NXP Q4 and FY 2023 Earnings Point to Strength of Automotive Segment

NXP Q4 and FY 2023 Earnings Point to Strength of Automotive Segment

The News: NXP Semiconductors reported financial results for the full year (FY) 2023 and the fourth quarter (Q4) ending December 31, 2023. Q4 revenue was $3.42 billion, an increase of 3% year-over-year (YoY), above the midpoint of the company’s guidance range. For the year, NXP delivered $13.28 billion in revenue, an increase of 1% YoY. Per Kurt Sievers, NXP president and CEO, “NXP delivered solid results throughout 2023, reflecting strong execution, consistent gross margin, and healthy free cash flow generation despite a challenging semiconductor market environment. We are navigating a soft landing by managing what is in our control, especially limiting over shipment of products to customers.” NXP’s earnings press release is available on the company’s website.

NXP Q4 and FY 2023 Earnings Point to Strength of Automotive Segment

Analyst Take: NXP’s Q4 revenue was $3.42 billion, up 3% YoY. FY revenue was $13.28 billion, up 1% YoY. For Q4, Generally Accepted Accounting Principles (GAAP) gross margin was 56.6%, GAAP operating margin was 26.5%, and GAAP diluted net income per share was $2.68. FY GAAP gross margin came in at 56.9%, GAAP operating margin at 27.6%, and GAAP diluted net income per share at $10.70. Q4 non-GAAP gross margin landed at 58.7% and non-GAAP operating margin at 35.6%, with non-GAAP diluted net income per share settling at $3.71. FY 2023 non-GAAP gross margin was 58.5% and non-GAAP operating margin was 35.1% while non-GAAP diluted net income per share was $14.01.

Looking at NXP’s performance more granularly, both the quarter and the year were a bit of a mixed bag, albeit mostly positive. NXP’s overall high margins gives the company maneuvering room should demand for any of its solutions soften in the next few cycles. Let’s take a closer look at NXP’s four critical business areas in more detail.


NXP’s automotive numbers look predictably strong with $1.89 billion revenue for the quarter (+5% YoY growth) and $7.48 billion for the year (+9% YoY growth).

Aside from the obvious, here are three company moves in Q4 that caught my eye, relative to possible additional on-ramps for growth in 2024:

  • NXP’s collaboration and investment in Zendar Inc. means the partnership could help strengthen NXP’s ADAS offering as both companies are reportedly working on using Distributed Aperture Radar (DAR) technology to codevelop an improved radar system that could deliver near-LIDAR performance. The value of this project to the market is that it could result in a simplified and more cost-effective radar system solution for automotive OEMs, with obvious ripple effects of efficiency and cost reductions across ADAS platform implementations.

For those tempted to point out that redundancies are good when designing and implementing safety-focused platforms especially for ADAS and AD applications, and that automakers may still want to opt for layers of radar, LIDAR and cameras to round out their systems, I would say this: The benefit of this type of system would be, on the one hand, higher performance for the entire stack overall, and on the other, the potential for a more resource-efficient ADAS stack, both in terms of energy consumption and compute power.

  • NXP also announced an expansion of its S32 vehicle compute platform with a new motor control solution, the S32M2, which will enable EV-makers specifically to both streamline product development and optimize the software scalability of S32 platform implementations.
  • NXP also recently announced a new fully integrated single-chip Ultra-Wideband (UWB) for automotive use cases, the Trimension NCJ29D6, which helps manage short-range radar and real-time localization within the same system for better efficiency and system simplicity. The solution aims to improve the performance of features such as child presence detection, gesture recognition, intrusion alerts, and secure car access, and could ship in new vehicles as early as 2025.

IIoT + IoT

For this segment, $662 million in IoT revenue for the quarter, pushing an impressive 9% YoY rebound after an otherwise disappointing year ($2.35 billion and a 13% backslide over 2022) speaks to both NXP’s resilience in the segment and the overall state of the IoT market which, like PCs and handsets, experienced a very soft first half. NXP’s rebound in Q4 could be indicative of an uplift in the IoT/IIoT market in H1 2024.

