manufacturing partners.

Litigation

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

Based on the most current information available to it and based on its best estimate, the Company also reevaluates at least on a quarterly basis the claims that have arisen to determine whether any new accruals need to be made or whether any accruals made need to be adjusted. Based on the procedures described above, the Company has an aggregate amount of ~~$61~~$102 million accrued for potential and current legal proceedings pending as of ~~July 3, 2022,~~April 2, 2023, compared to ~~$65~~$58 million accrued at December 31, ~~2021~~2022 (without reduction for any related insurance reimbursements). The accruals are included in “Other current liabilities” and in “Other non-current liabilities”. As of ~~July 3, 2022,~~April 2, 2023, the Company’s related balance of insurance reimbursements was ~~$43~~$67 million (December 31, ~~2021: $46~~2022: $43 million) and is included in “Other non-current assets”.

The Company also estimates the aggregate range of reasonably possible losses in excess of the amount accrued based on currently available information for those cases for which such estimate can be made. The estimated aggregate range requires significant judgment, given the varying stages of the proceedings, the existence of multiple defendants (including the Company) in such claims whose share of liability has yet to be determined, the numerous yet-unresolved issues in many of the claims, and the attendant uncertainty of the various potential outcomes of such claims. Accordingly, the Company’s estimate will change from time to time, and actual losses may be more than the current estimate. As at ~~July 3, 2022,~~April 2, 2023, the Company believes that for all litigation pending its potential aggregate exposure to loss in excess of the amount accrued (without reduction for any amounts that may possibly be recovered under insurance programs) could range between $0 and ~~$72~~$106 million. Based upon our past experience with these matters, the Company would expect to receive additional insurance reimbursement of up to ~~$89~~$70 million on certain of these claims that would partially offset the potential aggregate exposure to loss in excess of the amount accrued.

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

1314

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~This interim~~ Management’s Discussion and Analysis ~~("MD&A")~~(MD&A) should be read in conjunction with our consolidated financial statements and notes and the MD&A in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022, and the financial statements and the related notes that appear elsewhere in this document. This discussion contains forward-looking statements that involve a number of risks and uncertainties, including any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, uncertain events or assumptions, and other characterizations of future events or circumstances, including the expected timeline to remediate the identified material weakness in our internal control over financial reporting, the uncertain nature, magnitude, and duration of hostilities stemming from Russia's recent military invasion of the Ukraine, and our response to the current global pandemic and the potential impact the pandemic will have on our operations, liquidity, customers, facilities and supply chain.circumstances. Such statements are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this filing and in ~~“Risk Factors” in~~ Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K. Our actual results may differ materially from those contained in any forward-looking statements. We undertake no obligation to update any forward-looking statement to reflect subsequent events or circumstances.

Our MD&A is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flows. 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~~

•~~Liquidity and Capital Resources~~ ~~- An analysis of changes in our balance sheets and cash flows~~

•~~Information Regarding Guarantors of NXP -~~ ~~Financial information of the Obligor Group on a combined basis~~

~~Overview~~

($ in millions, unless otherwise stated) Q2 2022 Q2 2021 YTD 2022 YTD 2021
Revenue 3,312 2,596 6,448 5,163
Gross profit 1,882 1,422 3,659 2,777
Operating income (loss) 943 573 1,816 1,065
Cash flow from operating activities 819 636 1,675 1,368
Total debt 11,160 9,591 11,160 9,591
Net debt 7,615 6,681 7,615 6,681
Diluted weighted average number of shares outstanding 264,692 278,735 264,909 281,063
Diluted net income per share 2.53 1.42 5.01 2.67
Dividends per common share 0.8450 0.5625 1.6900 1.1250

~~Q2 2022~~Q1 2023 compared to ~~Q2 2021~~Q1 2022

Revenue for the three months ended ~~July 3, 2022~~April 2, 2023 was ~~$3,312~~$3,121 million compared to ~~$2,596~~$3,136 million for the three months ended ~~July 4, 2021, an increase~~April 3, 2022, a decrease of ~~$716~~$15 million or ~~an increase of 27.6%~~0.5% year-on-year. ~~Revenue growth during~~At end market level the ~~quarter was due to increased volumes of products shipped driven by~~year-on-year comparisons are mixed, with lower demand in the ~~continued industry-wide demand for semiconductors across~~Industrial IoT and the ~~company’s focused~~Mobile end markets resulting in a revenue decline in these end markets of $178 million or 26.1% and $141 million or 35.2%, respectively. The year-on-year revenue of the Automotive and the ~~positive mix effects within the company’s focused~~Communications Infrastructure & Other end ~~markets. Additionally, the company continued to experience the inflationary effects of~~markets increased ~~input costs from its suppliers which were passed along to end customers in the form of higher average selling prices.~~by $271 million or 17.4% and $33 million or 6.7%, respectively.

Our gross profit percentage ~~for the second quarter~~remained flat, 56.7% in both first quarters of 2022 increased from 54.8% in the second quarter of 2021 to 56.8%, primarily from the continued significant acceleration of revenue in the second quarter of 2022 compared to the same period in 2021, which led to improved factory loading, increased manufacturing volumes,2023 and ~~higher sales prices, which were mostly offset by higher input costs.~~2022.

We continue to generate strong operating cash flows, with ~~$819~~$632 million in cash flows from operations for the ~~second~~first quarter of ~~2022.~~2023. We returned ~~$224~~$230 million to our shareholders during the ~~second~~first quarter of ~~2022.~~2023. Our cash position at the end of the ~~second~~first quarter of ~~2022~~2023 was ~~$3,545~~$3,930 million. ~~This includes the net proceeds of the $1.5 billion of senior unsecured debt issued by NXP on May 16, 2022.~~

~~YTD 2022 compared to YTD 2021~~

Revenue for the six months ended July 3, 2022 was $6,448 million compared to $5,163 million for the six months ended July 4, 2021, an increase of $1,285 million or an increase of 24.9% year-on-year. The increase within the first half 2022 is attributed to strong demand, across all of the end markets.

Our gross profit percentage for the six months ended July 3, 2022 increased from 53.8% for the six months ended July 4, 2021 to 56.7%, primarily from the continued significant acceleration of revenue in the first six months of 2022 compared to the same period in 2021, which led to improved factory loading, increased manufacturing volumes, and higher sales prices, which were mostly offset by higher input costs.

Cash flow from operations for the first six months of 2022 was $1,675 million. Total shareholder return for the first six months of 2022 was $925 million. Our cash position remains solid, with the net proceeds of the $1.5 billion in newly issued debt adding to our cash and cash equivalents.

