The automotive chip industry has turned the corner, says NXP Semiconductor CEO Kurt Sievers in his last call with analysts before he steps down.
At the same time there is a fundamental shift for the 1100 engineers acquired with TTTech Automotive that are now part of NXP.
- Rafael Sotomayor takes over as CEO and President on October 28, 2025.
The company saw revenues starting to turn around after a tough year with high chip inventories, especially in automotive. “Our revenue was $26 million better than the midpoint of our guidance,” said Sievers. “The revenue trends in all our focus end markets were above expectations, reflective of increasingly positive cyclical trends. Taken together, NXP delivered revenue of $2.93 billion this quarter, a decrease of 6% year-on-year.”
“From a direct sales perspective, we continue to support Western Tier 1 automotive customers with their desire to digest on-hand inventory. However, we do believe that for the most part, the Tier 1 are either approaching or already at normalized inventory respect.”
“We are guiding quarter three revenue to $3.15 billion, down 3% versus the third quarter of 2024 and up 8% sequentially, a return to better than historic seasonal trends,” he said.
“It appears to us we are in the early stages of a cyclical recovery,” said Bill Betz, chief financial officer. “We have started the consolidation of our legacy front and 200-millimeter factories as part of our hybrid manufacturing strategy.
Automotive is expected to be the same as last year while industrial & IoT is expected to be up in the mid-single-digit range year-on-year and up in the high single-digit range versus quarter 2 2025. Mobile is expected to be up in the low single-digit percent range year-on-year and up in the mid-20% range on a sequential basis. And finally, Communication Infrastructure & Other is expected to be down in the upper 20% range versus quarter 3 2024 and flat versus quarter 2 2025.
“In Industrial & IoT, which is primarily served through distribution, we see globally a broad-based recovery across both core industrial and consumer IoT,” he said.
“Looking ahead, we will continue to manage what is in our direct control to drive solid profitability and earnings. This includes strengthening our competitive portfolio by leveraging the recently closed acquisition of TTTech Auto as well as the addition of Kinara and Aviva Links, which are still pending regulatory approval. Lastly, we are on track to align our wafer fabrication footprint consistent with our hybrid manufacturing strategy.”
NXP expects capital expenditures to be around 3% of revenue with a $225 million capacity access fee and a $145 million equity investment into VSMC, as well as a $15 million equity investment in ESMC.
“Our Automotive business is accelerating massively from the second into the third quarter when you think about the sequential growth,” said Sievers. “The underlying inventory burn, which has held us back for quite a while, is actually what is moderating or eventually going away through the quarter. It appears that this is coming to an end through this upcoming quarter. So that is actually the real factor.”
TTTech Automotive acquisition
However there is a change for TTTech Automotive away from products and tools for external customers.
“We acquired them for the IP and know-how they have in software for safe processing in the software-defined vehicle, where it is a major, major contributor to our system solutions there.”
“They come with 1,100 software engineers who are now indeed part of NXP. We don’t want them to do what they used to do to an extent. We need the competence they have and that know-how in a sector which they know, but really going more from maybe a service model to becoming an integral element of what we do for the software defined vehicle. So that’s why this is also changing to what it might have been in the past.”
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