- Price
- $226.79
- Fair value
- $310.00
- Discount
- 26.8%
- Uncertainty
- High
- LSEG rating
- 2.13
- Moat
- Wide
- Next earnings
- 2026-10-27
- Next earnings is estimate
- No
- Company name
- NXP Semiconductors
- Sector
- Semiconductors (automotive & industrial)
- About
- NXP Semiconductors is a Dutch chip company based in Eindhoven. It designs and makes processors, microcontrollers, radar and network chips, secure connectivity chips and power management chips. Most of its revenue comes from cars: Automotive gave $1.94 billion of $3.50 billion in revenue in Q2 2026. The other end markets are Industrial and IoT, Mobile, and Communications Infrastructure, which now includes a small data center business. NXP makes money from the sale of these chips to carmakers, their suppliers, industrial companies and distributors, often under designs that stay in production for many years. It makes part of its chips in its own plants and buys the rest from foundries such as TSMC. Rafael Sotomayor is the CEO.
- Thesis
- The market fears that NXP's strong 2026 growth is a short upturn of the car chip cycle and not a lasting trend. Revenue grew 19% in Q2 2026 after two years of falls, but channel inventory rose to 11 weeks from 9 weeks a year earlier, so part of the growth may be customers that refill stock. NXP's Q3 guidance range was wide, and investors looked at its low end, so the stock fell 7% the day after the Q2 report and 18.5% in July 2026. Car demand, tariffs and trade measures between the US and China add doubt, and China gave 18% of Q2 revenue. On October 8, 2026, Citi cut its rating to Neutral because estimates for NXP rise less than for other chip companies. For the gap to close, NXP must show that the growth continues after the restocking ends. The checks are clear. Q3 2026 revenue must reach at least the middle of its $3.65 billion to $3.85 billion guidance, with non-GAAP gross margin near 58.5%. Channel inventory must stay near 11 weeks and not rise more. Automotive revenue must keep growing from a year earlier, and the Q4 guidance must show growth again. Net leverage must stay near 1.5 times while NXP pays dividends and buys back stock. The first evidence comes with the Q3 2026 report on October 27, 2026, and the Q4 2026 report in early February 2027. If these checks pass, the gap can close over the next three to five quarters. If car production falls or customers cut stock, the gap can last into 2028.
- Risks
- NXP depends on car production. Automotive gave about 55% of Q2 2026 revenue. Channel inventory rose to 11 weeks in Q2 2026 from 9 weeks a year earlier. If carmakers or distributors cut stock, revenue can fall fast, as it did in 2024 and 2025.
Trade measures between the US and China can hurt sales and supply. China and Hong Kong gave $630 million of revenue in Q2 2026, and NXP has plants and suppliers in Asia. New tariffs or export controls can raise costs or block sales.
Chip companies often lose share when a cycle turns. Competitors such as Infineon, Renesas, STMicroelectronics and Texas Instruments sell into the same car and industrial markets, and Chinese chip makers grow in their home market.
NXP has $11.0 billion of debt. Net leverage is 1.5 times EBITDA, so the debt is safe in a normal market. In a deep downturn, debt and the dividend would leave less cash for buybacks.
- Balance sheet
- Cash: $3.2B
Debt: $11.0B
Net debt: $7.8B
Net debt / EBITDA: 1.5× (low)
Interest cover: 9.6×
Undrawn credit line: $3.0B
Debt due within 12 months: $999M
NXP funds itself with unsecured senior notes and with cash from operations. Debt is total debt at June 28, 2026, including discounts, issuance costs and other accounting adjustments. It fell from $12.2 billion at December 31, 2025, because NXP repaid $500 million of notes on January 5, 2026 and $750 million on April 20, 2026 with cash. The $1.0 billion due within 12 months is the current portion of long-term debt. Net leverage is net debt divided by adjusted EBITDA for the last 12 months, as NXP reports it. Interest cover is GAAP operating income divided by interest expense for Q2 2026, which excludes the MEMS gain of Q1. There was no commercial paper under the $2 billion program. On September 1, 2026, NXP signed a $250 million loan facility with the European Investment Bank for its Malaysia plant. In the first half of 2026, NXP paid $512 million of dividends and bought back $206 million of stock. Free cash flow was $1.5 billion in the same period.
As of 2026-06-28.
- Checkpoints
- Oct 27, 2026: Q3 2026 results: revenue, channel inventory and Q4 guidance. Pending. Watch: Revenue at or above the $3.75 billion middle of guidance, channel inventory near 11 weeks or lower, and Q4 guidance that grows pass; revenue near the low end, more channel inventory or a Q4 guide that falls fails.
Feb 2027 (estimate): Q4 2026 results and Q1 2027 guidance. Pending. Watch: Automotive revenue that still grows from a year earlier and Q1 2027 guidance above Q1 2026 pass; a fall in automotive revenue or a weak Q1 guide fails.
- Recent events
- 2026-10-08: Citi cut its rating on NXP from Buy to Neutral and its price target from $370 to $260. The stock fell 2.6% before the market opened. Earlier that week, Stifel cut its target from $282 to $265.
2026-10-06: NXP said that it will report Q3 2026 results on October 27, 2026, after the US market closes.
2026-09-01: NXP signed a $250 million unsecured loan facility with the European Investment Bank to expand its assembly and test plant in Kuala Lumpur, Malaysia. Loans can have a tenor of up to six years.
2026-08-28: NXP declared a Q3 2026 dividend of $1.014 per share, paid on October 8, 2026.
2026-07-28: NXP reported Q2 2026 revenue of $3.50 billion, up 19% from a year earlier, with growth in all end markets. Non-GAAP gross margin was 58.0%, and non-GAAP EPS was $3.61. Free cash flow was $791 million. It guided Q3 2026 revenue to $3.65 billion to $3.85 billion. The stock fell 7% on the next day, and it fell 18.5% in July 2026.
2026-04-28: NXP reported Q1 2026 revenue of $3.18 billion, up 12% from a year earlier, and non-GAAP EPS of $3.05. GAAP results included a gain of $627 million on the sale of its MEMS sensors business to STMicroelectronics, which closed on February 2, 2026 for $878 million in cash. The stock rose 25.6% that day.
2026-04-20: NXP repaid $750 million of 3.875% senior notes due June 2026 with cash.