Results of operations

The following table presents operating income for each of the three month periods ended ~~July~~April 2, 2023 and April 3, 2022, ~~and July 4, 2021,~~ respectively:


($ in millions, unless otherwise stated)	($ in millions, unless otherwise stated)	Q2 2022	Q2 2021	YTD 2022	YTD 2021	($ in millions, unless otherwise stated)	Q1 2023		Q1 2022		Increase/decrease

Revenue	Revenue	3,312	2,596	6,448	5,163	Revenue	3,121		3,136		(15)
% nominal growth	% nominal growth	27.6	42.9	24.9	34.5	% nominal growth	(0.5)		22.2		(22.7)
Gross profit	Gross profit	1,882	1,422	3,659	2,777	Gross profit	1,770		1,777		(7)
Gross margin						Gross margin	56.7	%	56.7	%	—	ppt
Research and development	Research and development	(542)	(476)	(1,060)	(937)	Research and development	(577)		(518)		(59)
Selling, general and administrative	Selling, general and administrative	(265)	(234)	(516)	(456)	Selling, general and administrative	(280)		(251)		(29)
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	(134)	(139)	(269)	(319)	Amortization of acquisition-related intangible assets	(85)		(135)		50
Other income (expense)	Other income (expense)	2	—	2	—	Other income (expense)	(3)		—		(3)
Operating income (loss)	Operating income (loss)	943	573	1,816	1,065	Operating income (loss)	825		873		(48)
Financial income (expense)						Financial income (expense)	(82)		(105)		23
Benefit (provision) for income taxes						Benefit (provision) for income taxes	(118)		(114)		(4)
Results relating to equity-accounted investees						Results relating to equity-accounted investees	(2)		12		(14)
Net income (loss)						Net income (loss)	623		666		(43)
Less: Net income (loss) attributable to non-controlling interests						Less: Net income (loss) attributable to non-controlling interests	8		9		(1)
Net income (loss) attributable to stockholders						Net income (loss) attributable to stockholders	615		657		(42)

Diluted earnings per share						Diluted earnings per share	2.35		2.48		(0.13)

Revenue

~~Q2 2022~~

Q1 2023 compared to ~~Q2 2021~~Q1 2022

~~YTD 2022 compared to YTD 2021~~

~~Revenue for~~markets and higher demand in NXP’s Automotive and Communication Infrastructure & Other end markets versus the six months ended July 3, 2022 was $6,448 million compared to $5,163 for the six months ended July 4, 2021, an increase of $1,285 million or 24.9%, with growth in all of the Company’s four end markets.year ago period.

Revenue by end market was as follows:


($ in millions, unless otherwise stated)	($ in millions, unless otherwise stated)	Q2 2022	Q2 2021	Change		YTD 2022	YTD 2021	Change		($ in millions, unless otherwise stated)	Q1 2023	Q1 2022	Change
Automotive	Automotive	1,713	1,262	35.7	%	3,270	2,491	31.3	%	Automotive	1,828	1,557	17.4	%
Industrial & IoT	Industrial & IoT	713	571	24.9	%	1,395	1,142	22.2	%	Industrial & IoT	504	682	(26.1)	%
Mobile	Mobile	388	347	11.8	%	789	693	13.9	%	Mobile	260	401	(35.2)	%
Communication Infrastructure & Other	Communication Infrastructure & Other	498	416	19.7	%	994	837	18.8	%	Communication Infrastructure & Other	529	496	6.7	%
Revenue	Revenue	3,312	2,596	27.6	%	6,448	5,163	24.9	%	Revenue	3,121	3,136	(0.5)	%

~~Revenue by sales channel was as follows:~~

($ in millions, unless otherwise stated) Q2 2022 Q2 2021 Change YTD 2022 YTD 2021 Change
Distributors 1,829 1,518 20.5 % 3,509 2,986 17.5 %
OEM/EMS 1,441 1,040 38.6 % 2,853 2,104 35.6 %
Other 42 38 10.5 % 86 73 17.8 %
Revenue 3,312 2,596 27.6 % 6,448 5,163 24.9 %

~~Revenue by geographic region, which is based on the customer’s shipped-to location was as follows:~~

($ in millions, unless otherwise stated) Q2 2022 Q2 2021 Change YTD 2022 YTD 2021 Change
Greater China and Asia Pacific 1,831 1,503 21.8 % 3,531 2,985 18.3 %
EMEA (Europe, the Middle East and Africa) 668 461 44.9 % 1,306 928 40.7 %
Americas 435 336 29.5 % 867 657 32.0 %
Japan 230 188 22.3 % 448 377 18.8 %
South Korea 148 108 37.0 % 296 216 37.0 %
Revenue 3,312 2,596 27.6 % 6,448 5,163 24.9 %

Automotive

Mobile

Industrial IoT

Comm Infra & Other

Revenue by sales channel was as follows:


($ in millions, unless otherwise stated)	Q1 2023	Q1 2022	Change
Distributors	1,491	1,680	(11.3)	%
OEM/EMS	1,594	1,412	12.9	%
Other	36	44	(18.2)	%
Revenue	3,121	3,136	(0.5)	%

Distributors

Other

OEM/EMS

~~Q2 2022~~Revenue by geographic region, which is based on the customer’s shipped-to location was as follows:


($ in millions, unless otherwise stated)	Q1 2023	Q1 2022	Change
China 1)	947	1,069	(11.4)	%
APAC, excluding China	975	998	(2.3)	%
EMEA (Europe, the Middle East and Africa)	725	638	13.6	%
Americas	474	431	10.0	%
Revenue	3,121	3,136	(0.5)	%
1) China includes Mainland China and Hong Kong

Q1 2023 compared to ~~Q2 2021~~Q1 2022

The ~~increase~~year-on-year change in ~~revenue is attributed~~revenues was driven by a decline in shipment volumes, offset by higher average selling prices due to ~~the combination of ongoing demand, across NXP’s Automotive, Industrial IoT, Mobile, and the Communications Infrastructure & Other end markets, as well as the effects of~~ increased input costs from ~~NXP~~its suppliers which were passed along to ~~our~~ end ~~customers in the form of higher average selling prices.~~

From an end market perspective, the year-on-year growth within the Automotive end market was driven by strong demand across the entire automotive product portfolio in support of the secular shift of electrification, advanced driver safety and assistance, and driver connectivity systems. The growth within the Industrial & IoT market reflects the continued adoption of our complete secure, connected edge processing solutions which leverage our broad processor portfolio, complimented by connectivity, analog attach and security products. The growth within the Mobile end market was due to ongoing adoption of our secure embed transaction solutions along with the company’s growth in our advanced analog high speed interfaces. The growth within the Communication Infrastructure & Other end market was attributable to cellular base stations, the network edge equipment, and the secure access, transit and government sponsored identification market.customers.