Communications Infrastructure and Other

$455 million in revenue was an 8% drop for the quarter YoY and a 19% sequential backslide after an otherwise positive year (5% growth, jumping from $2 billion in 2022 to $2.11 billion in 2023). The acceleration of that downward trend quarter over quarter caught our attention and could reflect a slowdown in telecom infrastructure spending as 5G networks begin to mature and device-side bandwidth and data usage efficiency improves. New scalable connectivity use cases in the automotive, mobile, PC and XR space are coming, but softness in Q4 could extend into H1 2024 as the segment wrestles with slower infrastructure investments ahead of the start of the next demand supercycle.


$406 million in revenue with 8% YoY growth for Mobile Q4 is the kind of encouraging trajectory we were all looking for, especially after a tough year for the segment, but this YoY uptick for the quarter is not enough to erase the year’s 17% shortfall (down to $1.32 billion in 2023 from $1.60 billion in 2022) but reflects the segment’s fluctuations this past year. NXP’s performance here has nothing to do with execution and everything to do with a mercurial mobile market last year. New handset and mobile platform features unlocked by new SOCs featuring next-gen on-device AI capabilities are expected to inject much needed excitement into the segment which had, of late, failed to incentivize consumers to shorten their upgrade cycle. 2024 is shaping up to disrupt this trend and inject new excitement for the types of experiences and features that AI-forward handsets will deliver to mainstream users.

Additional Automotive Market Considerations:

I think it is important to decouple automotive systems like ADAS, connectivity, and cockpit platforms from EV adoption. Fully immersive cockpits and zonal architecture for the software-defined vehicle, along with ADAS getting smarter and better, are mostly EV-agnostic feature sets. In other words, even if demand for the EV category were to wane, most of these other features would continue to drive automotive UX and safety innovation—ergo, demand for automotive-specific semiconductors and systems. Strong demand for new in-vehicle experiences that require microcontrollers, connectivity, and exactly the rules of solutions that NXP brings to the end ecosystem regardless of what type of engine propels the vehicle.

Regarding fears of a slowdown in EV adoption, I would caution that a slowdown in the growth rate of EV adoption, particularly in the US, is not at all the same thing as a slowdown in the growth of EV adoption as a whole. It merely means that the initial boost from early adopters is fading and that demand growth for the category is normalizing across all consumer segments. Having said that, automotive-focused semiconductor and platform vendors with diverse portfolios will be less impacted by any hypothetical downward shifts in demand for EVs.


Overall, the quarter looked good and reflects both across-the-board improvement for tech after a difficult few cycles and disciplined execution from NXP (including with regards to its discipline in managing inventories). As the tech sector continues to ease into recovery mode, 2024 might deliver another mixed bag of wins and misses for NXP in 2024. I expect the company’s performance to be mostly positive, with NXP strengthening gains in the automotive space with efficient and differentiated OEM-friendly solutions, some acceleration in the IoT/IIoT segment’s hiccup-y rebound, and a return to modest but steady single-digit growth in Mobile ahead of new AI-powered handset releases in H2. Patience may be the operative stance, particularly in H1 2024, as both the pace of the sector’s recovery and the asymmetrical nature of that recovery (some segments recovering faster than others) may send mixed signals about positive, market-driving disruptions still fighting for scale.

Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

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 The Futurum Group as a whole.

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Reimagining the Automotive Customer Experience in the Age of Autonomous Mobility

Author Information

Olivier Blanchard has extensive experience managing product innovation, technology adoption, digital integration, and change management for industry leaders in the B2B, B2C, B2G sectors, and the IT channel. His passion is helping decision-makers and their organizations understand the many risks and opportunities of technology-driven disruption, and leverage innovation to build stronger, better, more competitive companies.  Read Full Bio.


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