Analyst(s): Futurum Research
Publication Date: February 5, 2026
NXP’s Q4 FY 2025 update shows steady execution with a modest revenue beat versus consensus and improving demand signals exiting the year. Strategy emphasis on SDV compute, Ethernet, and edge AI platforms, alongside portfolio pruning, sets the stage for mix-driven growth and margin discipline.
What is Covered in this Article:
- NXP’s Q4 FY 2025 financial results
- SDV design wins and auto content roadmap
- Edge AI and Industrial & IoT platform traction
- Portfolio optimization and manufacturing strategy
- Guidance and Final Thoughts
The News: NXP Semiconductors (NASDAQ: NXPI) reported Q4 FY 2025 revenue of $3.34B, up 7% year-on-year (YoY), versus Wall Street consensus of $3.30B. By segment, Automotive was $1.9B (+5% YoY; at par with consensus), Industrial & IoT was $640M (+24% YoY; consensus: $638M), Mobile was $485M (+22% YoY; consensus: $452M), and Communications Infrastructure & Other was $334M (-18% YoY; consensus: $327M). Non-GAAP operating income was $1.2B (+8% YoY) with a 34.6% operating margin versus 34.2% a year ago. Non-GAAP net income was $851M (+4% YoY) and non-GAAP diluted EPS was $3.35 (+5% YoY).
“Throughout 2025, we executed effectively despite a challenging first half, maintaining operational discipline while advancing our strategic priorities in software defined vehicles and physical AI. Through strategic acquisitions we strengthened our portfolio to drive leadership in intelligent systems at the edge for automotive, industrial and IoT. These actions, combined with an improving demand environment, position NXP for profitable revenue growth,” said Rafael Sotomayor, President and CEO, NXP.
NXP Q4 FY 2025: Auto Stabilises, Edge AI Platforms Gain Traction
Analyst Take: NXP’s quarter shows stabilizing core demand with improving breadth across regions and end markets, while the path forward leans on software-defined vehicle (SDV) compute, Ethernet, and edge AI platforms. Automotive growth is rebuilding as inventory digestion eases, and design-win momentum supports mid-term content expansion. Industrial & IoT benefited from robust edge compute and early “physical AI” engagements, aided by recent acquisitions and platform launches. Portfolio optimization (MEMS divestiture, RF power exit) and hybrid manufacturing investments are aimed at resilience and long-term margin structure.
SDV Roadmap and Auto Content Gains
Management highlighted strong global adoption for SDV platforms, including S32N 5-nanometer vehicle compute, S32K microcontrollers, and growing automotive Ethernet attach, with design-win activity broadening across major OEMs. Early integration of TTTech Auto and Aviva Links assets is expanding conversations and pipeline for centralized architectures, with potential revenue impact beyond FY 2027. Auto returned to YoY growth in Q4 FY 2025 and is guided to be up mid-single-digit YoY in Q1 FY 2026, supported by steady normalization at Tier 1 customers and low single-digit price declines embedded in Volume Pricing Agreements (VPAs). Near-term unit volatility remains a watch item, but content cadence across domain controllers, zonal compute, and high-bandwidth connectivity provides structural tailwinds. The MEMS divestiture reduces non-core exposure while sharpening investment focus on SDV compute and connectivity. Together, SDV design wins and a more focused portfolio underpin a multi-year content growth narrative.
Edge AI and Industrial & IoT Momentum
Industrial & IoT outperformed in the second half and in Q4, with management citing strong customer interest in “physical AI” at the edge—combining i.MX applications processors with the Kinara NPU to address workloads like medical imaging, industrial safety, logistics automation, and robotics. The i.MX 952 launch and Kinara acquisition strengthen a scalable edge AI platform strategy aligned to vision, HMI, and sensor fusion use cases. Management expects Industrial & IoT to be up low-20% YoY in Q1 FY 2026, reflecting broadening demand across core industrial and consumer IoT. The platform approach should enable faster time-to-solution for OEMs while expanding NXP’s addressable market in intelligent edge systems. Execution focus remains on sell-through and channel health rather than broad restocking, supporting disciplined growth. Edge AI platform breadth supports sustained momentum into FY 2026.
Portfolio Optimization and Manufacturing Strategy
NXP completed the sale of its MEMS sensors business to STMicro for $900M, with up to $50M additional contingent consideration; Q1 FY 2026 guidance includes about one month ($25M) of revenue contribution before the divestiture is fully reflected. The company is stopping new product development in Radio Frequency (RF) power and recorded an approximately $90M restructuring charge, redirecting R&D to SDV and physical AI priorities. Working capital metrics closed Q4 FY 2025 with 154 days of inventory (including 7 days pre-build), with expected efficiency improvement as revenue accelerates through FY 2026. Hybrid manufacturing investments continue, with about $1.7B invested of a planned $3.4B across VSMC and ESMC (circa 50% through the cycle), targeting supply resilience and gross margin benefits. Capital returns remain disciplined alongside debt reduction actions, including redemption of March 2026 notes. The portfolio and manufacturing moves aim to concentrate spend on high-return platforms while reinforcing long-term margin structure.
Guidance and Final Thoughts
Q1 FY 2026 guidance calls for revenue of $3.05–$3.25B (consensus: $3.09B), non-GAAP gross margin of 56.5%–57.5%, non-GAAP operating margin of 31.7%–33.6%, and adjusted EPS of $2.77–$3.17, with the outlook assuming no broad-based channel restocking. By end market, Q1 reflects broad YoY growth led by Industrial & IoT (low-20%) and Mobile (mid-teens), with Automotive returning to mid-single-digit YoY growth, while sequential trends remain mixed and largely seasonal, except for a sequential uptick in Communications Infrastructure & Other. Distribution inventory ended Q4 FY 2025 at 10 weeks, with a steady-state target of 11 weeks planned in FY 2026, reflecting healthier demand conditions. Management indicates internal order signals (backlog, distributor backlog, short-term orders, escalations) have strengthened compared to 90 days ago, supporting confidence in operating within the long-term model through 2026. With SDV and edge AI as primary growth vectors and a tighter portfolio focus, mix and cost discipline should remain key levers.
See the full press release on NXP’s Q4 FY 2025 financial results on the company website.
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Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
Other insights from Futurum:
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