When aggregating all end markets together, and reviewing sales channel performance, ~~business transacted~~revenues through direct OEM and EMS customers was $1,594 million, an increase of 12.9% versus the year ago period. Revenues through NXP's third party distribution partners was ~~$1,829~~$1,491 million, ~~an increase~~a decrease of ~~20.5%~~11.3%. ~~Sales to NXP's direct OEM and EMS customers was $1,441 million, an~~

~~increase of 38.6% versus the second quarter of 2021.~~

From a geographic perspective, revenue declined in China and to a lesser extent in Asia Pacific, while revenue increased across ~~all~~the EMEA regions and the Americas regions.

Revenue ~~from~~in the Automotive end market was ~~$1,713~~$1,828 million, an increase of ~~$451~~$271 million or ~~35.7% year-on-year. Within Automotive, customers are focused on~~17.4% versus the key functional pillars of safety, electrification and improved driver comfort to accelerate competitive differentiation. These broad functional areas are fundamentally enabled by the secular adoption of new and increased levels of semiconductor content, which is layered on top of a strong base of existing electronic content in modern automobiles.year ago period. The increase in Automotive revenue ~~during the second quarter of 2022~~ can be attributed to ~~strong demand for~~growth in automotive processing, advanced analog, ~~embedded processing~~automotive application processors and radar ~~solutions.~~in support of the secular shift of electrification, and advanced driver safety and assistance.

Revenue ~~from~~in the Industrial & IoT end market was ~~$713~~$504 million, ~~an increase~~a decrease of ~~$142~~$178 million or ~~24.9% year-on-year. The~~26.1% versus the year ago period. Within the Industrial & IoT market is driven by the secular trend of multi-market OEMs seeking to enable secure, connected, high performance processing solutions at the edge of the network, whether it is in factory automation, smart building/smart home or the exploding plethora of connected IoT devices. The innovation in this market is being driven by thousands of relatively smaller customers, which NXP effectively services through its extended global distribution channel. During the second quarter of 2022, the year-on-year ~~increase~~decline was driven by lower demand across the continued demand for the company’s 32-bit ARM-based microcontrollers and crossover processors, and to a lesser degree industrial application processors. Additionally, the year-on-year increase was supported by demand for industrial analog products, and point-of-sale security solutions.entire product portfolio.

Revenue ~~from~~in the Mobile end market was ~~$388~~$260 million, ~~with an increase~~a decrease of ~~$41~~$141 million or ~~11.8% year-on-year. The year-on-year increase was driven by strong adoption~~35.2% versus the year ago period. Declines within the Mobile end market were due to lower demand of our secure ~~mobile wallet~~embedded transaction solutions, ~~and increased demand in our~~along with the company’s advanced analog ~~high speed~~high-speed interfaces ~~which was offset by declines in advanced~~and embedded power ~~systems driven by load switch demand decline.Our mobile customers are primarily serviced through our global distribution channels.~~solutions.

Revenue in the Communication Infrastructure & Other end market was ~~$498~~$529 million, an increase of ~~$82~~$33 million or ~~19.7% year-on-year.~~6.7% versus the year ago period. The ~~Communication Infrastructure & Other end market is an amalgamation~~increase in revenue was due to increase demand of ~~three separate product portfolios, which service multiple end markets, including cellular base stations; the~~our network edge equipment, RFID tagging solutions, and ~~the secure access,~~ transit and government sponsored identification market. The year-on-year growth in the second quarter of 2022 was driven by a combination of high performance RF Power amplifier products for cellular base-station applications, network edge equipment, and broad based demand for secure access ~~and identification~~ solutions. Offsetting these positive growth trends were declines in demand for the company’s ~~smart antennae~~RF Power products, ~~used in the Android mobile handset market, as well as declines in demand for~~ wireless access point ~~solutions.~~solutions and smart antennae products.

~~YTD 2022~~Gross profit

Q1 2023 compared to ~~YTD 2021~~

The increase in revenue is primarily attributed to the combination of strong demand, from NXP’s Automotive, Industrial IoT, and the Communications Infrastructure & Other end markets, and to a lesser degree the Mobile end market. The year-to-date growth rates are also influenced by higher average pricing, which were the result of rising inflationary effects on input costs from NXP suppliers, and passed along to our end customers.

From an end market perspective, within the automotive end market the year-on-year growth was driven by strong demand for advanced analog, embedded processing and radar in support of the secular shift of electrification, advanced driver safety and assistance, and driver connectivity systems. The growth within the Industrial & IoT market reflects the successful continuation of adoption of our complete secure, connected edge processing solutions which leverage our broad processor portfolio, complimented by analog attach, connectivity, and security products. Growth within the Mobile end market was due to ongoing adoption of our secure embed transaction solutions along with the company’s growth in our advanced analog high speed interfaces. Growth within the Communication Infrastructure & Other end market was attributable to cellular base stations, the network edge equipment, and the secure access, transit and government sponsored identification market.

When aggregating all end markets together, and reviewing sales channel performance, business transacted through direct OEM and EMS customers was $2,853 million, an increase of 35.6% versus the first half of 2021. NXP's third party distribution partners was $3,509 million, an increase of 17.5%.

~~From a geographic perspective, revenue increased across all regions.~~

Revenue in the Automotive end market was $3,270 million, an increase of $779 million or 31.3% versus the year ago period due to the ongoing demand for our automotive products supporting the secular shift of electrification, advanced driver safety and assistance, and driver connectivity systems.

Revenue in the Industrial & IoT end market was $1,395 million, an increase of $253 million or 22.2% versus the year ago period primarily driven by the continued demand for the company’s 32-bit ARM-based microcontrollers and crossover processors, and to a lesser degree industrial application processors. Additionally, the year-on-year increase was supported by demand for industrial analog products, IoT connectivity and point-of-sale security solutions.

Revenue in the Mobile end market was $789 million, an increase of $96 million or 13.9% versus the year ago period due to strong adoption of secure mobile wallet solutions, and demand for our advanced analog high speed interfaces, offset by declines in embedded power solutions.

Q1 2022

Revenue in the Communication Infrastructure & Other end market was $994 million, an increase of $157 million or 18.8% versus the year ago period due to a combination of strength from RF Power products levered to the secular build-out of 5G base stations, network edge equipment, and broad based demand for secure access and identification solutions. Offsetting these positive growth trends were declines in demand for the company’s smart antennae products used in the Android mobile handset market, as well as declines in demand for wireless access point solutions.

~~Gross profit~~

~~Q2 2022 compared to Q2 2021~~

Gross profit for the three months ended ~~July 3, 2022~~April 2, 2023 was ~~$1,882~~$1,770 million, or ~~56.8%~~56.7% of revenue, compared to ~~$1,422~~$1,777 million, or ~~54.8%~~56.7% of revenue for the three months ended ~~July 4, 2021.The increase of $460 million~~April 3, 2022, with increases in ~~gross profit was driven by the significant higher revenue~~pricing offsetting increases in ~~the second quarter of 2022 compared to the second quarter of 2021, which led to improved factory loading, increased manufacturing volumes,~~our foundry, subcontractor and ~~higher sales prices, which were mostly offset by higher input~~other supplier sourcing costs.

~~YTD 2022 compared to YTD 2021~~

Gross profit for the six months ended July 3, 2022 was $3,659 million, or 56.7% of revenue, compared to $2,777 million, or 53.8% of revenue for the six months ended July 4, 2021. The increase of $882 million was primarily driven by the significant higher revenue in the first half of 2022 compared to the first half of 2021, which led to improved factory loading, increased manufacturing volumes, and higher sales prices, which were mostly offset by higher input costs.

Operating expenses

~~Q2 2022 compared to Q2 2021~~

~~Operating expenses for the three months ended July 3, 2022 totaled $941 million, or 28.4% of revenue, compared to $849 million, or 32.7% of revenue, for the three months ended July 4, 2021.~~

~~YTD 2022 compared to YTD 2021~~

~~Operating expenses for the six months ended July 3, 2022 totaled $1,845 million, or 28.6% of revenue, compared to $1,712 million, or 33.2% of revenue, for the six months ended July 4, 2021.~~

~~The following table below presents the composition of operating expenses by line item in the statement of operations:~~

($ in millions, unless otherwise stated) Q2 2022 Q2 2021 YTD 2022 YTD 2021
Research and development 542 476 1,060 937
Selling, general and administrative 265 234 516 456
Amortization of acquisition-related intangible assets 134 139 269 319
Total operating expenses 941 849 1,845 1,712

~~R&D~~

~~SG&A~~

~~Amortization acquisition-related~~

~~Q2 2022 compared to Q2 2021~~

~~The increase in operating expenses was a result of the following items:~~


($ in millions, unless otherwise stated)	Q1 2023		Q1 2022		Percentage change
Research and development	577		518		11.4	%
As a percentage of revenue	18.5	%	16.5	%	2.0	ppt

Q1 2023 compared to Q1 2022

R&D costs for the three months ended ~~July 3, 2022~~April 2, 2023 increased by ~~$66~~$59 million, or ~~13.9%~~11.4%, when compared to the three months ended ~~July 4, 2021~~April 3, 2022 mainly driven by:

+ higher personnel-related ~~costs, including variable compensation~~ costs;

+ higher ~~pre-production related expenses;~~restructuring costs; and

+- ~~higher professional services.~~lower variable compensation costs.


($ in millions, unless otherwise stated)	Q1 2023		Q1 2022		Percentage change
Selling, general and administrative	280		251		11.6	%
As a percentage of revenue	9.0	%	8.0	%	1.0	ppt

Q1 2023 compared to Q1 2022

SG&A costs for the three months ended ~~July 3, 2022~~April 2, 2023 increased by ~~$31~~$29 million, or ~~13.2%~~11.6%, when compared to the three months ended ~~July 4, 2021~~April 3, 2022 mainly due to:

+ higher legal expense; ~~and~~

+ higher ~~professional services.~~personnel-related costs;

+ higher restructuring costs; and

- lower variable compensation costs.

Amortization of acquisition-related intangible assets


($ in millions, unless otherwise stated)	Q1 2023		Q1 2022		Percentage change
Amortization of acquisition-related intangible assets	85		135		(37.0)	%
As a percentage of revenue	2.7	%	4.3	%	(1.6)	ppt

Q1 2023 compared to Q1 2022

Amortization of acquisition-related intangible assets decreased by $5$50 million, or ~~3.6%~~37.0%, when compared to the three months ended ~~July 4, 2021~~April 3, 2022 driven by:

- certain intangibles became fully amortized during ~~2021.~~

~~YTD 2022 compared to YTD 2021~~

~~The increase in operating expenses was a result of the following items:~~

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. R&D costs for the six months ended July 3, 2022 increased by $123 million, or 13.1%, when compared to the six months ended July 4, 2021 driven by:

+ ~~higher personnel-related costs, including variable compensation costs;~~

+ ~~higher pre-production related expenses; and~~

+ ~~higher professional services .~~

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). SG&A costs for the six months ended July 3, 2022 increased by $60 million, or 13.2%, when compared to the six months ended July 4, 2021 mainly due to:

+ ~~higher legal expense;~~

+ ~~higher professional services; and~~

+ ~~higher IT related expenses.~~2022.

1918

~~Amortization of acquisition-related intangible assets decreased by $50 million, or 15.7%, when compared to the six months ended July 4, 2021 driven by:~~

- ~~an impairment charge in Q1 2021 as a result of the discontinuation of an IPR&D project.~~

Financial income (expense)

The following table presents the details of financial income and expenses:

($ in millions, unless otherwise stated) Q2 2022 Q2 2021 YTD 2022 YTD 2021
Interest income 6 1 8 2
Interest expense (106) (90) (210) (177)
Total interest expense, net (100) (89) (202) (175)
Extinguishment of debt (18) — (18) —
Foreign exchange rate results 3 (1) 3 —
Miscellaneous financing costs/income and other, net (13) (10) (16) (12)
Total other financial income (expense) (28) (11) (31) (12)
Total (128) (100) (233) (187)


($ in millions, unless otherwise stated)	Q1 2023	Q1 2022
Interest income	42	2
Interest expense	(111)	(104)
Other, net	(13)	(3)
Total	(82)	(105)

~~Q2 2022~~Interest income

Q1 2023 compared to ~~Q2 2021~~Q1 2022

~~Financial~~Interest income ~~(expense) was an~~increased due to higher interest rates and to a lesser extent by a higher level of cash.

Interest expense ~~of $128 million in the second quarter of 2022~~

Q1 2023 compared to anQ1 2022

Interest expense increased due to several debt restructurings, issuance of ~~$100 million in the second quarter~~$1.5 billion of ~~2021. The change in financial income (expense) is primarily attributable to an increase in interest expense as a result of the net increase in~~new debt and ~~debt extinguishment costs incurred in the second quarter~~repayment of ~~2022. Higher interest rates resulted in an interest income increase~~$900 million of debt in the second quarter of 2022.

~~YTD 2022~~Other, net

Q1 2023 compared to ~~YTD 2021~~Q1 2022

~~Financial income (expense) was an expense~~Other, net, mainly increased due to higher foreign currency results (a loss of ~~$233 million~~$5 million) and fair value adjustments in the first six months of 2022 compared to an expense of $187 million in the first six months of 2021. The change in financial income (expense) is primarily attributable to an increase in interest expense as a result of the net increase in debt, and debt extinguishment costs incurred in the second quarter of 2022. Higher interest rates resulted in an interest income increase in the second quarter of 2022.equity securities.

Benefit (provision) for income taxes


	Q1 2023		Q1 2022
Benefit (provision) for income taxes	(118)		(114)
Effective tax rate	15.9	%	14.8	%
Statutory income tax rate in the Netherlands	25.8	%	25.8	%

~~Q2 2022~~Q1 2023 compared to ~~Q2 2021~~Q1 2022

~~Our provision~~Beginning with the first quarter of 2023, NXP was in a position to make a reliable estimate of its annual effective tax rate. This estimated annual effective tax rate ("EAETR") is then applied to the year-to-date Income (loss) before income taxes excluding discrete items, to determine the year-to-date benefit (provision) for income taxes. The income tax effects of any discrete items are recognized in the interim period in which they occur. As the year progresses, the Company continually refines the EAETR based upon actual events and the apportionment of our earnings (loss). This continual estimation process periodically may result in a change to our EAETR for the year. When this occurs, we adjust on an accumulated basis the benefit (provision) for income taxes ~~was $129 million (15.8% effective tax rate) for~~during the ~~second~~ quarter ~~of 2022 compared to a provision for income taxes of $65 million (13.7% effective tax rate) for~~in which the second quarter of 2021. The increase in the income tax expense was due to higher income before income taxes as a result of the improved operational performance of the company, which was partly offset by an increase in tax incentives also taking into account the effect of specific US tax law that became effective as from 2022. In addition to this, in the second quarter of 2021 there was an income tax benefit due to a release of the valuation allowance and a lower taxable foreign exchange result.change occurs.

~~YTD 2022 compared to YTD 2021~~

Our provision for income taxes for 2023 is based on our EAETR of 17.0%, which is lower than the Netherlands statutory tax rate of 25.8%, primarily due to tax benefits from the Netherlands and foreign tax incentives. The effective tax rate of 15.9% for the first ~~six months~~quarter of 2023 was lower than the EAETR due to the income tax benefit for discrete items of $8 million. The discrete items are primarily related to changes in estimates for previous years and the impact of foreign currency on income tax related items. The effective tax rate of 14.8% for the first quarter of 2022 was ~~$243 million (15.4% effective tax rate)~~lower compared to ~~a provision for income taxes of $105 million) (12.0% effective tax rate) for~~ the ~~first six months of 2021. The increase in the income tax expense was~~current period due to higher ~~income before income taxes~~foreign tax incentives as a result of ~~the improved operational performance of the company which was partly offset by~~ an increase in ~~tax incentives~~qualifying investments and also ~~taking into account~~due to a different mix of the ~~effect~~benefit (provision) of ~~specific US tax law that became effective as from 2022. In addition to this,~~income taxes in the ~~first six months of 2021 there were income tax benefits due to changes in estimates of prior positions and a net change in the valuation allowance.~~

~~Net income (loss)~~

~~The following table presents the composition of net income for the periods reported:~~

($ in millions, unless otherwise stated) Q2 2022 Q2 2021 YTD 2022 YTD 2021
Operating income (loss) 943 573 1,816 1,065
Financial income (expense) (128) (100) (233) (187)
Benefit (provision) for income taxes (129) (65) (243) (105)
Results relating to equity-accounted investees (3) (2) 9 (3)
Net income (loss) 683 406 1,349 770

locations that we operate in.

Liquidity and Capital Resources

We derive our liquidity and capital resources primarily from our cash flows from operations. We continue to generate strong positive operating cash flows. At the end of the ~~second~~first quarter of ~~2022,~~2023, our cash balance was ~~$3,545~~$3,930 million, an increase of ~~$715~~$85 million compared to December 31, ~~2021.~~2022. Taking into account the available amount of the Unsecured Revolving Credit Facility of ~~$1,500~~$2,500 million, we had access to ~~$5,045~~$6,430 million of liquidity as of ~~July 3, 2022.~~

April 2, 2023. We currently use cash to fund operations, meet working capital requirements, for capital expenditures and for potential common stock repurchases, dividends and strategic investments. Based on past performance and current expectations, we believe that our current available sources of funds (including cash and cash equivalents, RCF Agreement of $2.5 billion, 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 twelve months. Our capital expenditures were $548 million in the first six months of 2022, compared to $300 million in the first six months of 2021. During the six month period ended July 3, 2022, we repurchased $554 million, or 2.7 million shares of our common stock pursuant to our share buyback programs at a weighted average price of $207.77 per share.

Our total debt amounted to $11,160 million as of Q2 2022, an increase of $588 million compared to December 31, 2021 ($10,572 million). On May 16, 2022, NXP issued $500 million aggregate principal amount of 4.400% Senior Notes due in 2027 (the “4.400% 2027 Notes”) and $1 billion aggregate principal amount of 5.000% Senior Notes due in 2033 (the “2033 Notes”). The net proceeds of the 4.400% 2027 Notes, together with cash on hand, has been used to redeem the $900 million aggregate principal amount of outstanding dollar-denominated 4.625% Senior Unsecured Notes due 2023 in accordance with the terms of the indenture. NXP will allocate an amount equal to the net proceeds of the offering of the 2033 Notes to the financing of, in whole or in part, one or more eligible green projects. Pending allocation, NXP will temporarily hold the remaining net proceeds of the 2033 Notes as cash and other short-term securities or use for general corporate purposes, which may include capital expenditures, short-term debt repayment or equity buyback transactions.


($ in millions, unless otherwise stated)	YTD 2023	YTD 2022
Cash from operations	632	856
Capital expenditures	251	280
Cash to shareholders	230	701

~~Exchange Offers~~

~~In connection with the sale of (i) NXP B.V.’s~~Cash and NXP Funding LLC’s 4.875% Senior Notes due 2024 (the “2024 Notes”), 5.350% Senior Notes due 2026 (the “5.350% 2026 Notes”) and 5.550% Senior Notes due 2028 (the “2028 Notes”) and (ii) NXP B.V.’s, NXP Funding LLC’s and NXP USA Inc.’s 2.700% Senior Notes due 2025 (the “2025 Notes”), 3.875% Senior Notes due 2026 (the “3.875% 2026 Notes”), 3.150% Senior Notes due 2027 (the “3.150% 2027 Notes”), 4.300% Senior Notes due 2029 (the “2029 Notes”), 3.400% Senior Notes due 2030 (the “2030 Notes”), 2.500% Senior Notes due 2031 (the “2031 Notes”), 2.650% Senior Notes due 2032 (the “2032 Notes”), 3.250% Senior Notes due 2041 (the “2041 Notes”), 3.125% Senior Notes due 2042 (the “2042 Notes”) and 3.250% Senior Notes due 2051 (the “2051 Notes”), which we collectively refer to as the “Notes”, the issuers of the Notes (the “Issuers”) entered into registration rights agreements pursuant to which the Issuers agreed, among other things, to use commercially reasonable efforts to file an exchange offer registration statement to exchange the Notes for new issues of substantially identical debt securities registered under the U.S. Securities Act of 1933 (the “Exchange Offers”).

On April 14, 2022, the registration statements on Form S-4 filed by the Issuers were declared effective by the SEC, registering the Exchange Offers. The Exchange Offers expired on May 16, 2022. Any outstanding Notes that were not tendered for exchange in the Exchange Offers remain outstanding and continue to accrue interest and are entitled to the rights and benefits that such holders have under the indentures related to such outstanding Notes, except for any rights under the applicable registration rights agreement which terminated upon consummation of the Exchange Offers. This exchange had no impact on our financial position, result of operations or cash ~~flows.~~

equivalents

At ~~July 3, 2022,~~April 2, 2023, our cash balance was ~~$3,545~~$3,930 million of which ~~$193~~$234 million was held by SSMC, our consolidated joint venture company with TSMC. Under the terms of our joint venture agreement with TSMC, a portion of this cash can be distributed by way of a dividend to us, but 38.8% of the dividend will be paid to our joint venture partner.

Capital expenditures

Our cash outflows for capital expenditures were $251 million in the first three months of 2023, compared to $280 million in the first three months of 2022.

Capital return

Under our Quarterly Dividend Program, interim dividends of $0.845 per ordinary share were paid on January 6, 2023 ($219 million) and dividends of $1.014 per ordinary share were paid on April 5, 2023.

Outstanding indebtedness

Our total debt amounted to $11,167 million as of Q1 2023, an increase of $2 million compared to December 31, 2022 ($11,165 million), with net debt amounting to $7,237 million.

Cash flows

Our cash and cash equivalents during the first ~~six~~three months of ~~2022~~2023 increased by ~~$726~~$83 million (excluding the effect of changes in exchange rates on our cash position of $2 million) as follows:

($ in millions, unless otherwise stated) YTD 2022 YTD 2021
Net cash provided by (used for) operating activities 1,675 1,368
Net cash (used for) provided by investing activities (617) (370)
Net cash provided by (used for) financing activities (332) (360)
Increase (decrease) in cash and cash equivalents 726 638


($ in millions, unless otherwise stated)	YTD 2023	YTD 2022
Net cash provided by (used for) operating activities	632	856
Net cash (used for) provided by investing activities	(351)	(329)
Net cash provided by (used for) financing activities	(198)	(674)
Increase (decrease) in cash and cash equivalents	83	(147)

Cash Flow from Operating Activities

For the first ~~six~~three months of ~~2022~~2023 our operating activities provided ~~$1,675~~$632 million in cash. This was primarily the result of net income of ~~$1,349~~$623 million, adjustments to reconcile the net income of ~~$723~~$326 million and changes in operating assets and liabilities of ~~$(402)~~$(315) million. Adjustments to net income (loss) includes offsetting non-cash items, such as depreciation and amortization of ~~$627~~$283 million, share-based compensation of ~~$178~~$99 million and changes in deferred taxes of ~~$(98)~~$(62) million.

~~The change~~ Changes in operating assets and liabilities ~~was attributable~~were primarily driven by a $196 million increase in inventories due to ~~the following:~~

~~The $111~~increased production levels in order to align inventory on hand with expected demand, $138 million increase in receivables and other current assets ~~for the six months ended July 3, 2022 was mainly driven by the increase in accounts receivable~~ due to the ~~linearity~~profile and timing of revenue ~~between~~by sales channel directly impacting outstanding receivables at the ~~two periods, customer mix, and~~end of the ~~related timing of cash collections in the first six months of 2022 compared with the same~~ period, ~~in 2021.~~

~~The $273~~$33 million increase in ~~inventories for the six months ended July 3, 2022 was primarily related~~other non-current assets due to ~~increased~~prepayments to secure long-term production ~~levels as we work to align inventory on hand with the current revenue forecasts.~~

~~The $270~~supply; partially offset by $52 million increase in accounts payable and other liabilities ~~for the six months ended July 3, 2022 was primarily related to the increase of trade accounts payable of $210 million~~ as a result of ~~increased demand and~~ timing $20 million in interest payable due to timing of interest payments, $53 million in income and social tax payables, partially offset by $13 million of other net movements including the non-cash adjustment for capital expenditures and purchased IP.

~~The $288 million increase in other non-current assets for the six months ended July 3, 2022 was primarily~~ related to ~~prepayments to secure long-term production supply with multiple vendors.~~payments.

For the first ~~six~~three months of ~~2021~~2022 our operating activities provided ~~$1,368~~$856 million in cash. This was primarily the result of net income of ~~$770~~$666 million, adjustments to reconcile the net income of ~~$851~~$352 million and changes in operating assets and liabilities of ~~$(252)~~$(164) million. Adjustments to net income (loss) includes offsetting non-cash items, such as depreciation and amortization of ~~$646~~$310 million, share-based compensation of ~~$184~~$89 million and changes in deferred taxes of ~~$12~~$(33) million. Changes in operating assets and liabilities were primarily driven by a $122 million increase in inventories due to increased production levels in order to align inventory on hand with expected demand, $61 million increase in receivables and other current assets, $247 million increase in other non-current assets; partially offset by $266 million increase in accounts payable and other liabilities.

Cash Flow from Investing Activities

Net cash used for investing activities amounted to ~~$617~~$351 million for the first ~~six~~three months of 2023 and principally consisted of the cash outflows for capital expenditures of $251 million, $42 million for the purchase of identified intangible assets, and $58 million for the purchase of investments.

Net cash used for investing activities amounted to $329 million for the first three months of 2022 and principally consisted of the cash outflows for capital expenditures of ~~$548~~$280 million ~~$72~~and $43 million for the purchase of identified intangible assets, ~~and~~ $5 million for the purchase of equipment leased to ~~others.~~

~~Net cash used for investing activities amounted to $370~~others, $4 million for the ~~first six months of 2021 and principally consisted of the cash outflows for capital expenditures of $300 million and $72 million for the~~net purchase of ~~identified intangible assets,~~interests of businesses, partly offset by ~~net proceeds of~~ $2 million ~~related to sales~~from the proceeds from return of equity investments and ~~purchases~~$1 million from the proceeds from disposals of ~~investments.~~property, plant and equipment.

Cash Flow from Financing Activities

Net cash used for financing activities was ~~$332~~$198 million for the first ~~six~~three months of ~~2022 compared~~2023 was primarily driven by the $219 million dividend payment to ~~net~~shareholders, partially offset by the $33 million proceeds from the issuance of common stock through stock plans.

Net cash ~~provided by~~used for financing activities ~~of $360~~was $674 million for the first ~~six~~three months of ~~2021, detailed in~~2022 was primarily driven by the ~~table below:~~

($ in millions) YTD 2022 YTD 2021
Repurchase of long-term debt (917) —
Proceeds from the issuance of long-term debt 1,496 2,000
Cash paid for debt issuance costs (13) (22)
Dividends paid to common stockholders (371) (260)
Cash proceeds from exercise of stock options and savings from ESPP 28 31
Purchase of treasury shares (554) (2,108)
Other, net (1) (1)
$552 million purchase of treasury shares and restricted stock unit withholdings and $149 million dividend payment to shareholders; partially offset by the $28 million proceeds from the issuance of common stock through stock plans.

Additional Capital Requirements

Expected working and other capital requirements are described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. At ~~July 3, 2022,~~April 2, 2023, other than for changes disclosed in the “Notes to Condensed Consolidated Financial Statements” and “Liquidity and Capital Resources” in this Quarterly Report, there have been no other material changes to our expected working and other capital requirements described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

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”). 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.

All of the existing guarantees by the Company rank equally in right of payment with all of the existing and future senior indebtedness of the Obligor Group. There are no significant restrictions on the ability of the Obligor Group to obtain funds from respective subsidiaries by dividend or loan.

The following tables present summarized financial information of the Obligor Group on a combined basis, with intercompany balances and transactions between entities of the Obligor Group eliminated and investments and equity in the earnings of the Non-Guarantor Subsidiaries excluded. The Obligor Group’s amounts due from, amounts due to, and intercompany transactions with Non-Guarantor Subsidiaries have been disclosed below the table, when material.

Summarized Statements of Income


			For the ~~six~~three months ended
($ in millions)			~~July 3, 2022~~April 2, 2023

Revenue			~~3,683~~1,948
Gross Profit			~~1,904~~992
Operating income			~~692~~413
Net income			~~253~~229

Summarized Balance Sheets


		As of			As of
($ in millions)	($ in millions)	July 3, 2022	December 31, 2021	($ in millions)	April 2, 2023	December 31, 2022

Current assets	Current assets	3,390	2,535	Current assets	3,885	3,740
Non-current assets	Non-current assets	11,585	11,576	Non-current assets	11,618	11,572
Total assets	Total assets	14,975	14,111	Total assets	15,503	15,312

Current liabilities	Current liabilities	894	637	Current liabilities	1,960	1,067
Non-current liabilities	Non-current liabilities	11,531	10,792	Non-current liabilities	10,562	11,528
Total liabilities	Total liabilities	12,425	11,429	Total liabilities	12,522	12,595

Obligor's Group equity	Obligor's Group equity	2,550	2,682	Obligor's Group equity	2,981	2,717
Total liabilities and Obligor's Group equity	Total liabilities and Obligor's Group equity	14,975	14,111	Total liabilities and Obligor's Group equity	15,503	15,312

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. The Company is therefore jointly and severally liable for the tax liabilities of the tax entity as a whole, and as such the income tax expense of the Dutch fiscal unity has been included in the Net income of the Obligor Group.

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 (for the ~~six~~three months ended ~~July 3, 2022: $365~~April 2, 2023: $225 million). The Obligor Group has amounts due from equity financing ~~(July 3, 2022: $6,584~~(April 2, 2023: $7,224 million; December 31, ~~2021: $5,167~~2022: $5,210 million) and due to debt financing ~~(July 3, 2022: $3,287~~(April 2, 2023: $2,819 million; December 31, ~~2021: $3,053~~2022: $2,629 million) with non-guarantor subsidiaries.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the Company’s market risk during the first ~~six~~three months of ~~2022.~~2023. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer (Certifying Officers), evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) on ~~July 3, 2022.~~April 2, 2023. Based on that evaluation, the Certifying Officers concluded the Company's disclosure controls and procedures were ~~not~~ effective as of ~~such date due to a material weakness in internal control over financial reporting that was disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.~~

~~Ongoing Remediation of Previously Identified Material Weakness~~

As previously described in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, we are implementing measures designed to ensure that control deficiencies contributing to the previously disclosed material weakness are remediated,

such that these controls are designed, implemented, and operating effectively. These remediation actions are ongoing, whereas we have expanded our controls or control designs based on updated enhanced risk assessments, put in place policies and implemented training programs, expanded our team and enhanced our reporting. The remediation actions, including those listed above, remain in process where further modifications are necessary to address the material weakness. We expect these changes to materially improve our internal controls.

The weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Management believes the remediation of this material weakness will be completed prior to the end of fiscal 2022. However, there is no assurance as to when such remediation will be completed.April 2, 2023.

Changes in Internal Control Over Financial Reporting

~~As noted above, the Company has been implementing measures to remediate the material weakness in our internal control over financial reporting. Other than the remediation efforts underway, there~~There were no changes in the Company's internal control over financial reporting during the three month period ended ~~July 3, 2022,~~April 2, 2023, which were identified in connection with management's evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable.

2422

Item 1A. Risk Factors

~~Our global business operations expose us to international business risks that could adversely affect our business~~

~~If any of the following international business risks were to materialize or become worse, they could~~There have abeen no 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 Kingdomchanges from the ~~European Union, enhanced export controls on certain products and sanctions on certain industry sectors and parties in Russia and the sovereign debt crisis in certain European countries;~~

•social and political instability in a number of countries around the world, including continued hostilities and civil unrest in the Middle East and the Ukraine. 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;~~

•~~adverse changes in government policies, especially those affecting trade and investment;~~

•~~volatility in foreign currency exchange rates, in particular with respect to the U.S. dollar, and transfer restrictions, in particular in China; and~~

•~~threats that our operations or property could be subject to nationalization and expropriation.~~

In addition, Russia’s recent 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. Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets. Any Russian response could also disrupt commercial and financial transactions. Further, 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. Any such disruption could result in an adverse impact to our financial results.

~~For a description of other applicable~~ risk factors ~~please refer to Part I, Item 1A: “Risk Factors” of~~previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Our Board has approved the purchase of shares from participants in NXP's equity programs to satisfy participants' tax withholding obligations and this authorization will remain in effect until terminated by the Board. In March 2021, the Board approved the repurchase of shares up to a maximum of $2 billion (the "2021 Share Repurchase Program"), and in August 2021, the Board increased the 2021 Share Repurchase Program authorization by $2 billion, for a total of $4 billion approved for the repurchase of shares under the 2021 Share Repurchase Program. In January 2022, the ~~board~~Board approved the repurchase of ~~directors~~shares up to a maximum of ~~NXP (the “Board”) approved a new~~ $2 billion (the "2022 Share Repurchase Program"). At December 31, 2022, ~~share~~there was approximately $437 million remaining for the repurchase ~~program. The new~~of shares under the 2021 Share Repurchase Program and $2 billion ~~share repurchase authorization is in addition to~~remaining under the $4 billion 2021 share repurchase program previously authorized by the Board. In addition, the Company purchases shares from participants in the Company’s equity programs who trade shares as trade for taxes.2022 Share Repurchase Program.

The following share repurchase activity occurred under these programs during the three months ended ~~July 3, 2022:~~April 2, 2023:

Period

Total Number
of Shares
Purchased
Average Price
Paid per Share Number of Shares Purchased as Part of Publicly Announced Buy Back Programs Maximum Number of
Shares That May
Yet Be Purchased
Under the Buy Back Program Number of Shares Purchased as Trade for Tax (1)
April 4, 2022 – May 8, 2022 9,899 $171.30 — 18,068,953 9,899
May 9, 2022 – June 5, 2022 5,454 $189.76 — 17,594,366 5,454
June 6, 2022 – July 3, 2022 — $— — 21,963,727 —
Total 15,353 — 15,353


Period	Total Number of Shares Purchased	Average Price Paid per Share	Number of Shares Purchased as Part of Publicly Announced Buy Back Programs	Maximum Number of Shares That May Yet Be Purchased Under the Buy Back Program	Number of Shares Purchased as Trade for Tax (1)
January 1, 2023 – February 5, 2023	7,822	$189.85	—	12,760,115	7,822
February 6, 2023 – March 5, 2023	28,900	$185.06	—	13,317,358	28,900
March 6, 2023 – April 2, 2023	560	$173.56	—	13,065,980	560
Total	37,282		—		37,282

(1) Reflects shares surrendered by participants to satisfy tax withholding obligations in connection with the Company's equity programs.

Item 5. Other Information

Steve Owen, Executive Vice President Global Sales and Marketing of the Company, will step down from his role as Executive Vice President Global Sales and Marketing effective July 26, 2022. In connection with the termination of Mr. Owen’s employment contract, Mr. Owen and the Company have entered into a Transition Services Agreement dated July 24, 2022 (the “Transition Services Agreement”). Pursuant to the Transition Services Agreement, Mr. Owen will remain employed by the Company through November 3, 2022. From July 26 through November 3, 2022, Mr. Owen will assist with transitionary and consulting responsibilities as may be necessary. Mr. Owen’s current salary and benefits, including participation in the annual incentive plan and vesting of outstanding equity awards, will continue through November 3, 2022, in accordance with the terms and conditions of the annual incentive plan and applicable equity award agreements. In connection with theNot applicable.

termination of Mr. Owen’s employment contract, he will receive a lump sum payment in the amount of EUR 1,000,000. The Transition Services Agreement contains non-compete and non-solicitation provisions that apply until November 3, 2024 and customary release of claims provisions.

~~The foregoing description is qualified by reference to the terms of the Transition Services Agreement, which is filed herewith as Exhibit 10.1, and is incorporated herein by reference.~~

2623

Item 6. Exhibits

Exhibit

Number

Exhibit Description

3.1

Articles of Association of NXP Semiconductors N.V. dated June 9, 2020 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q of NXP Semiconductors N.V., filed on July 28, 2020)

~~4.1~~

Base Indenture, dated May 16, 2022, among NXP B.V., NXP Funding, LLC, NXP USA, Inc., NXP Semiconductors N.V. and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K of NXP Semiconductors N.V. filed on May 16, 2022)

~~4.2~~

First Supplemental Indenture, dated as of May 16, 2022, among NXP B.V., NXP Funding, LLC, NXP USA, Inc., NXP Semiconductors N.V. and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K of NXP Semiconductors N.V. filed on May 16, 2022)

10.1*+

~~Transition~~Employment Agreement dated July ~~24, 2022~~13, 2020 between NXP ~~Semiconductors N.V.~~USA, Inc. and ~~Steve Owen~~Christopher Jensen

31.1*

Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer

31.2*

Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer

32.1*

Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer

101

The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~July 3, 2022,~~April 2, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the three ~~and six~~ months ended ~~July~~April 2, 2023 and April 3, ~~2022 and July 4, 2021;~~2022; (ii) Condensed Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~July~~April 2, 2023 and April 3, ~~2022 and Julyl 4, 2021;~~2022; (iii) Condensed Consolidated Balance Sheets as of ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021;~~2022; (iv) Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~July~~April 2, 2023 and April 3, ~~2022 and July 4, 2021;~~2022; (v) Condensed Consolidated Statements of Changes in Equity for the three ~~and six~~ months ended ~~July~~April 2, 2023 and April 3, ~~2022 and July 4, 2021;~~2022; and (vi) Notes to the Unaudited Condensed Consolidated Financial Statements.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


*			Filed or furnished herewith.
+			Indicates management contract or compensatory plan or arrangement.

2724

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: ~~July 26, 2022~~May 2, 2023


NXP Semiconductors N.V.

			/s/ William J. Betz
Name: William J. Betz, CFO

2825

Exhibit 31.1

CERTIFICATION

I, Kurt Sievers, certify that:

1.I have reviewed this quarterly report on Form 10-Q of NXP Semiconductors N.V.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: ~~July 26, 2022~~May 2, 2023


By:						/s/ Kurt Sievers
						Kurt Sievers
						President & Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, William J. Betz, certify that:

1.I have reviewed this quarterly report on Form 10-Q of NXP Semiconductors N.V.;

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: ~~July 26, 2022~~May 2, 2023


By:						/s/ William J. Betz
						William J. Betz
						Chief Financial Officer

Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Kurt Sievers, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of NXP Semiconductors N.V. on Form 10-Q for the period ended ~~July 3, 2022~~April 2, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of NXP Semiconductors N.V. at the dates and for the periods indicated.

Date: ~~July 26, 2022~~May 2, 2023


By:						/s/ Kurt Sievers
						Kurt Sievers
						President & Chief Executive Officer

I, William J. Betz, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of NXP Semiconductors N.V. on Form 10-Q for the period ended ~~July 3, 2022~~April 2, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of NXP Semiconductors N.V. at the dates and for the periods indicated.

Date: ~~July 26, 2022~~May 2, 2023


By:						/s/ William J. Betz
						William J. Betz
						Chief Financial Officer


	Fiscal year 2022		Fiscal year 2021
	Dividend per share	Amount	Dividend per share	Amount
First quarter	0.845	222	0.5625	155
Second quarter	0.845	222	0.5625	152


	As of January 1, 2022	Additions	Utilized	Released	Other changes	As of July 3, 2022
Restructuring liabilities	37	1	(8)	(5)	(1)	24